Market sources say that Reuters is about to try to penetrate the FX options market again by launching a revamped matching service for currency derivatives at the start of October. Players seem split in their view of how likely it is that the beefed-up Reuters Matching for FX Options will succeed. The company has already had unsuccessful forays into the market, notably with its ICor venture, launched initially as a joint venture back in 2001.
The FX options market has proved reluctant to embrace electronic trading fully and the voice brokers still play a very active and crucial role in both price discovery and the provision of access to liquidity, especially in emerging markets. However, the hybrid Volbroker system, owned by TFS-ICAP, is said to be playing an increasingly important role.
Whether Reuters can replicate the success of Volbroker is debatable. Volbroker is backed up by TFS-ICAP’s voice brokers, and users say it combines the benefits of an electronic platform, such as transparency and straight-through processing, with the ability of the brokers to find liquidity.
However, many banks are dissatisfied – as they always have been – with the levels of commission they are charged.