Icor teams with Reuters to deliver FX options

Icor Brokerage has formed a 50:50 venture with international dealing systems provider Reuters to deliver its FX options broking service, and in one swoop dismissed suggestions that the company faced problems raising cash.

Reuters will contribute $10 million to the joint venture and will host Icor’s broking system on its Dealing 3000 trading system. The deal also gives Icor the advantage of the Reuters brand name in an intensively competitive environment, as the FX community becomes bombarded with new online FX options broking systems.

“We want to be close to the trader,” said president of Icor Brokerage, Neil Chriss, “And no one is closer to the trader than Reuters.”

Reuters director of Treasury Services Mark Robson said the deal “validates the investment our customers make when they take the next generation of Dealing products, with Dealing 3000”.

The options broking capability will also complement Reuters’ current service in spot and forwards FX.

Traders now have a number of ways that they can broker FX options. Earlier this week, inter-dealer currency joint venture broker TFS-Icap indicated that it would takeover bank consortium-owned Volbroker; while competitors Cantor Fitzgerald and GFInet both offer an FX options capability.

The Icor service will be purely electronic, but customer account managers will also be on hand to guide users. This contrasts with GFInet’s hybrid system, which links voice and screen broking, and the anticipated link-up between electronic service Volbroker and voice broker TFS-Icap.

The Icor Brokerage in association with Reuters will be launched for clients in the Far East eraly next year, Chriss said. “We want to focus on one area and put 100% into making that work." The Asian focus will also mean Icor can iron out potential problems before rolling out to major clients in the US and Europe, observers noted.

The deal, which has been in negotiation since October last year, has delayed the launch of Icor’s system, which was originally scheduled for launch in the middle of this year. Chriss said the roll-out was delayed so the service could be reconfigured for Reuters’ system.

Existing Icor investors, believed to have contributed $15 million in previous funding, will have their shareholdings diluted from 100% to 50%. Both Icor chief executive Jeff Larsen and Chriss will remain on the Icor board, while Reuters Treasury Services managing director Julie Holland and another Reuters executive will take the remaining two seats.

Larsen said the $10 million raised would be used as general operating cash, but added that Icor plans to develop an interest rate derivatives platform due for launch at the end of next year.