BarCap survey shows options e-commerce still lags behind

A Barclays Capital survey of its corporate customers has found that electronic trading of foreign exchange options is lagging behind, as the market attempts to shift trading from voice brokerage to e-commerce systems.

Of the 400 clients that were surveyed by the bank, just 74 – or 18.5% – said they had traded foreign exchange options electronically. This contrasted with forex forwards, spot and swaps, which saw 50%, 80% and 37% e-traded respectively.

But BarCap’s head of foreign exchange, Ivan Ritossa, predicted the situation will likely change in the near future, with new online forex offerings such as the bank's live two-way streaming pricing for options launched earlier this month on the bank’s Barx electronic trading platform.

"As customers become accustomed to seeing options online, they will start migrating to trading this way as they have with other transaction types,” he said, adding that the high costs associated with developing sophisticated e-commerce forex platforms would lead to an increasing amount of outsourcing by rival banks.

“You have to question the full service model for those banks that are not in the top five. The high fixed costs make it hard for everyone to keep up. This doesn't mean people will exit the industry; rather they will look to areas of strength. The upshot of this is that there will be more white-labelling,” said Ritossa.