Icor launches electronic options broking

Icor Brokerage has launched its online brokerage service for forex options in the Asia-Pacific region, where 14 banks are already hooked up to trade over the system. Six additional Asian banks are set to go live next month.

The service, a result of a joint venture between Icor Brokerage and Reuters, allows the interbank market to broker forex options electronically over the Reuters Dealing 3000 platform.

The system will be rolled out in Europe and North America later this year, but was launched initially in Asia because the region’s diversity makes Asian banks particularly eager to trade electronically, said Jeff Larsen, chief executive of Icor Brokerage. "In an area of massive regional distances and multiple languages, electronic trading is a natural and essential advance, and the Asia-Pacific banks are particularly receptive to online trading," he said.

The first currency pairs to go live on the system were Australian dollar/US dollar and US dollar/yen. Euro/yen and six other currency pairs will be added this year. Interest rate options broking will be added in third-quarter 2002.

The system is purely electronic, in contrast to hybrid broking systems for forex options offered by GFInet, Cantor Fitzgerald, via its eSpeed network, and TFS-Icap, which combines voice broking with electronic trading.

TFS-Icap merged its voice-generated forex options business with bank-owned e-broking service Volbroker on December 1. Some industry pundits saw this tie-up as an admission that pure electronic forex options broking does not provide sufficient liquidity in which to operate a viable market-place. At the time of the announcement, Volbroker chief executive Dirk Ward told RiskNews' sister publication FX Week the firm had been in discussions with voice brokers almost as soon as Volbroker launched in July 2001.

Icor’s development in the coming months, following launches in the Americas and Europe, will shed further light on the issue.