Deal-X (DLX), the world's first multi-bank FX Option trading platform

FXCM and SuperDerivatives (SD) have partnered to develop Deal-X, a multi-bank electronic trading platform for FX options that connects buy-side market takers with liquidity providers on a single global platform.

In contrast to other platforms that only support typical exchange-traded products, for the first time the Deal-X platform allows bespoke FX options to be traded electronically, following OTC market conventions.

The offering combines SD’s innovative and proven technology with FXCM’s global reach and network of price providers to deliver fast and efficient trading on superior pricing.

The intuitive web-based platform supports price discovery, negotiation and execution, all the way to option expiration, powered by the industry benchmark SD options pricing model.

Deal-X enables:

• Users to trade both vanilla and bespoke instruments on G20 currency pairs and selected emerging markets
• Efficient price discovery – the best bids and offers from all liquidity providers on one electronic trading venue
• Simultaneous delivery of fast and secure options pricing from multiple banks via APIs, and anonymous trading to level the playing field for all participants
• Simplification of the option expiry process with a revolutionary central settlement mechanism
• All trading and settlement services, including central counterparty clearing, to be carried out through a prime broker, thereby minimising operational and counterparty risk
• Multi-participant request-for-quote/request-for-stream (RFQ/RFS) trading sessions, with published market-depth pricing for all parties
• Market participants to meet with and exceed forthcoming regulatory requirements and satisfy the need for greater transparency and reporting.
• Compliance with MiFID best execution and the SEC’s RegNMS regulation by clearly displaying the full depth of the market, with post-trade compliance reports available

A comprehensive range of post-trade services is also available, including a built in option-exercise facility that provides customers with added life-cycle management capabilities and reduces operational risk.

The platform is underpinned by the same specialised high-performance technology and infrastructure that is at the core of SD’s award winning system, which was launched in 2000.

Find out how Deal-X can enhance your FX options business by requesting a free trial or speaking to our expert team.

Investment banks layoff an opportunity for regional banks

Last week one of my colleagues visited the Hong Kong trading desk of an European investment bank.  She visits them quite frequently on support visits in the past and has befriended with many of the traders on the floor.  That is why she was in a bit shocked to see half of the trading desk emptied on her last week’s visit.

The investment banking land in Hong Kong, much like the rest of the world, is experiencing an earthquake right now.  But while the large investment banks scaling back, the regional banks are seeing an opportunity for them to play a bigger role in the market, and this round of layoffs has produced a pool of talents that can help put in place the proper procedures and infrastructure.

Some of the regional banks I’ve visited have said that they do have plan to expand and many of them have added a few former IB’ers to help with the expansion.  The key now is for the senior management and the board members of these regional banks to have the courage to take action on their ambition and follow through to the next steps.

China adds AUD and CAD trading against CNY

On Nov 28^th, China Foreign Exchange Trade System (CFETS) issued a statement saying that it will now allow interbank trading of AUD and CAD against CNY, joining the ranks of USD, JPY, EUR, GBP, MYR, RUB, and HKD.

This is a good sign but China must move a bit faster than this if they ever want to be taken seriously as a candidate for an international trade currency (if that is even possible).

Notwithstanding the opaqueness of China’s banking and political system.   At this point, options on CNY currency pairs can only be brought but not sold, so even simple strategies such as a synthetic forward or a risk reversal are still not possible.  With these strict restrictions, interbank trade volume is still minimal.  Banks would much rather focus their business that has more flexibility and can actually attract some interests.

Dipping your foot into the pool is fine, but no one will ever learn how to swim until he gets his head under the water.

CFETS should take a little bit of a risk and actually let the market start providing some better liquidity and transparency.