Deutsche Bank Launches Electronic Currency Options System
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Deutsche Bank AG on Wednesday launched an electronic trading system for foreign-exchange options-complex products that are usually traded over the phone.
Deutsche Bank, which holds the world's biggest market share in currency dealing, said in a statement that the new service was the first of its kind.
Options are instruments that give users the right, but not the obligation, to buy or sell a currency at a certain level at a future date.
The complexity of these products has made them tough to trade electronically.
With its new system, which lies within its AutobahnFX dealing platform, Deutsche Bank said it will honor all trades agreed to electronically "unless there is a clear manifest error."
That brings options trading up to speed with more-basic cash currency trading, which has moved steadily online over the past 10 years.
The development comes despite the latest triennial report from the Bank for International Settlements that showed trading in currency options fell by more than 2% in the past three years to $207 billion a day in April.
That contrasts with an overall 20% expansion in currency trading during the past three years.
This fall in options flows is mirrored by data from the Bank of England. The central bank said that average daily trading in foreign-exchange options and currency swaps in the U.K. fell 8% to $127 billion in April 2010 from $138 billion in October 2007.
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