SpectrAxe in Funding Round
Posted by Colin Lambert. Last updated: April 10, 2025
FX options CLOB SpectrAxe, which launched last year, has announced a Series A funding round, led by Susquehanna Private Equity Investments, with prop trading firms IMC and CTC as co-investors.
The funding, the amount of which was undisclosed, will, the firm says, accelerate SpectrAxe’s work on its anonymous FX options all-to-all central limit order book (CLOB) platform. Building on its early traction, the firm says it will expand its global footprint and deliver enhanced functionality to its growing user base.
“We have a shared belief that by solving the credit problem to enable true all-to-all trading in FX options in an anonymous, exchange-style environment, market fragmentation will become a thing of the past,” says Scott Greene, CEO of SpectrAxe. “The investment by Susquehanna, CTC, and IMC demonstrates the industry’s commitment to advancing FX options market structure. Our investors recognise the tremendous value in creating a more efficient marketplace for an asset class that has been underserved by technology for too long.”
Jarrod Boland, associate director at Susquehanna International Group, adds, “[SpectrAxe’s] platform has demonstrated that a central limit order book can successfully operate in the OTC FX options market, driving meaningful improvements in price discovery and liquidity access. This funding will help accelerate their already impressive growth trajectory.”
Meanwhile, Alvin Chopra, COO of SpectrAxe, says, “What sets SpectrAxe apart is our focus on addressing the structural barriers that have prevented true innovation in FX options. Unlike previous attempts that simply digitised existing workflows, we’ve reimagined how counterparties can interact, creating new possibilities for price discovery and liquidity that weren’t previously possible.”
The Full FX View
Things are definitely happening in the FX options space as more entrants seek to deliver greater automation, but is the all-to-all model the way to go?
Quite clearly for price discovery the market needs a CLOB or similar, but how many does it need? There is a school of thought that FX options can follow spot in becoming attractive to the non-bank market makers, and these firms, as we have written before, are entering the market in numbers, but they are not capturing what is probably the most valuable part of the market – the client-to-dealer flow.
The fact is a large proportion of the buy side that is using FX options are often doing so in a bespoke fashion – they want specific criteria which simply doesn’t work in a CLOB environment and do not like the challenge of executing larger, often bespoke, trades, in an environment in which the data will give away direction. Yes, there is hedging out of positions by dealers, but again, look at spot, as internalisation grows, would there be volume for more than one CLOB?
The risk of a CLOB becoming a playground for prop trading or erstwhile HFTs has been seen as something holding the model back – banks remain a vitally important part of the market thanks to their client bases, and simply do not want to play in a “shark tank”. The spot market is littered with examples where this evolution has been short-lived, and often fatal, for the platform concerned.
This means that we are likely to see a race to become the “recognised” CLOB in FX options, although even here one could ask the question, ‘does it already exist in CME?’ A lot of the non-bank players are very comfortable on CME and some of these firms’ support for another CLOB-type platform smells of firms that benefit from fragmentation trying to push the industry into just such a situation. Because there should be little doubt that new platforms increase fragmentation because no-one, especially from a standing start, will be able to establish a position of total dominance to eradicate it.
So whether the really valuable business – and 70% of FX options business in the UK is via the Reporting Dealers or Customer Direct channels – wants to go to a CLOB remains to be seen. It is good that firms are still trying to push the envelope – it will also be interesting to see how the PB at the centre of the SpectrAxe model, whoever it is, deals with the capital burden as volumes grow – but given the size of the market overall, it is hard to see all platforms thriving.
At around $300-350 billion per day, the FX options market is not sizeable in FX terms, which raises the question of where the trading will be executed. Like it or not, exchange-type models such as CLOBs are associated with information leakage – it is one reason why CLOB volumes in FX have declined over the years, and the nature of the really valuable business, largely RFS or RFQ, also argues against the model dominating.
History shows that new venues dedicated to a relatively limited sub-set of market participants, often survive but rarely thrive. Unless there is truly an untapped well of volume in FX options, that is not going to go to CME in the case of non-bank players, and wants to go to a lit environment (albeit anonymous or otherwise), it feels like the market doesn’t need more than one of each model.
