The Full FX Unfiltered
Posted by Colin Lambert. Last updated: May 20, 2024
The market structure in FX options is changing, albeit away from the glare of the spotlight, which continues to be dominated by the spot market, and Chris Povey, head of FX options at CME Group joins Colin Lambert in our latest Unfiltered video to discuss the evolution.
Povey observes that electronification means different things to different people, but does see a new generation of traders in banks – and the rise of systematic hedge funds – bringing new ideas with them to help drive automation levels even higher.
The conversation also looks at the value of a CLOB in FX options, and how it – and other channels – are helping LPs manage their risk, as well as how the increasing amount of market data is also helping. Inevitably there is a chat about the impact of regulation, as well as on the need to work collaboratively across the board.
Interestingly, Povey also makes several comparisons with the spot FX market, noting that at a high level, the options market structure very much reflects its spot cousin, albeit with more variables and the associated greater complexity.