- Authorised by the FCA, OptAxe is a regulated trading venue that centralises FX options liquidity to increase trading opportunities
- Brings a new approach to axe-driven FX options trading that applies innovation to position/price distribution, discovery and execution
- Improves efficiency, enables risk recycling and advances market intelligence for both market makers and market takers
OptAxe, a fully centralised trading venue for liquidity discovery, dissemination and execution, today announced it has received FCA authorisation to operate a multilateral trading facility (MTF) for axe-driven FX options trading.
OptAxe was launched to address fundamental shortcomings in FX options trading. OTC FX markets today lack pricing transparency and bilateral, manual processes often lead to missed trading opportunities. The absence of centralised information prevents full visibility of axe inventory, hinders the ability to benchmark options executions, and risks information leakage.
At present, FX options trading is still largely a voice-driven market and OptAxe analysis suggests that only 25% of bank-to-client axes are distributed successfully via traditional channels. Coupled with prevailing practices of dispersed, multi-pod portfolio management models, diminishing numbers of interbank counterparties and the rise of multiple electronic communication networks (ECNs) and platforms, FX trading has become significantly fragmented. This fragmentation now presents substantial position distribution and coverage challenges, and places constraints on effective price discovery and execution options.
What’s more, Uncleared Margin Rules [UMR], and regulatory obligations mandating Initial Margining for all trades, have exponentially raised the cost of running FX options businesses, with bilateral trading margin requirements heavily impacting balance sheets.
OptAxe offers an innovative and automated approach to FX options trading that digitises and centralises the distribution of FX options axes. OptAxe evolves the current model by providing market participants with a solution that sources and consolidates the best interest available in the market, in real-time. OptAxe aggregates axe inventory into a single platform, effectively acting as a multi-issuer venue rather than a multi-dealer platform, with RFQ and counterparty disclosure at the point of execution.
Chris Jackson, CEO and Co-Founder of OptAxe, said: “We set out to bring much-needed innovation to the FX options market, improve liquidity discovery and unlock previously untapped trading opportunities. OptAxe is a fully centralised, regulated venue for liquidity discovery, dissemination and execution that empowers trading participants with actionable insights from centralised liquidity information. We automate manual, bilateral processes and consolidate available axe inventory into a single platform, effectively acting as a multi-issuer, not a multi-dealer platform, RFQ-based venue”.
Yorke O’Leary, COO and Co-Founder of OptAxe, added: “Securing FCA approval to operate a regulated MTF for FX options trading is a significant milestone for OptAxe and represents a step-change in how the industry operates. Globally, capital costs are rising and market participants urgently need to access, recycle and clear more FX options risk, whilst still facing inefficient distribution practices, complex price discovery methods and expensive execution outcomes. With OptAxe, all market participants can easily access a centralised source of actionable axe inventory with evidence-based pricing that meets the demands of the trading community today and tomorrow.”
“With the overall size of the FX options market estimated to be approx $300bn per day, any improvement in the current distribution, and hence execution success rate will be transformative”.
The FCA authorisation follows a rigorous, two-year process from participating in the FCA’s Pathway Programme to gaining a full trading venue licence, compliant with all the regulatory obligations of an MTF, from operational resilience to surveillance, trade reporting and regulatory data reporting.
OptAxe’s platform is ready to use. All necessary technical development, connectivity and integration work is complete. OptAxe provides a range of connectivity options via Web GUI and a variety of APIs, including FIX and REST, that open access to sources of available liquidity. Automated price and execution options offer improved trading fulfilment control, expanded counterparty opportunities and better execution analysis to all market participants.
