Tradition-Icap, the world's leading voice broker and electronic platform (Volbroker) for the trading of FX currency options, today announced the imminent launch of its new VolCall service for the interdealer broker (IDB) market.
VolCall is a request for quote (RFQ) service that allows market participants to request and trade over-the-counter (OTC) specific interests electronically with intelligent protection for the first time.
VolCall has been developed to offer all the benefits of electronic trading whilst maintaining the comfort, flexibility and protection enjoyed in the traditional voice broking arena.
Following the completion of successful beta testing, Tradition-ICAP will launch VolCall to all Volbroker users.
VolCall will allow market participants not only to deal on prices with full liquidity shown, but also to counter with bids or offers based upon the clear information displayed on that specific interest.
Terry Benson, Group COO of Tradition-ICAP said: "Our belief is that VolCall meets, head on, the ever increasing pressure faced by our clients to reduce their variable costs by lowering the cost of execution for FX Options in the interbank arena. VolCall represents a market first that we believe will help to change the way OTC FX options are traded. The regulatory environment is increasingly calling for more transparency and efficiency. VolCall meets this challenge and brings the solution to market."
Information about VolCall
VolCall will launch in G10 options with a headline rate of $5 USD per million notional up to and including 2Y, and in Emerging Markets and longer dated options at a 50 percent discount to each institution's headline rate.
VolCall will offer the ability to request Puts, Calls, Spreads (including currency spreads), Straddles, Strangles, Risk Reversals and Butterflies.
The service is delivered and accessed via Tradition-ICAP's market-leading Volbroker graphical user interface (GUI). However it will also be accessible through the FIX API that many institutions already use for market data provision.
VolCall comprises a rule set and series of 'time slices' that protect market participants on both sides:
1. Price-making: 5-minute price-making phase where market makers enter two way prices; these will be collated and ranked by level rather than time entered.
2. Price adjustment: Provided the price made meets the qualifying width, the market maker will enter a 2-minute period of adjustment. In this phase the market maker will see the positioning of their price in relation to the best two way price and may adjust their price accordingly. This replicates the protection afforded by a traditional voice broker, and allows the market maker to only show a price that they are comfortable with.
3. Deal phase: In the final 30-second deal phase, the interest will be shown the best aggregated price, with all liquidity available at that rate (even if it exceeds their requested amount) to make an informed decision to trade, counter or indeed pass.
The service operates on a 24-hour rolling system, opening in Asia and following the global markets around the clock. VolCall is also the first OTC FX options RFQ service to support spreads.