Icor sees a trade a day in first week

Icor Brokerage, an over-the-counter electronic forex options trading platform, has seen a trade a day since it was finally launched in Asia on January 16 – more than a year after its initial schedule.

The service, in which UK information provider Reuters bought a 50% stake in September last year, has seen average trades of about A$30 million, with its biggest trade to date valued at A$120 million, according to Icor chief executive Jeff Larsen.

There are 14 financial institutions live with the service. "These are serious dealers that are not fooling around with small amounts," Larsen told RiskNews. He added that dealers are currently checking that the system meets specifications ahead of any future step up in activity. "You have to remember that for some of these banks reconciliation can take five to seven days."

Banks making markets in smaller currencies see Icor as a strategic advantage, which probably explains why Icor rolled out services in the Australian dollar/US dollar currency pair. The Australian dollar/US dollar market is made by five major Australian institutions, but brokers at large European and US houses often receive trading commissions as their firms have large international accounts with investors.

The Icor platform already has banks in Hong Kong lined up to trade options in that financial centre, subject to regulatory approval from the Hong Kong Monetary Authority. Clearance in Hong Kong was given a fillip in December, when the UK’s Financial Services Authority gave Icor the go-ahead to trade in the UK – British and Hong Kong rules are fairly similar given that Hong Kong was a former British territory.

Icor, once again, has an ambitious roll-out plan. It expects to rapidly introduce another nine currency pairs in Asia in the coming months, roll-out forex options in Europe this April and offer the same service in North America in June. An interest rate derivatives service is expected for release in August, which an Icor official claimed was still viable, despite the problems large interdealers such as the UK’s Icap have had in this area.

Icor forex options trades are about 50% cheaper than a traditional voice broker, Larsen claimed.