Merrill Lynch takes Fenics

Merrill Lynch today said it will deploy the Fenics FX options pricing software from New York-based broker and vendor GFI Group in 100 global positions. Fenics replaces Merrill’s existing in-house pricing platform for FX options.

"Fenics FX is the worldwide standard software used to price FX options," said Jay Morreale, global head of FX technology at Merrill in London. "Developing this technology in-house is not cost-effective," he added, underlining a growing trend for banks to outsource FX technology, in response to cost pressures.

The Fenics purchase - one of the biggest deployments of the software worldwide - is the latest step in Merrill’s continued investment in forex. It has hired more than 70 professionals for the product group this year and repeatedly affirmed its expansionist aims in the field.

John Ashworth, chief commercial officer at GFI, and former chief executive of Fenics, which GFI bought in 2000, said the Merrill deal was particularly exciting for the firm, as it endorses changes made to the product over the past two years. "We opened up the interface, so customers could add their own models, their own volatility interpolations and their own rates," Ashworth told RiskNews' sister publication FX Week.

Ashworth said GFI’s acquisition of Fenics strengthened the product by enabling it to benchmark vanilla and exotic prices against those traded through GFI brokerage desks.

Fenics is used in more than 850 dealing rooms globally.