IMC London: Discover a new force in FX Options trading

FX-ing things up: How IMC London is changing the game for currency options trading

London: widely considered the world’s premier financial services hub. The UK capital also ranks as the leading global center for currency (FX) trading, being at the geographic intersection of key European, Asian, and North American time zones.

It’s why top trading talent continues to gravitate to London. Among them is Alex Ross, who chose to launch his career in the city after leaving Cambridge University with a PhD in macroeconomics and macroeconometrics.

“The pull to be in London was always there,” says Alex. “Look at FX trading volumes around the world on any given day: they’re always highest during the 8-10 hours when London is online.

“In the morning, you’re interacting with traders across APAC – Japan, Singapore, Hong Kong. These are massive markets, and London traders often get in early to provide liquidity where it’s needed. Then, after lunchtime, the Americas start to wake up.”

Trading firms in London driving disruption

For the newly opened London office, it’s a whole new world of opportunity. Historically, FX options trading has been dominated by large investment banks. This is largely because these products have traditionally been traded over-the-counter (OTC), giving banks – also acting as lenders – a natural advantage as providers of liquidity.

“The FX Options space lagged behind other major markets in moving away from OTC trading,” Alex explains. “Bilateral credit agreements meant that market participants typically traded only with the banks they already had relationships with.”

But recently, new trading firms in London have begun to disrupt the status quo. Changing regulations, the need for increased transparency, and technological advancements have pushed trading flows toward exchanges for more complex FX products, such as options.

Unlike banks, market makers and other algorithmic traders can provide access to liquidity not only on an OTC basis, but also on multiple electronic exchanges. IMC – which is active in both OTC and exchange-based trading – is strongly positioned to capitalize on this shift.

“It comes down to having better technology and pricing,” Alex says. “We can show better prices to counterparties than they’d be getting from their investment banking relationships.”

Timing is everything for IMC London

After successful spells at two leading investment banks, Alex recently accepted a role at the new London office, which is focused on FX Options trading. As well as being drawn by IMC’s edge in pricing and technology, he believes IMC is well-placed to capitalize on increasing levels of volatility in the FX space.

“Before the COVID-19 outbreak in 2020, the market hit all-time lows across a wide range of volatility indices, particularly in EUR-denominated markets,” he explains. “We wondered whether this was the end of FX Options trading as we knew it.

“But no: instead, volatility suddenly surged to all-time highs – and it has mostly stayed that way ever since. It’s an exciting time for IMC Trading UK to be entering this space!”

IMC technology: A key differentiator

Against a tumultuous geopolitical and economic backdrop, Alex expects heightened volatility to persist for the foreseeable future. Market makers have an opportunity to further disrupt the market and capture a significantly larger share.

Although new to the scene, the London office has a distinct edge: a unique blend of experience and innovation that can deliver a competitive advantage in today's busy FX Options marketplace.

“The office has the energy of a startup,” he says. “Things move fast, and we’re focused on seizing new opportunities. This means bringing our research capabilities and world-class IMC trading tech, including our growing focus on machine learning and AI, to the currency trading space.

“But we also benefit from the deep experience of seasoned IMC traders, combined with the FX-specific knowledge of professionals like me moving over from investment banking. Together, I think we can make a significant impact on the market in the coming years.”

This is just the beginning – stay tuned for more updates on the IMC London office, and how we’re making our mark on the FX Options space. And visit our careers site for potential opportunities in London and across Europe.