Over-the-counter options platforms present a promising opportunity for vendors, say experts, particularly for execution and processing. A scant few providers offer solutions that are aimed directly at the sector, which is still dominated by voice-brokered trading.
The customized nature of OTC options--many are bilateral contracts with specific terms set privately by counterparties--has made it difficult to apply universal standards and trading protocols. Most activity is conducted over the phone by customers dealing with one or more dealers or funds. The minute amount of transactional data that does get transmitted electronically typically involves indications of interest or confirmations sent via e-mail or instant messages (IMs). The few attempts to aggregate dealer liquidity through electronic systems have met with limited success.
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