Icap should get the options ball rolling

While there has been plenty of talk – mostly by banks – about putting options online, volumes remain relatively insignificant and no-one seems to have delivered a popular method of e-trading options.

So can Icap succeed where others have failed? This is unclear, but the omens are good. Spencer's track record in establishing new ways of trading is exemplary. He set up Intercapital in 1986 with an investment of just £40,000, with the idea of building up a specialist broker that covered the nascent swaps business.

The fact that he has turned this four-man shop into a £3 billion FTSE 100 listed company shows he knows a thing or two about delivering ways of trading that people want. The market is ripe for significant growth in online options trading. Banks have gone through the process of introducing streaming prices online, and now the overwhelming majority of FX business is delivered electronically.

With volatility at 15-year lows, the technology now available should be easily able to cope with all but the most complex of structures. The data that enables the spot market to trade so efficiently on EBS, Reuters and single- and multi-bank portals should provide banks and brokers with sufficient information to be able to transact options.

Of course, many of the factors that have limited electronic transaction of options remain. Some customers will always need to be talked through complex financial transactions, and many will feel it is not appropriate to transact them electronically.

However, on balance it looks as though Spencer has again made the right move at the right time, and this is likely to pay dividends for him and his company.

It should also help the market as a whole. Moving the spot market online helped fuel the hefty increase in volumes that we have seen over recent years. With Spencer's intervention, it looks as though the options market is likely to follow a similar steep upward curve.