World First closes FX options business
Currency broker World First is closing its corporate options business, it said on Wednesday, in a move that will affect up to 50 staff at the UK-based company.
World First cited changes in its business, which put more emphasis on areas such as providing payment solutions to online e-commerce sellers, where it has strong growth.
“The business will not on-board any new clients or agree any new options contracts with existing clients with immediate effect,” it said in a statement emailed to Reuters.
“We will honour all outstanding contracts in full whilst continuing to provide forward and spot solutions to our clients.”
The firm also said that it would seek to re-employ all 50 staff affected by the changes and did not foresee any redundancies.
Currency options contracts, which give companies the right to buy currencies on specific future dates at specific prices, are higher-risk products that have traditionally been used chiefly by large listed companies working directly with their banks.
However, surveys over the past two years have shown smaller exporters and importers making more use of such products as they seek to lower the costs of their currency transactions with the help of brokers such as World First.
Banking researchers East and Partners say almost all of the medium-sized companies targetted by firms like Western Union (WU.N) or Monex, as well as 20 percent of small businesses now use options as part of their hedging strategies.
Events such as last year's Brexit vote, which caused a sharp one-off fall in the value of sterling, tend to lead to large gains or losses on options structures.