The Australian Financial Markets Association plans to start publishing a fixing rate for foreign exchange options. "We find [from other markets including interest rates and equities] that having this element of transparency will add extra depth to the market," said Ken Farrow, chief executive of the Australian Financial Markets Association in Sydney.
AFMA will poll 10-14 derivatives houses for daily fx option prices and then average them to provide an independent pricing guideline. "Now you don't have to rely only on your neighborhood banker," Farrow quipped. Settlement operations will also have independent prices.
The fixing rate is part of a push for great transparency following the National Australia Bank fx scandal last year and the subsequent market-wide audits. "There's been a real shift towards emphasizing risk management and compliance," Farrow added.
