Most of the FX options trading is supposedly done OTC. Is that where you get the tightest spreads as well? It obviously would have been an advantage to trade on an exchange, but if the prices are worse...
Its true that most is OTC - but all the big banks also have started to use CME to hedge their positions plus EBS, RD3K. I would stick to CME futures and Options for retail - they also have the eMini contract if you want to reduce postion and or risk.