Market Insights

In a series of articles, we’re exploring the development of single-stock options markets across the APAC region. Our aim is to highlight the many uses of the products as well as factors that may be acting as barriers to growth.

For the past several years, US stock investors have hedged their portfolios largely by looking at their calendars. Fed meetings, CPI prints, elections – whenever an event appeared on the horizon, investors would look to short-dated options to protect against the possibility of volatility.

While Brazil’s securities borrowing and lending framework has its strengths, it still trails global peers. In this paper, we propose steps to modernize the country’s SBL system, without compromising safety.

UK and EU regulators are set to reverse historic ‘unbundling’ rules. But while the rules were imperfect, we believe real strides were made in getting investors to pay attention to trading costs. Now more than ever, traders need to carefully choose the right execution partners and strategy.

More abundant and deeper liquidity in cleared swaps markets is achievable with incremental changes and targeted adjustments to rules governing swaps trading. This paper explores practical policy recommendations to achieve this goal.

Ahead of upcoming MiFID rules that ban PFOF, some firms are introducing new structures that directly link single market-maker venues with affiliated brokers. These structures offer even less competition for retail order flow than their predecessors.

The United States Department of Agriculture (USDA), trading exchanges and other agricultural-related publications have published several articles recently regarding the Mississippi River’s water levels.[1] In this paper, we join them in highlighting the tremendous importance of the Mississippi to the US economy, as well as exploring the relationship between its water levels and agricultural derivatives markets.

Several proposals to allow DCMs and DCOs to enter into combinations with FCMs, creating one “vertically integrated” entity, have recently reached the Commodity Futures Trading Commission. As the industry considers fundamental changes to the roles of these key pillars of derivatives market structure, we urge policymakers and market participants to carefully weigh the risks of a combined DCM/DCO/FCM.

Settlement price methodologies are a crucial component in options markets because they affect the final valuation and proceeds of options contracts. The methodology currently used for weekly index products in Hong Kong limits their effectiveness as a hedge on expiry day. In this paper, we propose enhancements to increase their appeal to investors.

Corporate actions can have major impacts on options prices, yet there’s considerable uncertainty about these events among traders. Whether it’s a dividend, a stock split or a merger, the communication of corporate actions should be clear, harmonised and proportional. In a series of papers, we explore these recommendations.

Corporate actions can have major impacts on options prices, yet there’s still considerable uncertainty about how these events will affect options contracts. Using a recent Petrobras dividend announcement as an example, we argue for a way US markets can better manage corporate actions.

With the launch of weekly options on single stocks and ETFs, one of the fastest growing products in global derivatives markets is now available to investors in Brazil.

Pilot programs allow regulators to test – in a real-world, yet controlled environment – whether a particular market structure reform is likely to have its intended effect. In this paper, we urge regulators to make greater use of pilot programs and propose a framework for designing these programs.

In late 2023, Optiver partnered with The Trade to conduct a buy-side survey, with the aim of identifying emerging trends in cash equity trading and market structure.

Exchanges use the Options Regulatory Fee (ORF) to cover a material portion, but not all, of their supervision and regulation of the US options market. ORF, however, is inconsistently allocated and collected across exchange groups, and there’s little transparency into how the annual regulatory budgets used to set these fees are determined. In this paper we advocate for the adoption of a standardized method for calculating and collecting ORF that would apply across all exchanges.

Corporate actions can have a significant impact on single stock options, and investors value clear guidance on how contracts will be treated. We offer ways exchanges can increase consistency and transparency in this area. This is part of our series of articles exploring the treatment of corporation actions around the world, and also part of our series on SSO trading across the APAC region.

Fire drills are a vital way of preparing the industry to effectively respond to a major default. Standardising the process by which members bid on the portfolios of a hypothetical defaulting firm would ensure a stronger, faster and more consistent response.

The Consolidated Audit Trail provides regulators with an overview of the U.S. equity and options markets. A critical tool for keeping markets safe and transparent, agreement on its most foundational measures nevertheless remains elusive. We set out our recommendations for improving the CAT.