That role is supported by the way we trade. As a global market maker, Optiver trades listed and OTC FX options in a principal capacity, using our own capital. Both listed and OTC flows sit in one book, under one risk framework, run by one unified, global team. This allows us to deliver consistent and reliable liquidity, whether we are helping a bank manage risk in the interdealer market or trading directly with a counterparty.
Our FX options operation spans over a decade and we have evolved to become one of the largest participants in FX options by average daily volume. The business has grown substantially over the past four years, and we are now connected to more than 70 institutions globally. We provide liquidity 23 hours a day, five days a week, so a counterparty can expect reliable liquidity whether it is during a Yen intervention action or a geopolitical event.
For our bank counterparties, that scale makes us a reliable place to manage risk. Our edge starts with pricing, particularly in options, where it translates into clean execution and carries through to how we manage risk. The result is liquidity provision designed to minimise information leakage and preserve counterparty anonymity. We will also take down large risk in a single trade, OTC or listed.
Two assumptions about how we trade are worth correcting. The first is that we are only useful in short-dated tenors. Short-dated risk, options with less than a month to expiry, are where we built our name, across G10, a set of emerging-market pairs and a growing list of crosses, but we price and warehouse risk well beyond it.
The second is that we hedge everything we do OTC through listed. With the market roughly 96% OTC and 4% listed, the listed market is not yet deep enough to absorb our hedging activity. We can warehouse risk and, where we do hedge, we do it responsibly through cross-market hedging strategies combining our expertise and data across OTC and listed markets, giving us the confidence to take down size.
We intend to expand on several fronts: growing our direct counterparty trading and deepening the bank relationships, while continuing to service the interdealer market. That growth also means more products, including a rollout of non-deliverable option pairs, and an aim to trade every cross whose component pairs we already price. We are also exploring longer tenors, with longer-dated vanilla options beyond one year and exotics likely beginning with digital assets. And it means becoming a go-to liquidity provider in FX options.
Whether you are an active FX options user or simply interested in learning more, please get in touch with Navid Faramarzian from the Optiver FX Options team.
