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August 6, 2009

Tethys Helps Options Traders Navigate Rebates, Fees

By James Ramage

There's help available for volatility traders to find rebates and reduce fees at options exchanges. Execution management system, algo and analytics developer Tethys Technology developed an analytics-based feature on its Execta EMS platform that locates the highest transaction rebates, or lowest transaction fees, for orders to options exchanges with maker-taker pricing models. In addition, it seeks out destinations with the lowest cancel-and-replace fees for exchanges that charge for customer priority, said Nitin Gambhir, Tethys' chief executive.

This is important because traders placing orders based on implied-vol levels must constantly change their quotes. Thus, it's crucial for them to manage the fee-incurring cancel rates at several exchanges.

At exchanges with maker-taker pricing models, such as NYSE Arca and Nasdaq Options Market, it's important for traders to steer their orders toward those market centers with higher rebates for providing liquidity and lower fees for taking liquidity. The Execta functionality helps do this, Gambhir said.

Tethys designed the Execta feature to be aware of the pricing rules and fees at each options exchange. It takes the information of each destination into account when routing orders.

 

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