One of the most important trends in the U.S. options market to date is the exit of market-making firms. Many market-makers have packed up millions of dollars of technology and turned into professional traders-a move that diminishes market quality and transparency. But a meaningful, sustained shift to a new higher-volatility regime, driven by the macroeconomic environment shifts, would change the rules of the game. Aite Groups latest report,U.S. Listed Equity Options Markets: Where Have All the Cowboys Gone?, examines key trends impacting the U.S. listed equity options markets.
In 2018 we saw the return of volatility in the options market following a stagnant and stubbornly calm period, and 2019 has started off with a bang. On February 5 the volatility event sent the U.S. options volume soaring to record levels-unearthing a level of excitement among options participants that we havent seen in some time, explains Audrey Blater, Ph.D., senior analyst at Aite Group.
While the excitement from the February 5 event was intense, there are changes to market structure that lurk beneath the surface, many of which will change theshape ofthe market for years to come, states Spencer Mindlin, analyst at Aite Group.
Based on Aite Group conversations between February and June 2018 with options exchanges, derivatives clearing organizations, market-makers, institutional brokers, retail aggregators, proprietary trading firms, and technology vendors, this report analyzes how the options trading environment has evolved in recent years as a result of the rise of new trading venues, the changing regulatory landscape, and technology developments.
To request a press copy of this report or to speak withAudrey Blater, Ph.D.,Gabriel Wang, orSpencer Mindlinabout this topic, please contact us atpr@aitegroup.com.
