A New Report from Aite Group
– If mishandled, certain potential regulatory changes could fundamentally change the equity options industry
A new report from Aite Group, LLC examines regulations currently being developed or reworked by the Securities and Exchange Commission (SEC) that will directly affect the equity options industry. The report considers the potential impact of the SEC’s handling of short-selling, the penny pilot program, market-making, high frequency trading, and more. It also compares the pro-rata trading model with the maker-taker model.
Like much of the financial services industry, the equity options industry is awaiting the rules for their marketplace to be finalized by the SEC. Rules regarding short sales, circuit breakers and the extension and or expansion of the penny pilot program are the major issues pending resolution in 2009, along with a possible repeal of the 60/40 tax rule. Among these possible regulatory changes are items that – if mishandled by regulators – could fundamentally change the equity options industry.
"The future of the equity options industry is now in the hands of the regulators," says Paul Zubulake, senior analyst with Aite Group and author of this report. "Market participants anxiously await the outcome of a multitude of regulatory changes, aware that missteps could destroy the industry as it is today. Regulators would be well-advised to consider the industry’s pleas and best interests during this crucial period."
This 27-page Impact Note contains 12 figures and eight tables. Clients of Aite Group’s Institutional Securities & Investments service can download the report at the Aite Group web site.