With a strong centralized clearing in place and continued diversification of client profiles, the future of the U.S. exchange-traded equity options market looks promising for years to come.
A new report from Aite Group, LLC examines major issues and trends in the U.S. equity options industry. It presents perspectives captured through interviews with 20 firms, including hedge funds, traditional asset managers and proprietary trading firms. The report also highlights key players in the marketplace, including exchanges and broker/dealers.
Despite struggling markets, equity options have experienced historic volumes in 2008, with an average daily trade volume of nearly 14 million contracts as of the end of September 2008. The options market even reached 30 million contracts one day in September 2008; an astounding number when one considers that the market averaged a mere 1.6 million contracts per day only a decade ago. Driven by adoption of electronic trading, institutionalization of clients, the effects of penny pilot roll-out, and the growing participation of high-frequency trading firms, the U.S. equity options market has outstripped its past image as a speculative retail market and gained acceptance among mainstream institutional players.
"With a strong centralized clearing structure in place and continued diversification of client profiles, the future of the U.S. exchange-traded equity options market looks promising for years to come," says Sang Lee, managing partner with Aite Group and author of this report. "Given ongoing concerns over counterparty risk and the ability of the exchange-trade market to provide much-needed liquidity and transparency, Aite Group expects to see continued robust growth of the exchange-traded market."
This 53-page Impact Report contains 25 figures and six tables. Clients of Aite Group’s Institutional Securities & Investments service can download the report by clicking on the icon to the right.
Related Aite Group Research:
Evaluating Futures Trading Platforms: Competing in a Changing Landscape
U.S. Electronic Fixed Income Trading Platforms: The World Ain’t Standing Still
Exchange-Traded Commodities: A Primer
OTC Derivatives Processing: Life on the Edge
