Boston, MA, USA
September 23, 2008

Electronic Equity Options Trading: A Technology
Transformation for a New Market Structure

Table of Contents

Return to report Abstract

Executive Summary 3
Introduction 5
Listed Options Market Landscape 7
Options Exchange Operational and Market Models 14
OTC Options Market Landscape 20
Options Market Drivers 23
  Rise of Multiple-Listed Products 23
  Electronic Evolution of Equity Options Trading 24
  Expansion of Asset Class / Adoption of Options Trading Strategies 25
  Contract Volume 29
  Message Volume 30
  Direct Market Access (DMA) in Derivatives 32
Options Market Evolution 34
  Consolidation of Exchanges 34
  Trends in Market Share 35
  New Infrastructure, Models, and Players 38
  Non-Displayed or Dark Orders--The Hidden Pennies 38
  Options Dark Pools 39
  Proprietary Products 41
  New Pricing Models and Structure 43
Options Market Outlook 47
  Fragmentation 47
  Volumes and Value-Traded 48
Changing Systems Requirements 49
  Market Evolution Forces Change 49
  Exchanges 50
  Brokerage Firms and Market Makers 51
  Buy Side 52
  Technology System Vendors 52
Changing Systems Requirements 53
  Market Evolution Forces Change 53
  Exchanges 53
Conclusion 58
 

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally experienced analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

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