Equity Options Market in Europe: Exchanges and Electronic Trading Gain Importance
Europe is the most developed market for OTC equity options. However, the rising maturity of the European markets and the need to reduce counterparty risk have meant that some OTC business has moved to the exchanges.
In a new report, Equity Options Market in Europe: Exchanges and Electronic Trading Gain Importance, Celent studies the leading global equity options market. In a rapidly changing environment, market participants have to adapt to the higher complexity and use of more advanced technology. There has been a move towards more electronic trading, and we can trace a shift in business moving from the OTC segment to exchanges as the market participants seek to trade standardized products on exchanges.
During the period between December 2008 and June 2010, there were declines in both notional amount outstanding for OTC equity options and exchange-traded equity index options. But the decline was more pronounced for OTC options, from US$3,154 billion to US$2,328 billion, around 26%. In the same period, exchange-traded equity options declined by about 10%, from US$3,034 billion to US$2,236 billion. This shows that there was greater resilience in the exchange-traded market.
“There has been a lot of pressure on European equity options markets of late, due to both the economic environment and the regulatory changes,” says Anshuman Jaswal, Celent Senior Analyst and author of the report. “Rapid evolution means that market participants have to adapt quickly and prepare themselves for higher levels of electronic trading and CCP clearing.”
This report provides an overview of the European market and discuss the relevance of recent developments. This is followed by sections on the OTC and exchange-traded markets. The move towards greater electronic trading is discussed, followed by a section on the challenges being faced by the various market participants.
The 48-page report contains 22 figures and four tables.
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 based 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 a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].
Tel: +1 212 345 1366
Tel: +44 (0)782 448 3336
Tel.: +81 3 3500 3023
Table of Contents
Impact of Recent Developments
OTC Equity Options Clearing
OTC Post-Trade Processing
Pricing and Market Models
Performance of Exchange-Traded Market
Electronic Trading in Options
Appendix A: Options Trading Platforms and Technology
Appendix B: OTC Equity Options Clearing
Leveraging Celent’s Expertise
Support for Financial Institutions
Support for Vendors
Related Celent Research