Following on from the recent criticism by the US Department of Justice on the clearing structure in derivatives, attention has turned towards the successful clearing structure in US equity options. Colin Packham speaks to Michael Cahill, chairman and chief executive at Options Clearing Corporation
Options Clearing Corporation (OCC) has recorded huge growth
in options clearing as the US equity options field has expanded
to mammoth proportions. But, what are the broader economic
conditions that will encourage their growth?
MC: Options growth has been driven by
the acceptance of the product, this has continued to grow
quicker and quicker. Options are a tool for traders right down
to the individual investor, with the chance to enhance yield or
hedging risk. I still believe that there is a tremendous amount
of untapped investors that dont currently use options out
there. I think the equity options market goes hand in
hand with the general volatility and general interest in US
stocks, and when I say US stocks I mean those US owned
companies or those listed in the US.
Many options exchanges are looking to enhance links between
the US and Europe. One of these is the recent announcement of a
clearing link between International Securities Exchange and
Eurex, together with OCC. Do you think that this link will be
MC: I truly believe that it will be so.
There has been so much discussion over the years, with so many
of regulatory issues holding it back. We did a study that
estimated that 15-20% of US equity options business is
generated from Europe today. If people are already willing to
go through all these steps and hurdles to access the products,
then this link should tremendously enhance volumes. It is a
much more efficient process.
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