Electronic trading will continue to grow whatever regulatory changes are imposed.
Equity options trading has
increased dramatically in recent months amid extreme volatility
in underlying markets. Meanwhile – and perhaps more
interestingly – an increasing volume of options are
being traded electronically. Recent market turmoil has made
buy-side dealing desks increasingly aware of the specific
advantages of electronic trading, both in operational
efficiency and risk management.
Electronic marketplaces can be
fully integrated into existing workflows. Automation enables a
number of efficiency gains, not least by connecting buy-side
order management systems to the sell-side trading desk. Because
there is then no "re-keying" of orders by dealer sales teams,
the result is a faster interaction between counterparties. In
periods of high volatility, the speed of execution over an
electronic platform means the likelihood of completing a trade
Speed and reliability must not
come at the cost of flexibility. A single stock may have as
many as 10 different maturities and up to 30 strike prices per
maturity. This is replicated across hundreds of stocks. Trading
on sophisticated electronic platforms allows an investor to
tailor a ticket to its precise requirements, and send it to a
select group of dealers.
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