– Investor demand continues to surge as they seek tools to manage exposure
– Cboe Global Markets VIX complex faces competition from new volatility products
– MIAX SPIKES options provides new alternative but need futures to thrive
– Biggest trading participants have global operations with access to order flow
LONDON and NEW YORK, March 5, 2020 /PRNewswire/ — The volatility trading landscape is set to see rapid growth in 2020 as rising customer demand is attracting the attention of global banks, market makers and derivatives exchanges according to a Burton-Taylor International Consulting (part of TP ICAP’s Data & Analytics division) report published today. The new report is based on more than 100 interviews with global banks, market makers, exchanges, and institutional investors active in global volatility markets.
“Volatility products have become an essential tool for managing risk exposure, with demand only expected to increase in 2020 as the combination of the COVID-19 virus, U.S. elections and Brexit roil the global financial markets,” said Andy Nybo, managing director at Burton-Taylor. “Global banks and broker dealers with broad distribution capabilities across OTC and listed derivatives markets are best positioned to leverage the rising demand, especially firms with access to client order flow.”
Derivatives exchanges are exploring ways to meet this expanding demand, launching new products designed to compete with Cboe’s dominance in listed volatility trading that can offer comparable capabilities, lower trading costs and mitigate industry concerns of relying on a single pool of liquidity. Miami International Holdings successfully launched MIAX SPIKES volatility options on its MIAX Options exchange in February 2019, while both the Nasdaq and BOX Options exchanges are developing their own volatility products.
Other findings from the report include:
- Goldman Sachs, Barclays and Morgan Stanley were identified as the largest bank participants in global volatility trading markets, followed by Credit Suisse and JPMorgan.
- Leading market makers in Cboe VIX options included Citadel, Susquehanna, and IMC, followed by Group One and Optiver.
- MIAX SPIKES options have been well received by market participants who believe lower trading fees and a successful SPIKES future will result in rising liquidity over time.
- The successful launch of MIAX SPIKES options and futures will expand the existing volatility trading ecosystem, creating additional volume without having an adverse impact on the Cboe VIX liquidity pool.
The Burton-Taylor report, The Landscape for Listed Volatility Trading: Industry Perspectives analyzes the rapidly evolving listed volatility trading landscape focusing on the leading market participants, investor demand, the challenges and opportunities for the Cboe VIX complex, and the prospects for MIAX SPIKES options and futures.
The report is available for immediate download by Burton-Taylor research members through our research portal or the report can be purchased by visiting www.burton-taylor.com/volatility-report-2020/ or by contacting firstname.lastname@example.org, +1 646 225-6696.
About Burton-Taylor International Consulting (www.burton-taylor.com)
Burton-Taylor International Consulting, part of TP ICAP group, is the recognized leader in information industry market research, strategy and business consulting. Burton-Taylor Exchange, Credit, Risk, Compliance, Media Intelligence, PR and Market Data share figures are seen as industry benchmark standard globally. For further information see www.burton-taylor.com.
About TP ICAP (www.tpicap.com)
TP ICAP brings together buyers and sellers in global financial, energy and commodities markets. It is the world’s largest wholesale market intermediary, with a portfolio of businesses that provide broking services, data & analytics and market intelligence, trusted by clients around the world. We operate from offices in 31 countries, supporting award-winning brokers with market-leading technology. For further information see www.tpicap.com.