This panel brought the international viewpoint on options markets in those locales.
The players:
- Chair: Wim Van Lerberghe, Director & Senior Relationship Manager, Pershing, a BNY Mellon Company
- Brian Gelfand, Vice President, Institutional Relations & Market Operations, TMX | Montreal Exchange
- Massimo Giorgini, Senior Business Development Manager, Equity & Derivatives Markets, London Stock Exchange
- Clecio Lima, Head of Electronic Trading, Associate Partner, BTG Pactual
- Wilson-Will Wilson, General Manager for Marketing & Sales, ASX Limited
Question: In the U.S. we?ve seen a boom of option focused retail brokers, and they were very successful. Why do you think we haven?t seen anything like that around the world? What needs to happen?
Giorgini: The Euro markets are shaped in a different way. In Italy, we’ve had competition in structured products, where there was a boom in structured products by Italian retail banks. Retail investors are now getting better educated by exchanges and brokers. We saw a shift from structured products into the listed market.
Lima: In Brazil, the same thing that happened in the U.S. will happen there, but we?re one step behind. Less than 0.5% of the population has accounts and are able to trade. This will grow with a focus on cash equities, and then the sophisticated traders will grow into options. It?s happening slower than we expected, but its a matter of time now.
Wilson: It?s similar in Australia. Retail markets are getting crowded. They?ve grown the business to a very large extent. ASX now offers listed CFDs, but Australia is small compared to other panel members, and the market was crowded out in the retail space by OTC/CFD providers, who got action by brokers who offered them and got larger commissions.
Gelfand: In the Canadian marketplace, we haven’t seen the development of options-specific online brokers, but the most active retail traders are the ones using the online trading platforms. We had 48% growth in 2011, and we?re up this year, too. We?re seeing new retail investors coming in. We?re investing very heavily in education, and have partnership with OIC to provide training. Now we?re working on investment advisors.
Regarding structured products, look at the role that options fulfill in market hedging, leverage. Is this taken up by other products? When I talk about equity options, it?s like I?m talking about antiques. What about OTC, CFD markets? How do exchanges deal with those products, and promote advantages options have?
Gelfand: In Canada it is different. CFDs haven?t challenged listed market, mostly because of regulation. Regarding promoting the advantages of listed products, a case can be made for tight spreads, clearing, etc., we have seen benefit of listed structured products. We?re seeing a lot of volume on options on ETFs, and have a strong argument in favor of listed options.