NEWS UPDATE
DERIVATIVES
Eurex options speed bump could disadvantage liquidity takers , HFT firm warns
As Eurex PLP launched its speed bump initiative on the DAX index options market , HFT firm Optiver warned the scheme could harm liquidity takers .
European proprietary firm Optiver has warned the launch of a speed bump to slow down aggressive high-speed trading on the Eurex DAX index options market could disadvantage liquidity takers .
Eurex launched the controversial programme , known as the Passive Liquidity Protection ( PLP ), on 24 August for all equity and DAX options , after already launching the speed bump for German and French equity options in June last year .
The initiative is aimed at levelling the playing field for discovering prices and boosting liquidity in the central limit order book for certain derivatives markets . As part of the PLP , a 1.5 millisecond time penalty on aggressive orders will be introduced on the DAX index options market , in a bid to protect liquidity providers .
However , the high-frequency trading firm , which is in favour of the PLP initiative from Eurex , warned in a discussion paper on the expansion of the speed bump that any move to stimulate liquidity provision should be balanced with liquidity-taking strategies .
“ Liquidity takers may no longer be willing to do certain trades if the proposed delay of 1.5 milliseconds on aggressing orders in DAX options leads to a loss of control over orders ,” Optiver said in the paper . “ If liquidity takers are unable to cancel orders in the deferral queue , it may result in dissatisfaction with the price at the time of trade .”
Optiver added that a delay on aggressive orders could also provide liquidity providers the option to choose when to cancel or amend orders , further disadvantaging liquidity takers . The paper summarised that the PLP programme may increase market complexity , while reducing transparency to the detriment of end investors .
“ Whether Eurex ’ s PLP is the right tool for protecting liquidity providers remains to be seen and is something that needs to be closely monitored by the exchange and market participants , but in our view , exchanges offering liquidity protection in the options space , is a step in the right direction for creating a healthier market structure ,” Optiver concluded .
BUY-SIDE
Schroders to allow permanent working from home post- COVID-19
New scheme from Schroders will keep work from home and flexible working conditions in place for its employees on a permanent basis .
Schroders has embraced flexible working conditions including working from home on a permanent basis .
The global asset manager confirmed in a statement that its introduction of flexible working before the lockdown meant its business was able to run smoothly throughout the pandemic , leading it to consider offering continued flexibility moving forward .
“ In the space of a few months , we have made 20 years ’ progress in attitudes towards flexible working , and we are going to continue with this momentum ,” said Emma Holden , global head of human resources at Schroders .
“ We believe re-thinking the rulebook on flexibility will ultimately prove a huge shot in the arm for Schroders ’ productivity in the long term , while also highlighting Schroders as a forward-thinking employer of choice .”
Industry and market participants globally have been forced into remote working conditions since the outbreak of COVID-19 and the implementation of nationwide lockdowns in March and April .
Schroders added that the move to continue providing flexible working would empower its employees to adopt practices that better meet client responsibilities , business requirements , and their individual working patterns .
Issue 65 // thetradenews . com // 9