THETRADETECH DAILY
SPONSORED ARTICLE
Jay Hockey Eric Heleine
Heleine : Our main needs are to find liquidity and reduce our footprint on the lit markets . Any initiative that can add capacity in this respect will be very well-supported . On the high-touch side specifically , we need partners that can execute our full size , or as close to it as possible , to ensure we don ’ t transfer alpha within the execution . The heightened volatility in the last year or so has led to a decrease in the amount of bank risk capital that ’ s available to us at the touch . Block orders come at a higher premium but from what we see , risk liquidity is far less than what we need , especially in terms of universe .
What value does Optiver provide as an execution partner and how has that relationship developed ? Hockey : From leveraging relationships we have on the ETF side , we have engaged with new work flow ideas such as RFQs for cash equities and straight-forward risk pricing on a fill / kill basis . This type of risk pricing and direct capital offering is nothing new , but where Optiver has been able to differentiate is its ability to offer risk with spread capture ( mids ) across an extensive list of stocks and in significant USD sizes . Our attitude is always to seek best outcome . By having the necessary access to all liquidity forms , we are able to better meet our best execution requirements .
Heleine : We see Optiver providing a type of liquidity that isn ’ t already present in the market , and we have been very positively surprised at the mid-cap flows , as this is where we often experience liquidity issues . For these reasons , the relationship is valuable for us . We don ’ t see much post-trade impact or order-book toxicity , and we also have to be sure we aren ’ t trading in a way that games liquidity . In terms of numbers of blocks traded , Optiver is roughly in competition with the buy-side-to-buy-side large-in-scale pools , like Cboe BIDS Europe , Liquidnet and POSIT . We also see a very disciplined settlement process when trading with Optiver , which is important for us .
Fernández : Optiver is a great partner for sourcing liquidity and has made a great effort to adapt quickly , while also being clear and transparent . They are a critical partner for us along with the dark pools and have the energy to keep innovating .
Optiver has built a central risk book that collates deltas from our internal market-making desks , which we leverage to offer two-way pricing in over 1,600 equities to buy-side firms . Our ability to hedge and offset risk across options , ETF and futures positions means we can passively unwind positions and limit market impact . We work with the major order and execution management system providers to supply transparency on pricing and establish a fully automated straight-through process . To learn more about trading with Optiver , visit our website at optiver . com / institutional-trading or contact Delta1Europe @ optiver . com .
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