2 – 8 MAY 2013
OIC 2013
Simplifying options key to growing volumes, execs say
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ndustry experts called on exchanges to simplify the explanation of options as a way to expand adaption of the strategies during a panel at the Options Industry Conference in Las Vegas on 25 April. Simpler explanations would make it easier for smaller and less sophisticated investors to understand how to use them, panelists said. Education, lower fees and more liquidity in small caps were also cited as ways to drive growth. About 80% of investors currently don’t use options, said Dennis Davitt, managing principle at Harvest Volatility Advisers. Explaining options contracts in a more standardized format would lead to more use, he added. “If options strategies were explained simply as insurance plans, there would be wider adoption,” said Davitt. Exchanges also need to educate investors on how to use options, the panelists said, adding that not enough people understand how to use them. Among those panelists was Ken Kwalik, head of portfolio management and trading at Goldman Sachs Options
Advisory Services, who added exchanges need to make more of an effort to educate the investing public. Lowering fees would also help produce more interest in options trading, according to Kyle McClements, managing director at Blackrock. Fees are currently too high for smaller participants to take on hedging strategies, he added. Another hindrance to raising participation in options markets is a lack of liquidity in small- and mid-cap options and their underlying securities, said TR Coccaro, head trader at Bow Street. “My firm would use more listed options in small- to mid-caps if there was more liquidity,” Coccaro said. Separately, Tim Martin, head of electronic trading at Wolverine Execution Services, told WSL the most logical area for options innovation would be index funds and ETFs. Given the rising popularity of those products, Martin said, further innovation around them would lead to even more derivatives adoption. “That’s where the growth is,” said Martin.
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ments and necessary documentation in their rules, according to the filing. The documents also stated plans will be required to address data backup and recovery, mission critical systems, alternate communications with customers and physical locations for employees, and regulatory reporting, among other things. TECHNOLOGY
NorthPoint eyes integrated regulatory offering
NorthPoint, a New York-based software vendor for hedge funds and asset managers, is looking at the possibility of creating a broad regulatory offering to integrate its capabilities, according to Dileep Bhat, senior manager.
Bhat said that NorthPoint’s clients will be affected by a number of upcoming regulatory changes, and some of them have complementary requirements. For example, he said some of the reporting requirements of Form PF dovetail with requirements that are expected in the Alternative Investment Fund Managers Directive (AIFMD), which will come into law later this year. “NorthPoint is looking strategically at the regulatory landscape,” he said. “We want to have one system where we can do data mapping and aggregating.” For clients and potential clients, Bhat said the value proposition is expected to be huge because of the cost of connecting to different platforms for the various regulatory mandates. “It makes sense to have one system and one data repository because you can take one snapshot
and use that as a springboard to file these reports. The vendor’s Form PF offering features an open application programming interface for easy connectivity and Bhat said he envisions the integrated regulatory platform will have the same feature. NorthPoint most recently implemented its Form PF offering for Westport Capital Partners in just a few weeks, including installation, training and data integration. EXCHANGES & ATSs
Eurex prep participants for HFT changes
Eurex has distributed a notice to traders to prepare them for changes to its rules it will make in compliance