Join the 80,000 other DTN customers who enjoy the fastest, most reliable data available. There is no better value than DTN!

(Move your cursor to this area to pause scrolling)




"I would just like to say that IQFeed version 4 is running very well and I am very happy with its performance. I would also like to extend a big thanks for the fast and efficient help that I always receive. My questions and concerns are always addressed promptly. Way to go!" - Comment from Josh in CO.
"You have an excellent product !!!!!!" - Comment from Arely
"Thanks for following up with me. You guys do a great job in tech support." - Comment from Phelps
"If you want customer service that answers the phone, your best bet is IQFeed. I cannot stop praising them or their technical support. They are always there for you, and they are quick. I have used ****** too but the best value is IQFeed." - Comment from Public Forum
"Just a thank you for the very helpful and prompt assistance and services. You provided me with noticeably superior service in my setup compared to a couple of other options I had looked at." - Comment from John
"I "bracket trade" all major news releases and I have not found one lag or glitch with DTN.IQ feed. I am very comfortable with their feed under all typical news conditions (Fed releases, employment numbers, etc)." - Comment from Public Forum
"I have been using IQFeed now for a few years in MultiCharts and I have zero complaints. Very, very rare to have any data hiccups or anything at all go wrong." - Comment from Public Forum
"Thanks for all of your help. Great customer service deserves to be recognized which one the reasons I've been a customer of DTN for over 10 years!" - Comment from Stuart
"I cannot believe what a difference it makes trading with ProphetX!" - Comment from Bruce in Los Angeles
"The people at Nirvana have very nice things to say about your company and I can see why! Price and service is a potent combination." - Comment from Ed
Home  Search  Register  Login  Recent Posts

Information on DTN's Industries:
DTN Oil & Gas | DTN Trading | DTN Agriculture | DTN Weather
Follow DTNMarkets on Twitter
DTN.IQ/IQFeed on Twitter
DTN News and Analysis on Twitter
»Forums Index »General Discussion »Trading Tips, Tricks and Ideas »Complexity of U.S. Options Markets
Author Topic: Complexity of U.S. Options Markets (1 messages, Page 1 of 1)

manoa
-Interested User-
Posts: 8
Joined: Mar 14, 2015


Posted: Jul 2, 2015 12:12 PM          Msg. 1 of 1
Getting ever more complex and difficult !

Complexity of U.S. Options Markets Requires Advanced Order Routing, TABB Reports

Traders Magazine Online News, June 29, 2015

John D'Antona Jr.

As the options market continues to grow in terms of trading volume and complexity, the ability to execute orders will get increasingly difficult and require the buyside to conduct more research and more advanced order routing strategies.

These are the findings of Tabb Group research, which in its latest report "Solving the Labyrinth: Smarter Access to U.S. Options Market Liquidity," also noted that advanced order routing technology is ciitical to supporting an expanding set of trading instruments, trading velocities and diverse exchange trading models.

Tabb wrote that with U.S. options market structure becoming more complex, options traders are facing four major challenges in their search for liquidity: the expanding number of exchanges, a diverse set of market models, an expanding array of options and accelerating trading velocity.

"Aadvanced order routing is seen as a key competitive differentiator for brokers with the ability to route to multiple exchanges with minimal latency, a necessity now for catering to institutional investors across the options markets," the market consultancy wrote.

Andy Nybo, TABB principal and head of derivatives research, examined in the report how the current 12 options exchanges, with two more expected by year's end, have created a complex market structure for traders looking to access liquidity and improve execution performance.

Managing the exponential increase in options data creates difficulty for analytical and execution processes, said Nybo. As the number of options series now exceeds 800,000 instruments.

"Peak message rates are approaching 10 million messages per second, putting massive strains on technology infrastructure at sell- and buy-side firms alike," he wrote. "The ability to analyze real-time data is important, but what these firms need is the ability to analyze historical tick data to refine execution strategies that contribute to improved returns."

The new report examines the effect of competition for order flow from the 12 exchanges, creating a hyper-competitive environment where exchanges tweak trading rules and protocols constantly to influence routing of order flow from market participants, driving market makers to invest significant resources to fine-tune their models and strategies.

"Market makers have by necessity become increasingly sophisticated in managing exposures," Nybo said. "They are using exchange-provided risk tools to manage quotes, as well as low-latency infrastructures, co-location and advanced analytics to better manage risk."

Furthermore, the market's complexity has also forced trading firms to dig deeply into the details of their trading activity to gain a better understanding of where orders are being routed and executed. As a result, Nybo added, trading firms are investing considerable resources in analytic capabilities to evaluate the impact of fee and liquidity parameters on performance. "Traders want the ability to understand routing logic within algorithms and at the same time understand the impact of fees associated with their executions."
 

 

Time: Sun February 16, 2020 4:38 PM CFBB v1.2.0 16 ms.
© AderSoftware 2002-2003