NYSE Euronext Options Exchanges Review

It is with great excitement that NYSE Euronext’s options exchanges begin 2013, eager to build on the momentum and successes of 2012.

For the options industry, 2012 was a year with numerous challenges. A difficult macroeconomic environment, combined with uncertainty over domestic policy, resulted in a decrease in overall options volume of 12.8% year over year. However, despite these challenges, NYSE Euronext was pleased to achieve a record-breaking year:  throughout 2012, NYSE Euronext maintained its position as either the #1 or #2 exchange group by equity option market share with an ADV of 3.9 million contracts, culminating in NYSE Amex Options and NYSE Arca Options reaching their highest combined market share to date—28.5% in October. [1]

NYSE Euronext is tremendously grateful to its customers and member firms, without whom this success is not possible. Moreover, we are looking forward to continuously developing these relationships over the coming year to ensure the best trading experience for all of our clients.

Here are some of our proudest moments from 2012:

A Leader in the Industry.  In 2012, the NYSE Euronext options exchanges spearheaded two major initiatives:   Eliminating position limits in SPY and eliminating fee caps on dividend trades.

  • In August, NYSE Amex Options received approval from the US Securities and Exchange Commission to launch a pilot program to eliminate position limits for options on the S&P 500 ETF. NYSE Amex Options was the first exchange to offer this low-cost alternative to expensive proprietary index products for institutional investors, further enabling traders to optimize their S&P 500 hedging strategies using SPY options. In addition, throughout 2012 NYSE Amex Options continued to be the only options exchange that allowed Customers to trade SPY free of charge, further boosting trading in the industry’s most liquid ETF.
  • In October 2012, NYSE Euronext led the charge to eliminate fee caps on dividend trades. The Exchange believes this initiative will benefit the industry as a whole by removing incentives to engage in this practice.

Product Launches.  During 2012, NYSE Euronext continued to innovate by announcing the launch of two new products:  Additional Short-Term ("Weekly") Options expirations and Mini Options contacts.

  • In November 2012, NYSE Euronext led the industry by filing with the SEC to expand the Short Term Options program from one to five consecutive weekly expirations in the industry’s top 10 most actively traded options classes. Through this initiative, NYSE Euronext aims to provide investors with new investment opportunities to suit their individual trading goals and to allow them to benefit from events such as corporate earnings that occur on a specific, known date.
  • NYSE Arca Options took the initiative in designing and filing for approval for the Mini Options product, to be launched on March 18, 2013. A mini contract carries a deliverable of 10 shares of an underlying security, unlike standard contracts which represent a deliverable of 100 shares. This exciting new product will make trading options on popular, high-priced names more flexible and affordable for the retail community.

Technology Enhancements.  2012 marked the completion of NYSE Euronext’s migration to its state-of-the-art data center located in Mahwah, New Jersey. With constantly-evolving technology, NYSE Euronext continues to refine its offering to ensure we are delivering unrivaled capacity, performance, and speed.

  • In September 2012, NYSE Euronext further expanded its Market Maker Risk Limitation Offering. The functionality now extends beyond transaction-based risk mitigation to include both volume-based and percentage-based risk mitigation controls. Originally employed to provide Market Markers with more control over their risk, NYSE Euronext now also offers this functionality to order routing participants.
  • In November 2012, NYSE Euronext launched the Client Management Tool (CMT), an online web tool that provides customers the ability to actively view and manage same-day orders placed on NYSE Amex Options and NYSE Arca Options with ease.

Educational Outreach.  Throughout 2012, NYSE Euronext continued to collaborate with the Options Industry Council (OIC) and the industry at large to educate investors and their financial advisors on the options product.

  • In September 2012, NYSE Amex Options teamed up with the OIC to host an inaugural Thought Leadership Forum, targeting wealth managers and pension funds. The event presented success stories from top wealth and pension advisors who have effectively incorporated options trading into their portfolios. Initial feedback from the event has been highly positive and we hope to continue adding value for our customers by continuing the event series in 2013.

Looking to the year ahead, we are committed to providing our clients with an unrivaled trading experience and are enthusiastic for the opportunities ahead of us.

[1] Volume statistics calculated using OCC data