The demographic of options market participants has changed – the group is younger and more educated versus years ago, and wants and needs are evolving.
How the industry can address this by meet buyers and sellers “where they are” was discussed Wednesday morning at the Options Industry Conference in Asheville, North Carolina.
JJ Kinahan, Chief Executive Officer at IG North America, opened the panel, entitled “Engaging Today’s Investor: Are We Evolving With Them?”, by asking what has been the biggest contributor to the retail trading boom over the past several years.
“The biggest contribution is access,” said Steve Quirk, Chief Brokerage Officer at Robinhood Markets, noting that more younger people and non-professional traders can access markets quickly and affordably, in a way that historically has been the purview of older, wealthier people.
Quirk said expanded market access has helped boost the percentage of US households with exposure to the stock market to 58%, a number that other nations would love to match given the wealth creation capacity.
Jessica Inskip, Director of Education and Product at OptionsPlay, noted that democratization of financial literacy has been a powerful trend, especially as people realized they needed more than just robo-advisers to map out their financial futures.
Johnathan Hampton, Director of New Sales and Partnerships at Exegy, stressed the importance of providing infrastructure resilience and high-quality data to market participant firms who support end-user retail investors.
Panelists noted that regulation is a challenge, as there can be a disconnect between today’s options trader, who may utilize TikTok or other non-conventional sources of information, and regulators, who can be slow to adapt to a shifting landscape.
Quirk said this disconnect means the industry’s education efforts need to extend beyond customers, to elected officials and regulators, so that progress in expanding market access isn’t rolled back. “Some regulations will shut out younger investors,” he said. “Every product isn’t suitable for everyone, but don’t turn it back into an old boys’ club.”
To the question about new products that have moved the needle, Hampton said deploying cloud for market data applications has helped customers innovate, while Inskip cited integrating education with products in a way that relates to the customer.
Quirk noted durations are shorter for most things these days, and this should be reflected in financial products. ”Older people think kids are just lazy gamblers on their parents’ couches, but we say let them invest the way they want…Catering to the way they’d like to invest is important.”
What are clients asking about most often? Hampton said people want “consistent, quality data as fast as possible,” while Inskip said the primary ask is better “understanding of how markets work and how that can translate into actionable strategies.”
