BOX Options is always trying to find a niche and deliver value to their customers and the industry, according to CEO Patrick Zielinski.
This year the Exchange is celebrating its 20th anniversary, but since its launch, BOX has revolutionized equity options trading.
“We’re a different business now, but we’ve always been an innovator in the space,” Zielinski told Traders Magazine.
Jointly owned by TMX Group and leading broker-dealers, BOX invented the price improvement auctions, Zielinski said, adding said that back then options were “traded in nickels and dimes and the price improvement auction created a way to create competition within the spread, and generate pricing incurrence in the industry”.
“Whether it’s with our order types or our technology, BOX always tries to be an innovator,” he stressed, adding that the Exchange was able to morph into a highly deterministic, reliable and simplistic trading center.
In 2017, BOX combined its existing electronic market with the BOX Trading Floor, an open outcry market.
“The floor offers a benefit of liquidity and price discovery,” Zielinski said.
The competition in the option industry is a challenge, Zielinski said: “It’s a cutthroat industry, but that’s the most exciting part of the industry as well.”
“When you stack us up against our competitors, we’re all trying to be different. We’re all competing for order flow,” he said.
BOX has a single exchange compared to some of the other exchange families that have multiple venues.
“For what we’re able to do and capture pockets of order flow in a wide variety of segments, I think we’ve done a good job being able to put ourselves in a competitive position,” Zielinski commented.
Zielinski thinks, however, that there’s room for another exchange if the venue “adds value to the industry”.
He believes that their competitive advantage is their nimbleness. “I think it’s our size, and the way that we engage our client base,” he said.
Technology plays a huge role, said Zielinski: “Although we have a trading floor, it’s really highly technical behind the scenes.”
“We also have a talented staff that lets us create this ecosystem in our market,” he added.
BOX has modernized its trading infrastructure over the past several years and most recently has launched a clearing API and is currently focused on building out “a stateof the art market data feed that is anticipated to go-live the first half of 2025”, according to Zielinski.
When asked about trends in the options industry, Zielinski said there’s a lot of attention focused on zero data expiration options.
There’s a tremendous amount of volume that’s being transacted in these short dated products, he said.
There are some interesting trends happening in single names as well, he said: “I think future drivers of volume could be the expansion of these short, dated options into single names.”
According to Zielinski, BOX Options has recently received the SEC approval for their FLEX options capability that was launched on Tuesday, May 28.
FLEX Equity Options are options with flexible terms such that participants can customize expiration date, exercise price, and exercise style.
FLEX Equity Options are available for trading on the BOX Trading Floor and will be later available on the FLEX Open Outcry Orders, Zielinski said.
“We’re really excited to offer FLEX and hopefully gain some traction with that and innovate in that space,” commented Zielinski.
In addition, BOX is always looking to evolve their systems and provide innovative solutions to the industry, he said.
“You have to be nimble and responsive to the market and be willing to reinvent yourself as needed,” he concluded.
