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Wednesday, November 27, 2024
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Post-Election Optimism: Retail Investors Predict Stronger Stock Market in 2025

By
Press Release
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Carl Hazeley, Finimize

Post-election optimism: Retail investors predict stronger stock market in 2025 as they enjoy immediate gains & set sights on crypto

Overwhelming majority believe Trump will be good for the stock market amid bitcoin and S&P 500 surge

  • Overwhelming majority of retail investors (72%) believe Trump’s win is good for the stock market as it will boost investor confidence, and believe the stock market will be higher 12 months from now (71%)
  • Majority (72%) have already seen immediate gains since Trump’s win – over a third (37%) have seen returns of 6% or more so far
  • Total amounts to invest are up, 54% have over $10,000 to invest in the year ahead compared to 45% last quarter 
  • Crypto optimism peaks amid bitcoin record highs – 67% think bitcoin will be higher 12 months from now, up from 59% last quarter
  • Over a quarter of retail investors (26%) plan to invest in crypto market in the next year despite absence so far in 2024,  up from 21% last quarter

14.11.24 – LONDON: Retail investors are feeling optimistic post-election, with a strong majority expecting the stock market to surge in the coming year and looking toward the crypto market, according to Finimize’s latest Modern Investor Pulse survey, out today.

Financial information platform Finimize surveyed 2,000 retail investors and found that 72% believe Trump’s election win will be beneficial for the stock market, citing renewed confidence in the market outlook. Additionally, a significant portion (71%) of investors anticipate that the stock market will continue its upward trajectory over the next 12 months. Since the election, 72% of respondents have already recorded portfolio gains, with over a third (37%) seeing returns of 6% or more.

Post-election optimism and investment readiness

Following the election results, retail investors appear well-positioned to increase their market presence. The survey found a rise in the amount retail investors are prepared to commit, with 54% now holding over $10,000 to invest over the next year, up from 45% last quarter. Stocks remain the leading asset class of choice, yet cryptocurrency has unsurprisingly surged in interest as bitcoin reaches record levels.

Crypto market poised for growth

Investor confidence in cryptocurrency is at an all-time high, with 67% of retail investors believing bitcoin will be valued higher in 12 months, marking an 8% increase from last quarter.  Over a quarter (26%) now plan to allocate part of their portfolio to crypto assets within the next year, a notable rise from 21% in the previous quarter.

Carl Hazeley, Chief Analyst at Finimize said: “Retail investors are embracing a sense of market optimism in the wake of the election. We’re seeing strong confidence in traditional equities, supported by an increased appetite for crypto, which reflects an exciting shift in investor priorities and risk appetites.”

“With the majority of retail investors anticipating further stock market gains and expressing heightened interest in crypto, our findings indicate a dynamic investment landscape heading into 2025. It’s clear that retail investors are adapting to the current political and economic climate while broadening their strategies in lock-step with professionals.”

-ENDS-

About the Modern Investor Pulse
The Modern Investor Pulse is a quarterly survey capturing insights from Finimize’s global community of retail investors. For access to the full survey data, please reach out to our press team.

About Finimize
Finimize empowers retail investors with concise insights from world-class analysts. With over two million subscribers to its newsletter and mobile app, Finimize boasts one of the largest retail investor communities globally. Over 70,000 members attend their events annually. Finimize for Business, launched last year, supports over 350 financial institutions in engaging modern investors and creating content that drives engagement, revenue, and retention. Through its network of partners, Finimize content reaches over 40 million individual investors worldwide.

Shining a Spotlight on the Client Commission Costs of CSA/Soft Dollar Aggregation Platforms across Asset Owners, Asset Managers, and CSA Brokers 

By
S&P Global Market Intelligence
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Commission Sharing Arrangement (CSA) aggregation platforms offered by brokers and some technology firms are a well-accepted solution to the management of multiple CSA/soft dollar trading relationships. However, most of these solutions are characterized by excessive, unpredictable, and opaque client commission costs, leading to volatile and unnecessary charges on client commissions, asset manager resource allocations, and CSA broker revenues.

CSAs and Aggregation Platforms
CSAs allow asset managers to generate trading commissions for the payment of third-party research. They are a very significant portion of the buy-side equity commission wallet, and most industry estimates peg CSAs at over 40% of total buy-side commissions. Four out of five buy-side firms have CSAs in some capacity, and over 50% of CSA program volume is executed electronically. The number of CSA brokers each buy-side firm works with varies greatly, from a mere handful to close to 50 brokers.
CSA aggregation platforms are administrative services, utilizing technology and broker to broker communications to manage CSA trading commissions across multiple brokers, track credit balances, and submit research payment requests in one place. These platforms are a unique element of the patchwork CSA regulatory landscape as client commissions are utilized to pay for them, yet they are not technically either trade execution or equity research. In other words, these are client commissions being spent to pay for a service not directly involved with the investment decision making process.
History

Section 28 (e) mandates that a broker dealer providing research be involved in “effecting” the trade. The 2006 SEC soft dollar interpretive release clarified these terms and declared that the 28 (e) safe harbor is available to an asset manager when two brokers share a commission, if both those brokers are involved in effecting transactions and one or both are providing research. CSA brokers fulfill the “effecting” requirement by executing, clearing, and settling trades.

The SEC articulated a 4-prong functional approach to allow the CSA aggregation broker to also fulfill the “effecting” requirement, the most popular prong being “monitor and respond to customer comments concerning the trading process”. When sharing a commission for “providing” research, that term was expanded to include brokers who “pay the research preparer directly”. This affirmed the aggregation model, as CSA aggregators are not creating research, but simply paying a third-party research provider directly upon instruction from the asset manager.

Economics

CSA aggregators share the execution component of a CSA trade with the executing CSA broker. Rates vary depending on several factors (client, trading channel, trade volume, etc.), but the range is typically 4 mils per share (.0004 cents per share) up to 10 mils per share (.0010 cents per share, or 1/10th of a cent per share). For example, on a 4 cent CSA trade with a 50/50 execution/research split and a 7 mil “toll charge”, the CSA executing broker keeps 1.93 cents per share. The CSA aggregator receives 0.0007 cent per share, and the asset manager receives 2 cents per share in their CSA credit balance. On International trades, the average toll charge is ¼ bps.

These “mils” can add up…fast. If that particular asset manager is executing 10 million CSA shares per month with that CSA broker, the CSA aggregator is paid $7000 per month, or $84,000 per year. Multiply across 15 CSA brokers (assuming identical trade levels) and the commission revenue for the CSA aggregator from one client is a staggering $1,260,000 for an administrative function that is the same regardless of share volume.

Crucially, these client commissions are taken directly from the CSA broker, reducing asset manager revenue and service levels, including research and trading allocations.

The Problem-Excessive Client Commission Costs:

The problem with this model is excessive costs and overpayment of client commissions. Payment to the CSA aggregator increases as CSA trading volume increases, in some cases dramatically. However, the operating cost of administering the CSA program is essentially the same. The payment to the CSA aggregator can quickly grow out of proportion to the cost associated with managing a client’s research payments, sometimes by hundreds of thousands of dollars.

In a declining margin environment for trading equities (especially using electronic venues), the expense of the current CSA aggregation pricing model is unsustainable. A 5 mil aggregation fee on a 50 mil electronic trade is 10% on every share. In addition, the opaque nature of the current pricing model leads to cost uncertainty, a lack of transparency, client inconsistency, regulatory risk, and unnecessary volatility across time.

The Solution-Bring CSA Aggregation Cost Back to Reality

At S&P Global Market Intelligence, we provide a best-in-class CSA aggregation platform, free to the asset manager and with a flat annual CSA broker connection fee that does not increase based on trading volume. Our platform is supported by a consortium that includes Bank of America, Barclays Capital, Citigroup, Goldman Sachs, and UBS Investment Bank, along with other large leading broker/dealers.

This platform is directly tethered to the actual cost of managing a CSA aggregation system, including offering discounts for low volume CSA brokers. Our pricing can slash CSA aggregation costs across the board, and in certain cases by up to 90%. We are not a broker/dealer and cannot compete for order flow. 

It is important for the buy side to review their spend on these CSA aggregation platforms to confirm they are not overpaying with client commissions.

Reducing the excessive cost of CSA aggregation is a triple win as it benefits asset owners, asset managers, and CSA brokers together.

Research unbundling has delinked research cost from trade volume, and it’s time for the unbundling of CSA aggregation cost from trade volume as well. 

Contact Us 
For more information or to schedule a demo, please reach out to Lansing.gatrell@spglobal.com
Visit s&pglobal.com/researchmanager.com for more information.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 























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Almost All Year-End Bonuses to Rise

By
Press Release
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Dollar symbols flowing from an open faucet. Digital illustration.

Johnson Associates projects year-end incentives to be higher across almost all sectors.

Projections: Traditional asset management boosted by market appreciation and active ETF inflows. Hedge funds rise on inflows and strong performance. Investment banking higher led by equities trading and debt underwriting. Small to mid-sized illiquid alternatives flat to up modestly while largest funds up more despite fundraising challenges. Geopolitical issues largest risk variable into year-end.

Alternatives are a strategic priority for many financial services firms

  • Many firms, including those who did not traditionally offer alternatives, continue building out alternatives strategies
    ▪ Institutional and retail investor demand for alternatives growing
  • Alternatives have higher fee levels and provide diversifying revenue streams
  • Private credit “hottest” sector within alternatives
  • Private credit proliferation across multi-strat alternatives, traditional asset managers, large banks, and insurance companies
  • Banking regulation shifted momentum to private credit firms
    ▪ Some major banks have formed partnerships with alternatives firms to scale direct lending capabilities
  • Compensation pressures as talent market highly competitive

The full report can be read here

Source: Johnson Associates

Europe Trip Takeaways and the Development of Consolidated Tape

By
Kelvin To
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By Kelvin To, Founder and President, Data Boiler Technologies

After a month in Europe meeting with regulators, trading venues, market participants and other stakeholders, I have many takeaways pertaining to the Consolidated Tape (CT) and related market structure reforms. Analogies from my mix of train rides and air flights traveling across 14 countries and 18 cities, how the CT can provide seamless experience that fit different purposes? I invite you to join me on this journey by clicking here to download the full whitepaper.

The following is an abstract summary:

•      Tight spread constant refreshing EBBO as advertised price to draw big crowds and infuse trust

•      Deciphering the Consolidated Tape in layperson terms, its economic viabilities and market impacts

•      Dynamics among the protectionists, opportunists, regulators, overlooked, and the underrepresented

•      Save costs, grow the overall pie, reduce vulnerabilities, and support sustainable economic development

Amid the creation of a Savings and Investments Union initiative upon the incomplete Capital Markets Union, the EU needs substantially more than a name change. It needs to convince the world to place their trust and money in the EU market. Given Brexit and the UK taking divergence paths with the EU, international competitiveness and growth is at the heart of the UK FCA.  In the race of market data reform, the US is leading the world with the Securities Information Processors (SIPs) introduced back in 1975 and the most recently approved rule (effective December 9, 2024) to improve Transparency of Better Priced Orders, a.k.a. accelerated implementation of Market Data Infrastructure Rule.

Travel across Europe with a low budget takes careful planning and understanding of the nuances (market micro-structure). The same goes with building the CT, to make the impossible possible, e.g., making a CT subscription of €100 per user achievable. Every country I visited has these Americanized boardwalks that connect to my favorite old towns. They co-exist and grow the overall pie, which is the key point here.

I am not sure if it was the European pride or protectionism, rejecting the Americans in building the capital markets’ boardwalks (see this for our suggested mock-up “Schematic of EU Equity Data Aggregation and Consolidation”) to attract big crowds. On one hand, the issuers want these American big brands to invest in their companies. On the other hand, local Exchanges and small domestic participants are worried that order flow may be segmented away to erode their market shares. Selling data and connectivity is the bread-and-butter for typical Exchanges. Yet, such is the mentality of ‘we burn, you burn with us’ to [allegedly give CT crappy data, e.g., 100,000 messages at any given point in time, i.e., mussed up everything and ecosystem degradation to exacerbate gap between proprietary feeds and CT] is sadly a lose-lose approach.

Protectionism and self-interest blinded the eyes of the bigger picture. I am referring to the EBBO. This empirical study shows that “traders are more likely to select dealers (SIs) over exchanges when quoted bid–ask spreads are wide on exchanges and when the tick size is not binding in the exchanges order books.” For a win-win approach to enable prosperity for all EU Citizens, Europe needs a narrow bid-ask spread and constant refreshing of the EBBO, i.e., not over 100 messages at any given point in time to make the tape useful / suitable for BestEx analysis. 

It is totally practical as proven by the High Frequency Trading firms (HFTs) and self-aggregators (SAs). Exchanges are not doing anything extra but providing the same fastest data feed and connection as they provide to the HFTs and SAs (see MDIR ‘same manner same methods’ provision). It benefits the trading and investing communities, including the European trading venues because a usable tape and narrow spread EBBO advertised price can draw crowds to shop in the European markets.

There are legitimate reasons why pre-trade data in Consolidated Quote System of the US SIP is prioritizing speed over streaming of non-core non-essential data. It goes fast by traveling light, analogies to my having 1 backpack and 1 carry-on for my entire 1-month trip. Time lock encryption (TLE) and compressed streaming of “core data” and relevant regulatory data can help overcome the extra hop latency issue in data consolidation. Because it takes a longer time to decode the full depth of book, odd-lot and other nitty-gritty in the Proprietary Feed. The CT would NOT be at a disadvantage in net.

One does not need to know how many people are in the queues of every convenience store across all European markets if he/she may be shopping for milk within neighborhood distance. Top-of-book EBBO provides an indication and introduces price pressure that any neighborhood store should not be too far off from this pan-Europe best price. Again, using a mix of CT and selected Proprietary feeds save money.

I wonder why some local European firms may decide to choose an endogenous selection to trade on certain exchanges or with dealers, and then review the performance every 6 months instead of up their game in execution performance. One logical reason is they under invest in technologies and lack resources or are understaffed. Second, a lack of EBBO thus far causes their clients not to be aware of receiving inferior price. Third, they rely on a strong presence throughout Europe and stickiness relationships with clients rather than execution performance to do business. Fourth, they are afraid that the geographic dispersion and aggregation distance would cause their EBBO refresh rate to be ‘stale’ anyway, that I disagree.

The market shrinks because of protectionist policies that reduce serendipity. The viability of a CTP business model is dependent on its ability to fulfill different sell- and buyside subscribers’ needs. CTP central procurement should be able to save money also for SAs. CT must have non-display low latency subscribers to commingle with display options for outgoing data delivery. One size does not fit all. Attempts to use a single “cloud” service to satisfy both is naïve.

If a pre-trade equity CT is not using the same low latency methods and manner of delivery that Exchanges provide to the HFTs and SAs for incoming data to CTP, it essentially creates more data fragmentation (i.e., what you see on CT is not the same as what others see on Proprietary feeds). The US SEC recognizes the SIPs were not modernized alongside markets evolution and technologies development, therefore it requires the “same manner same methods” provision (see page 186 or footnotes 608 and 609 of MDIR).

I recommend forming an industrywide non-profit entity (NPE) and putting our technologies on top to bid for the CT. Broad representations in governance of the NPE (like NASD before it becomes FINRA) are substantially superior to rate setting by any one group. 

Trade Execution Platforms Need Agility, Collaboration

By
Editorial Staff
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KCx, the execution services arm of Kepler Cheuvreux, has partnered with Adaptive to build KCx Omni, the next-gen trade execution platform. The collaboration leverages KCx’s unique quantitative and technical capabilities together with Adaptive’s long standing track record of building low-latency trading platforms.

Financial institutions, challenged to navigate an increasingly complex global equities trading landscape, are turning to advanced technology and event-driven algorithms to enable smarter trading and deliver the best possible execution experience. 

In response, KCx embarked on a transformative journey to reimagine what a modern trade execution platform should look like, incorporating open-source technologies and cloud computing into the fabric of the platform and reimagining the full front-to-back execution experience, spanning pre-trade, post-trade, data, and advanced analytical capabilities.

Key to the delivery of KCx’s new execution platform is Adaptive’s technical know-how and capital markets technologies, including Aeron®, the low-latency, high-throughput, resilient messaging & clustering technology; as well as Hydra, which streamlines and accelerates the build process, enabling swift project delivery and ensuring the execution platform scales effectively.

The platform is built on the three core principles of sequencer architecture, hybrid development, and rapid deployment, leading to an outcome that includes a bespoke UI, resilient architecture, greater automation, seamless traceability, and cross-asset class growth enablement.

Access the full project details here.

SIFMA, EY Publish U.S. Treasury Clearing Compliance Considerations Report

By
Press Release
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Joe Seidel, SIFMA

SIFMA and EY Publish U.S. Treasury Clearing Compliance Considerations Report to Guide Industry Transition to Central Clearing

New York, NY, November 13, 2024 – SIFMA and Ernst & Young LLP (EY US) today published “U.S. Treasury Central Clearing – Industry Considerations Report,” designed to capture and organize the various considerations and activities market participants should evaluate while assessing and completing preparations for the upcoming U.S. Securities and Exchange Commission (SEC) Treasury Clearing Rule compliance dates. It is intended to be utilized as a guide by sell-side and buy-side market participants alike as they implement changes in response to new U.S. Treasury clearing requirements.

“Treasury securities play a key role in the U.S. and world economies.  SIFMA has long supported efforts to make the Treasury market more resilient.  At the same time, we recognize the need to ensure liquidity is not negatively impacted,” said Joe Seidel, SIFMA Chief Operating Officer.  “As we transition to central clearing in compliance with the new SEC rules, it is important that the industry focuses on preparedness efforts to ensure as little market disruption as possible.  The report is designed to offer a roadmap of considerations and actions firms need to take now to be ready for the coming deadlines.  This is also part of SIFMA’s broader efforts, including the development of standard clearing documentation, to coordinate a smooth transition with the industry.”

Clearing transactions involves a clearing agency stepping in between a buyer and seller to handle certain elements of transaction processing, manage risk and pay down obligations.  In December 2023, the SEC approved a final rule which mandates the clearing of certain eligible secondary market transactions in U.S. Treasury securities. It triggered a significant structural change to the U.S. Treasury market and will have significant impacts on broker-dealers, institutional investors, asset managers, hedge funds, interdealer brokers, principal trading firms, banks, and covered clearing agencies (CCAs). The first compliance date is March 31, 2025, by which time CCAs must implement enhanced practices as outlined in the respective rulebook of each CCA, which include risk management, margin, customer asset protection, and access to clearance and settlement services. The second compliance date is December 31, 2025, by which time direct participants of CCAs must comply with the requirements to clear eligible cash secondary market transactions. The third compliance date is June 30, 2026, by which time direct participants of CCAs must be compliant with the requirements to clear eligible Treasury repo transactions.

“The SEC’s new Treasury clearing requirements represent a pivotal shift for the U.S. Treasury market, and firms must act quickly to meet the upcoming compliance deadlines,” said Brendan Maher, Managing Director, Financial Services Consulting, EY. “This report offers market participants a practical framework to navigate this complex transition, highlighting key considerations and actions. At EY, we are committed to helping our clients adapt to these new regulations by providing actionable insights and strategic guidance to ensure a seamless and efficient transition to central clearing.”

The SEC Rule will drive a number of changes to the overall U.S. Treasury market structure and require the integration of market participants who will now be mandated to centrally clear transactions for the first time. New CCAs may also emerge, and market participants may decide to connect to one or more CCAs to support their trading and clearing strategies. Such changes to the market will require new operations and capabilities to accommodate increased clearing volumes and new relationships between firms.

The report details the critical activities that institutions should consider as they design and implement a process for Treasury clearing. The primary objectives of the report are to:

  • Provide an implementation blueprint for industry participants on implementation priorities.
  • Identify the key steps to operationalize change across different clearing access models.
  • Surface key issues, open questions, and gaps in market structure and provide recommendations on the path to resolution.
  • Provide views on the target state transaction lifecycle from execution through margin processing, including proposed high-level transaction flows.
  • Provide insights on implementation dependencies across work efforts, where possible.
  • Serve as an educational resource on the rule and its implications.

The report includes input and subject-matter analysis from market participants on both the buy-side and sell-side that was gathered 1) via a survey issued to SIFMA member firms by SIFMA and EY, 2) from information workshops hosted with SIFMA member firms, and 3) from bilateral conversations with market participants. It is available at the following link:  https://www.sifma.org/resources/general/us-treasury-central-clearing-industry-considerations-report/

SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development.  SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).

Liquidnet Releases New Liquidity-Seeking Algorithm

By
Press Release
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Alan Polo, Liquidnet

SmartDark features prioritized routing to venues with larger executions sizes and better price stability

NEW YORK, LONDON – November 12, 2024 – Liquidnet, a leading technology-driven agency execution specialist, today announced the release of SmartDark, its latest algorithm for its equities platform, designed to enhance how institutional traders can execute their trades through prioritized routing with larger executions and better price stability.

Alan Polo, Head of Sales and Trading, Americas, said: “Today’s markets remain volatile and complex for buy-side traders to navigate. Although many algorithms in the market boast exceptional performance, the reality is that an algorithm’s effectiveness depends entirely on the quality of the liquidity it can reach. SmartDark is a great illustration of our ability to develop innovative solutions for the buy-side that help traders access liquidity.”

Available in the U.S., SmartDark incorporates a variety of yield and quality metrics to give traders an optimal blend of targeted liquidity-seeking strategy and maximum liquidity exposure, resulting in the opportunity to trade on high quality venues with better price stability.

Scott Kartinen, Head of Global Algo Products, commented: “Our algorithms are one of our core differentiators and we’re proud to offer a new addition to our lineup. As one of the few unconflicted, agency-only brokers with expertise in lit, dark, and block markets, we are in a unique position to craft execution strategies that effectively navigate complex markets and secure the liquidity buy-side traders need. We’re excited to see SmartDark aid our Members in executing their orders more efficiently.”

The algorithm sits within the Liquidnet Dark space and leverages the existing framework to offer a new tool to enhance traders’ execution abilities. Liquidnet Dark has an average block execution size of 28,000 shares for all trades crossed by Liquidnet and an overall block participation rate of 44%[1].

[1] Liquidnet internal data, January 1, 2024 – June 30, 2024

About Liquidnet

Liquidnet is a leading technology-driven, agency execution specialist that intelligently connects the world’s investors to the world’s investments. Since our founding in 1999, our network has grown to include more than 1,000 institutional investors and spans 57 markets across six continents. We built Liquidnet to make global capital markets more efficient and continue to do so by adding additional participants, enabling trusted access to trading and investment opportunities, and delivering the actionable intelligence and insight that our customers need. For more information, visit www.liquidnet.com and follow us on X @Liquidnet.

About TP ICAP Group plc

TP ICAP is a world-leading markets infrastructure and data solutions provider. The Group connects buyers and sellers in wholesale financial, energy and commodities markets. We are the world’s largest wholesale market intermediary, with a portfolio of businesses that provide broking services, trade execution, data & analytics, and market intelligence. www.tpicap.com

[1] Liquidnet internal data, January 1, 2024 – June 30, 2024

TECH TUESDAY: State of the Options Industry

By
Editorial Staff
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TECH TUESDAY is a weekly content series covering all aspects of capital markets technology. TECH TUESDAY is produced in collaboration with Nasdaq.

Growth in the U.S. options market has outpaced that of equities in recent years, and there is enough runway for that dynamic to continue for the foreseeable future.

That was the broad takeaway of the State of the Options Industry panel on day one of SIFMA’s 2024 Market Structure Conference held on November 6 in New York. Panelists were Arianne Adams, Chief Strategy Officer at Webull Financial; Greg Ferrari, VP & Head of North American Exchange Trading at Nasdaq; and Larry Tabb, Director of Market Structure Research at Bloomberg.

Ferrari noted that options trading volume has seen a 19% compound annual growth rate over the past decade, driven by increased retail participation and liquidity enablement. 

“Liquidity provisioning, retail education and underlying market infrastructure are driving confidence in market quality and risk mitigation,” Ferrari said. “Overall, there is great emphasis on the good we’ve done as an industry.”

“Demand is real and continues to accelerate,” said Adams of Webull, a trading platform operator. “We are seeing more customers using options to mitigate risk and trade around events in a more precise fashion.” 

Adams said retail has indeed been strong, but the market’s expansion has also included institutions trading more options, especially contracts with shorter maturity profiles.

Ferrari cited two secular trends underpinning options market growth: more ETF listings with embedded options components, and greater demand for U.S. options market access from abroad. “We see this in inbound calls asking how to participate [in options],”  he said. “Data is being consumed much more broadly.”

Bloomberg’s Tabb asked whether 18 options exchanges were too many. 

Ferrari noted there are many different segments within the options market, which support a variety of exchanges. “The overall landscape is incredibly dynamic,” he said. With its six options exchanges, Nasdaq is “spending less time on fee models and fee schedules and more around the market maker experience. We are focusing on the architecture of the technology and ensuring that it meets and exceeds the needs of the market, as well as ensures confidence in the infrastructure.”

Adams commended some of the newer options exchanges for building decent market share but also said exchange consolidation would be a good idea at some point.

The panel was constructive on newer short-maturity options, including zero-days-to-expiration options (ODTEs), which have gained traction in recent years with little or no cannibalization of more traditional monthly or weekly expirations. Ferrari said 21% of options trading volume is in contracts expiring that same day.     

“The ability to take views on specific days is really important to help manage risk and to take advantage of news, information and what’s happening in the world,” Tabb said. 

The panel also touched on flex options, whose share of the market has more than doubled in recent years to about 2% of average daily volume on greater demand for bespoke products; and floor trading, which has retained a critical role in the market ecosystem as a venue for complex transactions but has limited growth prospects.

Creating tomorrow’s markets today. Find out more about Nasdaq’s offerings to drive your business forward here.

Webull Launches 24/5 Trading

By
Anna Lyudvig
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Retail traders all over the world are showing increasing interest in the US stock market, which operates on ET – commonly considered the peak trading period, according to Anthony Denier, Group President & US CEO at Webull.

Anthony Denier

“However, global news and events can occur at any time, driving market movements and fueling trading ideas, strategies, and opportunities,” he told Traders Magazine.

Today, Webull, announced the launch of Overnight Trading, powered by Blue Ocean ATS to expand trading hours for its users in the United States. 

“By offering Overnight Trading, Webull is giving users the flexibility to trade on their own schedule, free from the constraints of regular market hours or pre- and post-market sessions,” commented Denier.

“This expanded access allows traders to seize opportunities whenever they arise, regardless of time zone,” he added.

The 24/5 Overnight Trading session will operate from 8:00 pm to 4:00 am ET Sunday through Thursday, giving users the opportunity to trade in and out of U.S. stock and ETF positions during the overnight session.

“As of now, Overnight Trading is available for stock and ETF trades,” Denier said.

As investors increasingly seek the flexibility to trade around the clock, Webull has partnered with Blue Ocean Technologies to offer Overnight Trading, providing their clients with the ability to trade whenever opportunities arise.

Not only can users react to market movements overnight, but they can also respond to timely events outside of regular, pre, and post-market sessions. 

Whether it be company earnings, breaking news, or international market activity, users can respond quickly to market developments and be proactive about their investments.

According to Denier, this partnership empowers our customers to make well-informed trading decisions and capitalize on opportunities outside of regular market hours. 

“With Overnight Trading, they can now seamlessly trade in and out of positions during overnight market movements, ensuring they never miss a chance to act when markets shift,” he commented.

Webull Corporation, headquartered in St. Petersburg, Florida, operates in 15 regions globally and is backed by private equity investors located in the United States, Europe and Asia. 

Webull serves 20 million registered users globally, providing retail investors with 24/7 access to global financial markets.

Webull currently offers level one overnight market data free of charge, with the ability to subscribe to more in-depth data packages. 500+ symbols are now available, with the goal to continue expanding the available security list.

“Webull has always prioritized listening to our clients, continuously striving to provide innovative trading solutions for our expanding retail investor community,” Denier said.

“This new offering is a direct result of that commitment—ensuring our clients have the tools and flexibility they need to make informed, effective investment decisions,” he added.

Hedge Funds More Concerned About Risk Management, Regulation

By
Press Release
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Asset Tarabayev, Beacon Platform

HEDGE FUND RISK MANAGEMENT AND REGULATION CONCERNS RISE

These issues could also be impacting successful fundraising

All funds plan to boost spending on risk management over the next two years 

More than half believe regulation challenges will rise over the next three years, Beacon Platform Inc. study shows

London November 12th, 2024 Hedge funds are boosting spending on risk management as concerns about navigating regulatory challenges increases, new global research* by Beacon Platform Inc. shows.

Almost all (99%) of the hedge fund executives questioned in Beacon’s study in the US, UK, Germany, Switzerland, France, Italy, Sweden, Norway, and Asia say their fund will increase spending on risk management over the next two years.

More than half (56%) of the executives, whose funds are responsible for a collective $901 billion assets under management, say spending on risk management will rise by 20% or more, the study by Beacon, the open and cross-asset portfolio analytics and risk management platform for hedge funds, found.

The majority are concerned about their ability to navigate regulatory challenges – around 56% say that will become harder over the next three years although 39% expect the pressure to ease. C-level executives were almost twice as likely to think that regulatory challenges would become harder (73%) than their Investment Analyst or Portfolio Management colleagues (38%).

Transparency was identified as a major issue in the study – around 90% questioned admit transparency provided to clients and investors has to improve with 23% saying it has to improve dramatically.

Regulators are seen as the main drivers behind greater data transparency although industry trade bodies and hedge funds themselves are also pushing for increased transparency. Beacon, a portfolio analysis, risk management, and development platform that enables capital markets firms to increase the transparency and efficiency of their operations, notes that improved transparency helps hedge funds to attract investment and scale their business.

The research found hedge funds are generally happy with their risk management systems but identified some areas of concern. Around a third (33%) said their fund’s systems were only average for latency – the ability to get complex calculations within an acceptable time frame – and 30% said it was only average for accuracy (the ability to mark to market and use industry standard models for all products) with 5% saying its was poor.

Around a fifth (22%) said their systems were only average for transparency, with 6% saying it was poor or very poor. More than a quarter (26%) said their systems were average for flexibility, with 2% saying it was poor. More than four out of five (82%) who rate their system as poor plan to replace it in the next 12 months, while 65% will use more systems to compensate for their system’s weakness.

Investment in systems has paid off for funds doing it – around 55% who say visibility of risk at their fund has improved over the past two years attribute that to greater investment in technology, while 47% attribute improvements to greater use of specialised third parties.

Asset Tarabayev, Chief Product Officer at Beacon Platform Inc. said: “As regulatory challenges increase and clients demand greater transparency, our research shows that hedge funds are gearing up to respond to these concerns. Spending is expected to grow across the sector as funds look to leverage the advanced reporting features of modern risk management and portfolio analysis systems to improve transparency for investors and regulators alike. Technology-leading funds are already benefiting from these advanced technical capabilities, increasing the transparency of analytic models, accelerating their time to compliance, and delivering real-time views of risk limits and exposures.”

Notes to Editors

* Beacon Platform Inc. commissioned independent research company Pure Profile to interview 100 senior hedge fund executives in the US, UK, Germany, Switzerland, France, Italy, Sweden, Norway, and Asia collectively responsible for $901 billion assets under management. The research was conducted during August 2024 using an online methodology.

For more information please contact

Phil Anderson at Perception A on 044 7767 491 519

About Beacon

Beacon is a financial technology firm that provides everything quantitative developers need to rapidly build, test, deploy and share trading and risk applications, analytics and models. Developed by a team with unmatched financial markets experience, Beacon’s open platform includes the apps, tools and infrastructure firms need to migrate their software and infrastructure to the cloud, manage risk across all asset classes, and focus on building innovative strategies that provide a competitive edge. For more information visit www.beacon.io

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