Emerging technologies and improving the experience for market participants were spotlighted in “The Options Trailblazers Pushing the Boundaries of Innovation” panel Thursday morning at the Options Industry Conference in Asheville, North Carolina.
To be sure, innovation carries risk, and panel moderator Lule Demmissie, Chief Executive Officer US at eToro, brought up risk management early in the discussion.
Geralyn Endo, Relationship Manager, Options Lead at MEMX, cited a 2020 Jane Street whitepaper entitled “Dead Man’s Switch: Making Options Markets Safer With Active Quote Protection.” Adopting the principles of the whitepaper has made for more liquid markets with tighter spreads and higher confidence in exchange trading, Endo said.
Kevin Luthringshausen, Senior Vice President, Chief Content Officer, at Tradier, said his firm deploys automated systems that flag illiquid or expiring options, enabling retail traders to take action, and additional risk control measures are offered.
To the question of where innovation is taking place, Luthringshausen noted a focus on trade idea generation for retail customers, delivered quickly and easily. “Our sophisticated retail audience has other jobs, they don’t do this for a living, so we focus on automation,” he said.
Laura Morrison, ETF/Investment Industry Advisor and Former Chief Revenue Officer at Direxion, cited buffered ETFs as an innovative product that can reduce the complexity of trading.
The panelists noted that innovation doesn’t need to be large and transformative; rather, it can take the firm of small, incremental improvements.
Artificial intelligence and “supercomputing” were discussed. The panel indicated that while the potential of such technologies is massive, it’s still more of a tomorrow story.
Luthringshausen said AI may prove useful in trade idea generation, and there is some application of AI to chart patterns to discern the next move of a stock or ETF. Morrison cited Daizy, which uses generative AI to produce financial reports.
Demmissie closed the panel by citing data from eToro’s surveys of its own customer base, which skews young. When asked to rank how they find and trust information, she said community was most trusted, followed by technology, followed by institutions.
“Every industry is going to be thoroughly disrupted by technology, and disruption creates innovation,” she said.
