Panel Discussion on Options and Volatility Market Structure at RMC Asia

The final presentation on the first day of RMC Asia was a panel session titled Options and Volatility Market Structure.  Steven Sears from Barron’s moderated the pan which consisted of Pat Fay, Global Head of Derivatives from FTSE Russell, David Friedland, Managing Director from Interactive Brokers, Timothy Hendricks, Found and Managing Partner of X-Change Financial Access, LLC, and Qi Wang, Head of Options Product Development, China Financial Futures Exchange.

The panel discussions are always among the most informative of the sessions at CBOE’s Risk Management Conferences.  Some highlights from this session include –

  • It was noted that 20% of open interest in the US options market comes out Asia
  • The human element is still important for option execution – as in open outcry trading has not gone away
  • There is customer demand for FTSE China 50 Index derivatives in the Asia as well as the US
  • It was noted that the depth of the US option market is a major reason that Asian traders are attracted to the US options market
  • Options on the S&P 500 have become a global proxy for hedging
  • In China the government is very cognizant of past speculative activity and is proceeding cautiously with the roll out of listed derivatives
  • It was noted that there is not too much concern with respect to what the Fed may or may not do in December
  • At least on panelist believes 2016 will yield higher volatility than in the past few years
  • In response to a question about what strategies work one panelist responded that Butterflies in index options tend to work well over time