You remind me of SLE. Can you give some hints of what type of structural inefficiencies are there for retail?
Trading Advantage: Institutional vs Retail
- Thread starter Woodrow97
- Start date
You remind me of SLE. Can you give some hints of what type of structural inefficiencies are there for retail?
Tradeweb Brings RFQ Trading to the Options Industry
Launches Institutional U.S. Equity Options Trading Platform for Customer-to-Dealer Trading
Launches Institutional U.S. Equity Options Trading Platform for Customer-to-Dealer Trading
- Tradeweb Brings RFQ Trading to the Options Industry
Launches Institutional U.S. Equity Options Trading Platform for Customer-to-Dealer Trading
NEW YORK - August 16, 2018 - Tradeweb Markets, a global leader in electronic financial marketplaces, today announced the launch of the Tradeweb U.S. options platform for institutional customer-to-dealer trading.
Designed to improve efficiency and access to liquidity in the surging U.S. options market, the Tradeweb U.S. equity options platform allows institutional investors to directly source full-size price quotes from multiple market makers using the request for quote (RFQ) protocol Tradeweb pioneered in the fixed income cash and derivatives markets as well as ETF markets.
A recent survey by Greenwich Associates forecasts increasing demand for equity options among U.S. institutional investors. Through July 2018, average daily volume rose 22 percent year over year according to data from the Options Clearing Corporation (OCC).
By introducing its RFQ protocol to the U.S. options market, Tradeweb now allows institutional investors to send simultaneous electronic price requests to multiple liquidity providers, putting them in competition for the trade. This creates more aggressive pricing and tighter spreads while eliminating the need to call individual dealers or work across multiple exchanges for pricing and execution for large trades. The new platform offers RFQ trading of multi-leg options strategies on all U.S. listed single stocks, ETFs, and equity indices. Learn More.
The platform builds on the success of Tradeweb's European equity options and global ETF platforms, with the latter demonstrating the value of the Tradeweb RFQ model in unlocking liquidity, with 40 million shares traded on average every day and more than $888 billion in ETF volume executed since launch.
"Our institutional ETF trading platforms were an important step in enabling buy side institutions access to better pricing and size for block ETF trades. We've now expanded the Tradeweb RFQ model to U.S. options in direct response to clients who want the same value they experience executing ETFs on Tradeweb applied to options," said Adam Gould, Head of U.S. Equities at Tradeweb. "Just as we've seen on our ETF platform, we expect our new options offering to drive better pricing for clients, while also streamlining their workflow and demonstrating best execution."
Currently, nine liquidity providers, a mix of banks and proprietary trading firms (PTFs) are live on the platform. Amid a complex, fragmented liquidity landscape, Tradeweb provides a unique opportunity for investors to directly access additional liquidity in U.S. options from PTFs that are experts in options pricing and play a significant role in the options ecosystem.
Tradeweb has led the way in bringing electronic RFQ trading to the equities markets and continues to build more efficient equity trading solutions, recently announcing the future launch of RFQ trading for single stocks in Europe in association with the Plato Partnership.
About Tradeweb Markets
Tradeweb Markets builds and operates many of the world's most efficient financial marketplaces, providing market participants with greater transparency and efficiency in fixed income, derivatives and ETFs. Focused on applying technology to enhance efficiency throughout the trade lifecycle, Tradeweb pioneered straight-through-processing in fixed income and now supports marketplaces for more than 25 asset classes with electronic execution, processing, post-trade analysis and market data in an integrated workflow. Tradeweb Markets serves the dealer-to-customer markets through the Tradeweb institutional platform, wholesale trading through Dealerweb, and the U.S.-based retail fixed income community on Tradeweb Direct. Customers rely on Tradeweb to drive the evolution of fixed income and derivatives through flexible trading architecture and more efficient, transparent markets.
Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read Characteristics and Risks of Standardized Options.
Hmm. Do I now?
Well, it's the combination of the three points I added to the list - capacity, lack of specific mandate and flexibility in risk management.
@ajacobson I wonder how that will influence the OTC market
@Secret Santa - They're bring a midnight snack to the shop. They work late to see us - or they come in early depending on your view.
Since trading is based on psychology, I find it obvious that retail trades are "flagged" somehow. One buys a commodity at low, then hope to sell it at a higher price, the opposite for short selling. Sometimes a broker will trade against you. When you as a retail place an order to buy or sell, it might show up on a terminal having a different color? Red or Green, perhaps Blue? Then big money can move it away from you. Such schemes are useful in lower volume environments perhaps?
eaglefeather,
You provided some interesting comments here.
Is this true what you are stating? If this the case, how can retailer make money if the broker is "trading against me"?
I have never heard this before.
Thanks
Robert Morse
Sponsor
Simplemelike asked me to respond to this. This color coding does not exist. Automated trades might have a process to look for order flow and make assumptions about the flow. This has nothing to do with the size of your account or how the order is handled by your broker. Orders are either routed direct to the exchange, to a MM or through a dark pool or some combination. Some retail accounts do not get a choice. Some institutional accounts do not either. We offer choice do to both.
Bob
Would users of such a system expect to get better prices then they could by placing an order on one of the exchanges? Or would the prices be the same or worse, with the benefit just being the ability to easily trade in size?