Russ Chrusciel
product manager
SunGard’s Brass business
As Glenn Hutchins of Silver Lake reminded us at City Day in New York, we’ve gone through one of the most dramatic stretches in the U.S. economy over the past 12 months (everything from banks collapsing to the U.S. government injecting huge amounts of capital into the nation’s financial system). Then looking forward, Glenn thoughtfully laid out 4 key trends in technology that he saw shaping the financial industry in the years ahead. Here is how I see these 4 trends, and how they might shape aspects of the U.S. options markets in upcoming years:
Continued surge in different types of market data (databases, email / personal messaging, social networks)
Out of necessity, options market participants have been pretty skilled at managing huge amounts of price data from OPRA for many years - but now will be faced with how to incorporate information from less traditional data sources into their options trading strategies and decision-making.
Software as a Service (including hosted models)
Since option traders definitely put a premium on workstation performance when so many intricate theoretical calculations are being done both pre-trade and post-trade, hosted software solutions that optimize application efficiency will continue to increase in importance.
Mobile Access
U.S. options exchanges were once very “floor-focused” (with traders residing on exchange floors and most market participants located very nearby). Now, remote market-making is quite common on U.S. options exchanges, and market participants require access to their positions and market data from a variety of locations. This desire for mobile access will definitely continue, but may not increase as quickly compared to other needs in the options trading community.
Increasing Impact of Social Networks
Twitter posts about implied volatility potentially become as important to the options trader as other economic news that gets released each day! The next generation of options traders and risk managers will integrate more perspectives from social networks into their market views, which will influence their trading strategies. In essence, the option trader’s Facebook community becomes the new “trading crowd” - replacing the huddled groups of traders that previously existed on options exchange floors.
What do you think? I’m interested to hear your perspective on how technology trends will influence the U.S. options markets in the years ahead.