Tag Archives: electronic options exchange

Strike Price

Best Execution Algos for Options Trading: Dash Dares To Be Different

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MarketsMuse.com Strike Price section profiles trading systems vendor Dash Financial algorithm-based approach to securing options market “best execution” in the ever-increasing world of options mart fragmentation and the wacky rebate schemes that have proliferated across the electronic options exchange landscape. Below is courtesy of extracted elements from MarketsMedia.com April 20 story “Parsing ‘Best Ex’ for Options Trades”

Achieving best execution in options trading can be far more complex than in equities because of exchanges’ multi-tiered pricing models, which results in hidden transaction fees that may negate the economics of a trade.

That’s according to David Karat, head of sales and marketing at algorithmic trading-technology company Dash Financial.

The equities world is complicated only by fragmentation, because the pricing schedule is based on whether one trades either as principal or agent, Karat explained. “You can go to an exchange and know what price tier your broker is at,” he said. “You know what the maker-taker fees or the rebates are.”

In options, pricing is dependent on a wider range of factors. Orders must be tagged whether they’re a customer, professional customer, broker/dealer or market maker. “All those capacities have different nuances, even the schedules for pricing,” Karat said. “It’s even got down to the point where you’ll have some basket of symbols that, based on certain criteria, if you traded it in a certain time, it will have a different rate structure.”

Dash Financial launched in 2011 to provide technology that would enable traders to gain a greater level of transparency into their orders. “The idea behind Dash was to build a firm that was completely transparent to the client using ‘best-of-breed’ technology and show the client everything that we did all the time,” Karat said. “We have a dashboard that shows every aspect of the routing as it’s happening. As the order trades, they’re seeing where we’re routing it, why we’re routing it that way and everything else.”

Dash Financial has launched Blitz, a trading algorithm focused on aggressive liquidity capture. One of the biggest issues facing the marketplace today is institutional traders’ inability to clear the screens as displayed on order arrival.

To continue reading the entire story from MarketsMedia.com, please click here

Strike Price, Tech Talk

ISE Lifts a Leg: Plans to Introduce Yet Another New Options Exchange

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The International Securities Exchange (ISE), the venue that bills itself as the first all-electronics options exchange in the United States will open a second by year’s end. The company has has filed a Form 1 application for a second exchange license with the Securities and Exchange Commission.

No details about the products to be traded, market structure, or fee schedule of the new exchange have been announced – except that it will run on ISE’s “Optimise” technology.

“Our Optimise technology platform was designed to support multiple markets and will enable our member firms to leverage their existing connectivity for our new exchange,’’ said Gary Katz, President and Chief Executive Officer of ISE.

The new exchange, the company said, however, will make use of a new piece of functionality added to Optimise: Legging orders.

According to a document filed with the SEC, a legging order is an order on the regular order book in an individual series representing one leg, or side, of a two-legged complex options order.

A legging order may be automatically generated for one leg of a complex order under two circumstances.

First, when the price matches or improves upon the best displayed bid or offer on the regular limit order book.

Secondly, when the net price can be achieved as the other leg is executed against the best displayed bid or offer on the regular limit order book.

The multiple-legged order type, ISE believes, will improve liquidity for complex orders by enabling interaction between the complex and regular order books.