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CEO TALK: OCC Addresses Options Technology and Cybersecurity

Traders Magazine Online News, February 8, 2018

John D'Antona Jr.

Technology. Cybersecurity.

Two great buzzwords that are firmly entrenched in the financial market lexicon – previously in equities but now moving into the derivative option market. As the options market continues to enjoy healthy an more modest volume and valuations when compared to equities, investors cannot help but take notice.


That said, Craig Donohue, Executive Chairman and Chief Executive Officer at the Options Clearing Corporation took some time to sit down with Traders Magazine editor John D’Antona Jr. and discuss the state of the options industry, covering topics such as volume, OCC’s move to more cloud-based technologies and his greatest regulatory concern.

Here is an edited version of the conversation:

Traders Magazine:          Why don't you tell us a little bit about the state of the options industry. I just read a report this morning about how options volume is down and but still doing well on a year over year basis.

Craig Donohue:                We've certainly seen in the last three to four years a leveling off of volume growth, even as 2017 volume rose by three percent. We’ve had a 45-year industry track record of very significant growth year after year.  Investors have become more familiar with and adept at using options, both at the retail and the institutional level. There has also been tremendous product innovation and extension over that 45 years, which is reflected by the recent launch of bitcoin derivatives..

About three to five years ago, we started to see options volumes flatten out from a growth perspective. That can mostly be attributed to the increased cost of capital that are affecting both proprietary traders and large bank-owned broker dealer FCM's who are active in the options industry. And I think the additional regulatory burdens as well.

TM:                                    Is there a single area where you see growth or potential growth?

Donohue:                         The growth areas for us as an industry, and because we're the sole clearing house for the U.S. listed options industry, has been in ETF options and stock loan clearing. We’ve seen growth in futures clearing as well, where we clear not only the VIX and variance futures contracts traded on the CBOE futures exchange but also the NASDAQ energy product. And in 2017 we became the first clearinghouse to clear bitcoin futures.

TM:                                    Now let's talk about the state of the clearing industry. Can you elaborate on what you're doing there in terms of either technology or new initiatives? 

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