Traders are urging U.S. regulators to fix a part of the options market that some blame for contributing to the last five years of stagnant trading.
Bloomberg News reports that auctions, which mainly match orders from individual investors, may have reduced competition during normal trading. The relative attractiveness of auctions could be reducing liquidity in the options market as market makers cut their efforts elsewhere during continuous trading.
“Corrective steps need to be taken to safeguard the high level of competitiveness that has served the options market for over 40 years very well,” a group of market-making firms wrote in an August 5 letter to the Securities and Exchange Commission.
The letter followed the New York Stock Exchange’s decision to change fees on its options auction mechanism earlier this year, a move the SEC has temporarily suspended.
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