Volex Execution Services, an arm of Volant Trading, has launched exchange-sponsored auction sessions to attract undisplayed liquidity is US listed options.
Borrowing from the retail market, where auctions are regularly used for price improvement, the sessions are designed to only allow an order to trade at national best and offer (NBBO) or better, and will provide another tool for both broker-dealers and the institutional buy side to use in combating widening spreads and insufficient liquidity at size.
"Most smart order routers do not accommodate auction sessions for institutional clients. As spreads continue to widen, traders must adopt more advanced execution services to discover liquidity, electronically and efficiently," says Vishal Gupta, head of VOLEX Execution Services. "Auctions set up an 'electronic jump ball' where liquidity providers compete for the order."
"The markets have matured and auctions have become a significant part of the listed options business," adds Ed Boyle, CEO of BOX Options Exchange, which runs intraday auctions in the space. "We are very pleased to see Volex take the auction process to the institutional community, as it has been underserved in this area," continued Boyle.
The auctions will be available to registered brokers for US listed options, with orders sent to Volex via FIX Protocol or via REDIPlus and Bloomberg execution management systems.
More on options auctions and ongoing liquidity initiatives later this week as BST reports from the Options Industry Conference in Miami Beach, Florida.
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