Andre Eue, Head of Market Development at Eurex, gives an overview of Eurex EnLight’s recently introduced new functionalities, including Staging of RFQs that allows for enhanced member access. He also talks about the more intuitive GUI and outlines the upcoming availability of Options Volatility Strategies (OVS) in single stock options. In addition, he explains the focus on increasing the distribution in the Dealer-to-Dealer and the Dealer-to-Client space in 2022.
You have been very active in enhancing functionalities.
Yes, we were able to provide additional flexibility and enhanced access for our members with three new functionalities at once: auto pull, Staging of RFQs and an updated, more intuitive GUI. With auto pull, we are offering more security for liquidity providers, because they can now define how long provided quotes should be executable.
With Staging of RFQs we provide an efficient integration of Order Management Systems (OMS) into EnLight. The good thing here is that third-party systems to support each and every workflow of the EnLight backend are no longer needed.
When members make use of staging, the negotiation process is managed via the Eurex GUI, but fed into the user’s system through OMS. What’s more is that Staging of RFQs also contributes to further workflow electronification and significantly reduces implementation efforts.
Together, these two new offers, plus a more intuitive and convenient GUI, will move the user experience to a new level.
Can you explain the OVS concept in more detail?
There will be major improvements to the Eurex trading system with the introduction of our NextGen ETD concept. It will, among other things, allow members to negotiate and trade Options Volatility Strategies in single stock options with daily delivery of the cash leg on Eurex, including Eurex EnLight by mid-2022.
So far, OVS in single stock options are generally not traded on EnLight since the underlying stock is not traded on Eurex. With the introduction of our NextGen ETD project, OVS single stock options will become available using daily settling futures with physical delivery that will serve as a proxy for the stock during the negotiation process. This will allow for delta neutral trading without manual back-to-back transactions of the underlying cash leg.
Trading via Eurex EnLight will be of interest here, as OVS are predominately negotiated off-book and EnLight is a fully electronic platform, designed to bring off-book business in Eurex products on-exchange. We expect that a good portion of the single stock options volume traded via EnLight will be contributed by OVS in the future.
What strategic measures are planned for 2022?
We will, of course, further concentrate on the continuous development of the Eurex EnLight functionalities, but besides that, distribution will be our core theme for this year. We are working on cooperations with Inter-Dealer Brokers (IDBs) and software vendors to increase distribution in the Dealer-to-Dealer and the Dealer-to-Client space. Our aim here is to lower the barriers of adoption and unleash the operational efficiency provided by EnLight to the off-book market to all market participants.
With IDBs we are working on rolling out a hybrid model to combine the strength of voice and electronic trading, making the transition for market participants from pure voice to electronic seamless and easy without the initial need to change trading behavior.
Together with software providers we are looking to extend the existing Direct Market Access/Order Routing System set-up in the order book to EnLight and thus the off-book market. With this we want to strengthen the buy side / sell side relationship, while at the same time provide efficient practicability and execution certainty for buy side customers.
We will keep our customers in the loop on any further developments.
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