Committed to improving the market
Optiver: Best European Liquidity Provider/Market Maker – Q&A with Andrew Meyer, Partner & Head of Delta 1, Optiver.
What do you think lies behind you winning this award?
Optiver has been trading derivatives as a market maker, since its inception in 1986. The business moved to ETFs a decade ago, when we started providing liquidity, on-exchange in a small range of liquid ETFs.
About four years ago, we started actively driving growth in the ETF sector and are proud to now be one of Europe’s leading ETF liquidity providers, with the second biggest market share in RFQ platforms for ETF equities, as of the end of 2019.
Our success in the ETF space has been a testament to the tenacity and adaptability of the team and great collaboration with the rest of our business. We’ve always followed a systematic, long-term approach as opposed to behaving opportunistically. We believe in meaningful partnerships with other market participants such as exchanges, RFQ platforms, issuers and end investors as it aids us in our mission to always improve the market.
What changes and developments have there been to your offering over 2019?
In 2019 we took a step back and completely re-engineered our tech stack, from front-end to back-end, based on our learnings over the past few years. We can now price, warehouse and manage risk far better and in a fully automated way at scale. In fact, with the same team size we are now able to provide continuous competitive pricing in thousands of ETFs, on screen and via RFQ.
Additionally, we continued to professionalise our Institutional Trading offering and increased global coverage with significant growth in Europe as well as some roots into Latin America and Asia. Working together with the industry we expanded the number of Institutional Investors trading with us by 30 per cent and drastically increased our overall notional requested and traded.
We have also increased our trading in ESG listed products, a trend we hope to continue in 2020.
What has been your experience of the recent market volatility in early 2020?
As a market maker, our role is to provide liquidity to the market by consistently offering prices to counterparties, in all market conditions. When markets become more volatile, we tend to see greater interest from counterparties who rely on our price-setting capabilities. It was very encouraging to see that our new tech stack was able to handle the approximately tenfold increase in orders and trades, both on and off-exchange. With many others dropping out or widening their spreads on screen and OTC, we stayed true to our commitment to ensuring healthy well-functioning markets by providing ETF investors with the liquidity they need.
What plans do you have as a firm going forward?
Optiver’s Delta 1 team aims to further improve in the ETF space whilst growing into the cash equity space. With the ETF business established we are trying to leverage what we learned to improve cash equity execution for end-investors. We want to focus on building partnerships that allow for continuous improvement in the Cash Equity space.
We fundamentally believe that the execution landscape should evolve but that this type of growth can only be unlocked through a collaborative approach with Institutional Investors. We have already grown to offer continuous liquidity in more than 1000 European cash equities to Institutional and Retail Investors. We are just getting started there.
Improving the market through liquidity provision has always been Optiver’s motto and we hope to continue growing our positive impact. Institutional investors, looking for liquidity providers, are realising that Optiver is the biggest liquidity provider in Europe, and that we offer a real alternative to trading with banks and brokers.
Partner & Head of Delta 1, Optiver
Andrew Meyer is a Partner and Head of Delta 1 at Optiver. He has been with the firm for over nine years, he started as a trader in the Sydney office.