IEX Group has announced the launch of a US options exchange to partner with liquidity providers to tackle risk management challenges faced in the options markets, subject to regulatory approvals.
The new exchange will bring IEX’s suite of order protection innovations to better meet the demands of market makers.
“We are focused on understanding the challenges of our members and having discussions with market participants to guide our entry into the options market,” said Bryan Harkins, president at IEX.
“IEX’s experience and expertise in understanding the needs of liquidity providers provides a great foundation as we begin to offer options market makers a set of tools designed to drive performance.”
The proposed options exchange will be an electronic venue, offering access to the full multi-listed options market while relying on a pro-rata model.
The development will be the first time that IEX’s proprietary solutions for risk management and markout optimisation will be available for US options trading, building on top of its equities offering.
“IEX spent the last decade innovating to build technology that is designed to protect liquidity providers, and we have now added a team of leaders with deep multi-asset expertise that can help guide IEX through our next stage of growth,” said Brad Katsuyama, founder and chief executive at IEX.
“We have been encouraged by the conversations this team has had with market makers about moving into the options market which underscores the opportunity for us to deepen our relationships with clients and to further improve execution quality in US markets by expanding into options.”
The launch follows IEX’s announcement of several key leadership appointments earlier this year, including the addition of Harkins as president and John Palmer to lead the firm’s efforts in building out its offerings and technology to serve new markets.
Palmer will serve as head of options and lead the new exchange. He will continue reporting to Harkins, who will oversee both IEX’s equities exchange and the new options exchange.
IEX has also appointed Ivan Brown, who will play a key role in the firm’s plans to bring a highly differentiated trading venue to the options market. Brown will lead business development and product design for the new options exchange.
He joins IEX after 15 years in financial markets leadership positions at the New York Stock Exchange (NYSE), most recently having served as head of options and business development.
“Bryan, John, and Ivan are proven operators who have built successful trading platforms across asset classes,” asserted Ronan Ryan, co-founder and chief operating officer at IEX.
“We are committed to bringing together the best people in the trading industry to disrupt the status quo in options trading with a unique market architecture, highly differentiated products, and deep commitment to client relationships.”
IEX stated that it plans to work closely with options industry participants to address the unique risk management-related challenges that currently exist in the options market, adding that it will require minimal effort for current members of its equities exchange to be onboarded to this new venue.