NEW YORK & LONDON--(EON: Enhanced Online News)--European investors are increasingly embracing the use of US-listed options as part of their strategies to manage equity exposures – this at a time when alternative OTC-and European-listed options markets are seen lacking sufficient liquidity to meet their trading requirements. According to TABB Group in new research issued today, “European Interest in US Options: Factors Driving Renewed Demand,” portfolio managers are turning to US-listed options products to manage risk and exposure across broad-based portfolios of both US and global equities.
“European Interest in US Options: Factors Driving Renewed Demand”
“European investors say they’re facing significant challenges when hedging their portfolios of equity securities because the domestic European markets are not providing them with sufficient liquidity and, under the new MiFID, EMIR and Basel III regulatory landscape, the OTC markets have become less economically desirable,” says Andy Nybo, TABB’s head of derivatives research and author of the report. “The growing importance of volatility strategies is also attracting these investors to the US options markets where they can manage volatility exposure across a broad range of index, ETF and single-stock products with significant liquidity,” adds Nybo.
The ability to use options in hedging strategies around large global portfolios has become a key driver for many European investors’ use of options in the US markets. Not only are they able to deploy these strategies in size across major index options, but they’ve also found significant liquidity across single-stock and ETF options in the US allowing them to enter and exit large positions efficiently with minimal market impact.
Rising levels of US equity assets are driving demand, Nybo says, with holdings of US equity securities by investors across Europe totaling $1.9 trillion as of June 30, 2012, up 21% annually since 2009, with continued growth expected in 2013. “As the economic recovery in the US continues to gather steam, European investors will continue to allocate assets towards US exposure, which will include the use of options to manage risk and implement directional strategies.”
The 17-page report with 11 exhibits is available for TABB Group Research Alliance Derivatives clients and pre-qualified media at http://www.tabbgroup.com/Login.aspx. For a copy of the Executive Summary or more information, visit www.tabbgroup.com. To purchase the report, write to email@example.com.
About TABB Group
With offices in New York and London, TABB is the only research and consulting firm focused exclusively on capital markets, based on the interview-based, “first-person knowledge” research methodology developed by Larry Tabb. For more information, visit www.tabbgroup.com. In 2010, TABB launched TabbFORUM, the online capital markets community for peer-to-peer opinion and analysis covering current industry issues, tracked daily by more than 18,000 professionals.