---
title: "Options: Near-Term Challenges, Long-Term Health"
description: "Taking the pulse of the market via #OIC2017."
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 05.11.2017

 By Terry Flanagan

 Options

# Options: Near-Term Challenges, Long-Term Health

 05.11.2017 By Terry Flanagan

![Options: Near-Term Challenges, Long-Term Health](https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/iStock-510176308-1.jpg)

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The options market faces a number of near-term challenges such as fragmentation, a persistent bifurcation of liquidity, and higher operating costs for market participants.

But despite stalled growth over the past few years, the longer-term outlook for the options space remains robust, according to speakers and participants at the Options Industry Conference, which is taking place in Scottsdale, Arizona this week.

https://twitter.com/jj\_gogoMktStrux/status/862689110669967360

Thursday's Exchange Leaders panel included top executives from the five U.S. exchange operators, which combined run the 15 options exchanges, ranging from the biggest incumbents Nasdaq PHLX and CBOE, to the smallest newcomers, Miax Pearl and Nasdaq Mercury.

This panel often has been a contentious one, with CEOs sniping at each other and making veiled accusations about whose initiatives undermined market transparency most egregiously. But this year's version was friendlier.

https://twitter.com/option\_girl/status/862708921214967808

https://twitter.com/Nasdaq/status/862715539503841281

Deepening liquidity on lit markets was a point of emphasis. One exchange executive noted that "tight posted quotes are the best advertisement we have." NYSE's Ivan Brown took it a step further, saying “no cause is more important to the options industry than the preservation and advancement of displayed markets.”

Regarding the proliferation of new exchanges in recent years, the question was raised as to how a venue operator can be competitive without exacerbating market fragmentation. Miax's Shelly Brown, whose Miax and Pearl exchanges are the 11th and 15th in a crowded field, said "it is on us to find ways to add value."

One bright spot in a growth-hungry market has been on the retail side.

https://twitter.com/Options\_Edu/status/862700849889513472

Also, some new products have caught on.

https://twitter.com/RussellRhoads/status/862693197939486720

With regard to product concentration and overall liquidity, it was noted that 80% of total options volume is generated from trading in 20% of the securities in the market. One potential cure for this -- and for other ailments in the market -- is growing the pie, i.e. attracting more participants to the options space.

https://twitter.com/Swish1953/status/862465550953267200

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