European demand for US equity remains strong
04 June 2018 Chicago
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The Options Industry Council (OIC) has revealed that European demand for US equity remains strong.
The study, entitled ‘European Demand for US Exchange-Listed Equity Options 2018’, was conducted by Burton-Taylor International Consulting and commissioned by OIC.
According to the study, European investors account for approximately 9 percent of total US exchange-listed equity option order flow.
The magnitude of their US equity holdings has increased 52 percent since 2013 to a total of $461 billion in 2017, continuing to drive the demand for risk management and strategies for portfolio protection.
Additionally, European investors focus on income generation, capital appreciation, and volatility strategies, the study found.
Hedge funds encompassed the largest category of European users as they accounted for approximately 53 percent of total European order flow.
Meanwhile, private wealth management accounted for 21 percent, proprietary trading firms accounted for 12 percent, and investment managers eight percent.
Further findings from the study revealed that the broad range of US exchange-listed equity options are appealing to hedge funds seeking liquidity and private wealth accounts, who want to hedge or generate income.
It was also revealed that European investors saw the most potential in short-term US exchange-listed options (42 percent), exchange-traded fund options (42 percent), and single stock options (33 percent).
Andy Nybo, director at Burton-Taylor International Consulting, commented: “European investors are clearly focused on US exchange-listed equity options, as these markets provide investors with the deep liquidity and product diversity to support their US focused strategies.”
He added: “The range of available products provides considerable flexibility for a broad variety of income and risk management strategies, with rising demand from institutional and retail investors supporting future growth.”
Gary Delany, director of European education for OIC, said: “The Burton-Taylor study on European demand for US exchange-listed equity options, which builds upon previous studies done in 2014 and 2011, provides OIC with invaluable insights as we look to develop and grow our educational initiatives."
The study, entitled ‘European Demand for US Exchange-Listed Equity Options 2018’, was conducted by Burton-Taylor International Consulting and commissioned by OIC.
According to the study, European investors account for approximately 9 percent of total US exchange-listed equity option order flow.
The magnitude of their US equity holdings has increased 52 percent since 2013 to a total of $461 billion in 2017, continuing to drive the demand for risk management and strategies for portfolio protection.
Additionally, European investors focus on income generation, capital appreciation, and volatility strategies, the study found.
Hedge funds encompassed the largest category of European users as they accounted for approximately 53 percent of total European order flow.
Meanwhile, private wealth management accounted for 21 percent, proprietary trading firms accounted for 12 percent, and investment managers eight percent.
Further findings from the study revealed that the broad range of US exchange-listed equity options are appealing to hedge funds seeking liquidity and private wealth accounts, who want to hedge or generate income.
It was also revealed that European investors saw the most potential in short-term US exchange-listed options (42 percent), exchange-traded fund options (42 percent), and single stock options (33 percent).
Andy Nybo, director at Burton-Taylor International Consulting, commented: “European investors are clearly focused on US exchange-listed equity options, as these markets provide investors with the deep liquidity and product diversity to support their US focused strategies.”
He added: “The range of available products provides considerable flexibility for a broad variety of income and risk management strategies, with rising demand from institutional and retail investors supporting future growth.”
Gary Delany, director of European education for OIC, said: “The Burton-Taylor study on European demand for US exchange-listed equity options, which builds upon previous studies done in 2014 and 2011, provides OIC with invaluable insights as we look to develop and grow our educational initiatives."
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