Clearly will change big players behaviors which might turn impacting liquidity, premiums and margins requirements on the markets I play.
The options market for one of my vehicles, the S&P500 index, is widely populated by investors seeking protection to his portfolios and in great extent by speculators.
The trend seems to be a growing share of speculators (mostly playing long Gamma long Vega strategies, i.e., premium buyers) relative to hedgers.
¿How will be affected?
All OTC derivatives will pass through exchanges. Is foreseeable several exchanges will explode in activity.
Meanwhile, former high risk financial products seems to become commodities, like vanilla options and exchanges-traded futures.
¿Will this change open a opportunity in the time decay/insurance business I am?
Have to think further about it. And follow developments how brokers react, so on.
As time passes I am more convinced of my linkages with the growing army of individual investors wanted to manage their portfolios on their own.
More and more I tend to see myself as the new breed of "market makers" providing liquidity to retail gamblers and yhose who want to protect their portfolios.
Open outcry in the S&P500 options markets is deemed to disappear sooner or later. Long time legal fights (ISE against CBOE) will finish opening SPX to the different exchanges, making electronic trading and machine market making the new normal. Something good.
¿Will FinReg speed up this process?
What I know for sure is that change is good. Greater changes drives better opportunities.
Now a change happening once in a generation is coming to place. Here and now...
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