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Interview: Susquehanna takes on Market-Making in MSCI and STOXX® Index Options

Release date: 12 Apr 2016 | Eurex Exchange

Interview: Susquehanna takes on Market-Making in MSCI and STOXX® Index Options

Eurex is constantly working to increase liquidity across all products. Susquehanna International Securities Limited, one of the leading global trading firms, has been supporting us over the years as a Market Maker in various products (i.e. VSTOXX® Futures, Weekly Equity Options). Since very recently they joined as Market Makers in some Equity Index Options. We talked to Cathal Hardiman about their role as Market Maker and the development of these products.


Cathal Hardiman,
Susquehanna International Securities Ltd.

Eurex: You started Market-Making in options on MSCI Europe, Emerging Markets & World, STOXX® 600 and STOXX® Europe Indexes. Why is now the right time to add these products?

Cathal Hardiman: Generally speaking, as our options sales desk continues to grow our client base, the range of products we cover is a big relative strength of the desk. As such, we are always keen to expand our offering, especially with products where we see a lot of growth potential like in these instruments, as the underlying indexes are well followed globally through both futures and ETFs.
Options allow portfolio managers active in these indexes more flexibility with their strategies, for example using options for yield enhancement or downside protection. We have already seen client interest to this effect so we believe that volumes should continue to grow further.
We saw increased activity in MSCI Futures this year, with 266,000 contracts trading in the first two months, which is more than 3x the volume traded in the same period last year. As such, we felt the time was right to add the related options to our product suite*. (*Figures received directly from the exchange.)

Eurex: How do these new products complement the existing Susquehanna options offer?

Cathal Hardiman: We already make markets in the majority of listed options in Europe (both index & single stock options). Having an integrated book allows us to offset risks across products, and also better informs our pricing. Both of these benefits allow us to be competitive in pricing risk. The wider the product list on our book, the larger these integration benefits are. Aside from having a wider product offering, this also allows us to make tighter prices in any given product, ultimately allowing us to give a better service to our clients.

Eurex: We see a fragmentation of the market in MSCI products across European, American and Asian exchanges. How do you see Eurex Exchange in this competitive environment?

Cathal Hardiman:  Since these indexes are so well followed globally, the addition of another liquidity pool in which to trade options is very much welcomed. Many of our clients only trade in European markets, and some only on Eurex. As such, getting these options trading on Eurex should attract a wider base, which will hopefully lead to a marked increase in activity worldwide. Having SIG Susquehanna on board as the Market Maker in Eurex MSCI Options promotes deeper, more liquid and more consistent markets which are necessary for growth.

Eurex: What is the potential you see in this segment going forward? What will drive its future growth?

Cathal Hardiman: We see a lot of growth potential for options on well tracked indexes, as long holders use options to complement their existing delta one strategies (e.g. through overwriting or protection buying). The more informed fund managers can be about what options strategies they can employ, the more natural growth we will see. This is something we are working with Eurex and iShares to achieve with ETF options (EUN2 GY & DAXEX GY), and we are already seeing some sizeable client interests in these products.

Eurex: Thank you very much Cathal for sharing the insights.

For more information about any of these products feel free to contact Cathal on T +353 1 802 8118 or

About Cathal Hardiman

After receiving his MSc. in Finance from LSE, Cathal went through the education program at SIG. He spent nearly three years on the trading side before joining the European options sales operation. Along with his colleague, Javier Arrazubi, Cathal makes prices for asset managers, hedge funds and private banks across the spectrum of European equity and index options. He is currently based in the SIG European headquarters in Dublin, Ireland.


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