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Pushing liquidity in options products – Eurex’s Passive Liquidity Protection

Release date: 24 Aug 2020 | Eurex Exchange, Eurex Group

Pushing liquidity in options products – Eurex’s Passive Liquidity Protection

Eurex launched its Passive Liquidity Protection (PLP) back in June 2019 to strengthen order book liquidity. After a successful pilot phase with German and French equity options, on 24 August 2020 Eurex is rolling this out to the remaining equity options segments, as well as its flagship index product, the DAX Equity Options.

“Looking at the options market, we found that not all market makers have the technology to compete in the order book which means they are not able to provide the price picture they want to, because they simultaneously have to monitor their risk of being picked off when prices suddenly change. PLP is a gamechanger by creating an environment where all market makers can provide their most competitive price offering safely in the order book,” explains Jonas Ullmann, Chief Operating Officer, Eurex.

With PLP, orders that are executable upon arrival at the matching engine will be delayed by a specific deferral time before they can interact with the order book. Passive orders go straight into the order book. Participants will be informed in their private messages whether their order has been deferred – this is not visible in market data.

 

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