Statement Summary
The press release outlines a roundtable discussion led by the Commission’s Director of the Division of Trading and Markets, focusing on the current state of options market structure. Acknowledging the historical context and growth of the options market since 2004, the discussion emphasizes the need to address ongoing issues such as market fragmentation, execution quality, and liquidity concentration. As the market evolves with increased retail participation and technological advancements, the Commission aims to foster transparency, fairness, and competition. The roundtable features expert presentations and panel discussions to explore these dynamics, ensuring that regulatory approaches remain responsive to changing market conditions and support investor interests.
Original Statement
Thank you, Commissioners Peirce and Uyeda, for your remarks today and for your engagement on options market structure. In particular, I’d like to credit Commissioner Peirce with the idea of this roundtable. Her advocacy and leadership on options helped make today possible, and her intellectual curiosity, passion for our work, and dedication to core Commission principles regularly make our Division better.
I also want to thank our moderators and distinguished panelists for lending us your valuable time, expertise, and experience today to help inform the Commission and the investing public we serve. We are confident that this group will lead us through a lively, thought-provoking, and informative discussion about current issues in the options market.
Before I begin, please note that my remarks today are provided in my official capacity as the Commission’s Director of the Division of Trading and Markets, and do not necessarily reflect the views of the Commission, the Commissioners, or members of the staff. This disclaimer also applies to the comments of my Division colleagues who will join me as part of today’s program.
As we explore current topics in options market structure today, it is useful to remember the Commission’s last deep dive into the listed options waters was in 2004: a Concept Release on Competitive Developments in the Options Markets. The Concept Release reflected on fundamental questions about how competition, technology, and investor protection intersect in the options market. It came on the heels of a transformational time for options. Multiple-listing had been introduced in August 1999, driving venue competition. The International Securities Exchange launched in May 2000, becoming the first new entrant in the options market in more than two decades. Controversy marked introduction of payment of order flow and internalization to options markets then, as execution venues sought to differentiate themselves to customers. Some of the questions raised in the Concept Release, such as the appropriateness of execution quality disclosure to options trading, remain relevant today.
Now, more than 20 years later, the options market has seen phenomenal growth, with increasing retail participation and the addition of more options exchanges – and hence competition and investor choice. At the same time, options markets are working harder than ever. The sharp increase in the number of options classes and series and exploding quote traffic necessitate higher levels of technological investment and capital commitment. And despite these transformative changes, liquidity is even more concentrated in a limited set of the most active symbols, wide spreads are common in less liquid symbols, large market makers occupy a significant number of specialist appointments, and consolidators control the vast majority of retail flow. Many of the same issues from 2004 persist. It is therefore incumbent upon us to re-inform ourselves and revisit where things stand.
In our first segment, we will delve deeper into these trends via data. As we listen, consider that what’s old is new again, albeit with a modern twist. As the options market evolves, many of the underlying policy questions with which the Commission and market participants have grappled over the years remain familiar. But today, we consider those policy questions in a landscape that is profoundly more automated, interconnected, and complex than ever before. For example, we continue to consider ways to promote and facilitate competition, while addressing any potential negative effects of fragmentation.
At the same time new issues have emerged, like short-term options series with more expirations during the week. And ORF. Though, I am happy to say that in the case of the Options Regulatory Fee, every exchange has amended its rules as part of a successful, if long-overdue, industry-led reform effort. This reform will move the marketplace to a more equitable and fair regulatory funding model on July 1 of this year. And to the exchange leader who volunteered last fall to participate in an ORF roundtable on December 24, your Christmas comes early in 2026.
Today’s roundtable is an effort by the Commission to once again engage with market participants in a thoughtful dialogue on these issues and to reexamine and reaffirm an approach that supports transparency, fairness, and competition in the markets that investors rely on every day. We should consider how to respond to changing market dynamics, whether in technology, trading behavior, or market participation, and reflect on our collective past experience and lessons learned as we do so. I expect that today’s panels will provide robust discussions that will help us assess these important market structure issues.
First, we will hear from Jesse Brady and Ethan Coombs in the Division’s Office of Analytics and Research. Jesse and Ethan will present highlights from their paper that was released last week to support today’s discussion. The paper is available on the roundtable webpage and on the Commission’s market structure analytics page. The data describes key trends observed in the options market in recent years.
Following the presentation, we will have three panel discussions. Panel one, moderated by Division colleague Arun Manoharan, will examine how the current options market structure facilitates or hinders the ability of liquidity providers to compete fairly and freely in furtherance of a robust national market system. Our second panel will discuss the customer experience with listed options. Division colleagues Jon Kroeper and Eric Juzenas will moderate. After lunch, Chairman Atkins will make remarks. Our third and final panel will be moderated by Richard Holley and will consider the growth of listed options, the associated challenges and opportunities that growth presents, and the issues that the Commission and market participants should consider in the years ahead.
Again, thank you to everyone participating in today’s roundtable. We look forward to exploring with you an interesting and always-evolving segment of the marketplace, which is increasingly important to investors.
I’ll now turn it over to Jesse and Ethan.
