Four of the hottest topics, straight from the 2025 IDX conference
The International Derivatives Conference (IDX) brought together industry leaders to explore the key forces shaping the derivatives landscape. The conference addressed topics such as regulatory challenges, trading technology advancements, the current state of equity options trading in Europe, and broader insights into the future of trading.
We invited our experts to share their perspectives on the aforementioned themes and to unpack the key takeaways they gathered from the conference.
Navigating the ever-changing regulatory space
By Daniel Noorian
Head of Execution and Quantitive Services
What’s going on
In the current environment, FCMs and brokers are continually navigating change, much of which is driven by external factors beyond their control.
The implementation of regulatory changes and exchange upgrades, applicable to both protocol adjustments and product launches, places considerable strain on resources throughout the futures and options ecosystem. Nevertheless, it is difficult to argue against the majority of the regulatory changes as these are designed to make the financial system safer (i.e the move to US treasury and repo clearing).
Exchange products must continue to evolve, and while there have been numerous successful product launches recently (i.e weekly e-mini and treasury options) there are also plenty which have failed to take off.
Why it matters
Tech dollars, especially for FCMs, tend to get funnelled into larger projects which are often driven by changes in regulations. As clearing services expand from futures to swaps and treasuries, these areas are increasingly seen as key sources of revenue, continuing to attract more investment than other areas, such as execution.
This is the primary reason Liquidnet built a futures business, to place greater emphasis on execution tools and introduce products like pre-trade analytics and roll seeker. As part of the world’s largest inter dealer broker, we are able to place more onus on the things we believe are being neglected as well as valued by our clients.
What we heard
The panel focused on three areas: exchange and CCP projects, regulatory change, market change and associated risks. And an audience poll revealed a fairly even split on where the focus should be. A few common themes emerged. Firstly the need for better coordination and standardisation between regulators, exchanges and CCPs was mentioned, along with the work done by DMIST to address these challenges in the futures ecosystem. While some new technologies, such as distributive ledger technology, have demonstrated great benefits, they need to further evolve to reach their end state. 24/7 trading was another big topic, which was addressed from a resourcing and operations standpoint.
Are European equity derivatives falling behind?
By Oliver Deutschmann
Head of Equity Derivatives, EMEA
What’s going on
European equity derivatives markets are still lagging behind the U.S. in growth, liquidity, and retail participation. In 2024, the U.S. market for exchange-listed equity option contracts notched up another groundbreaking year of trading volumes.
This disparity is largely driven by Europe's fragmented market structure, siloed clearing models, and limited retail investor education, all of which contribute to a more complex and costly trading environment. In contrast, the U.S. benefits from centralised clearing, consolidated trading venues, and a well-developed retail ecosystem, which together fuel higher volumes and ongoing product innovation.
Here's a comparative view of how the two markets currently diverge.
Why it matters
This siloed liquidity in Europe leads to overall more siloed liquidity globally, as the US now accounts for more than 70% of the MSCI World Index*.
From a European perspective, improving equity derivatives trading is fundamental to improve the region's financial competitiveness, deepen market liquidity, and support broader capital markets integration across Europe, not just within the EU.
A more efficient and accessible equity derivatives market can help European institutional and retail investors better manage risk, hedge exposures, and gain market access through cost-effective instruments. It also allows for more transparent price discovery and can drive innovation in financial products, including ESG and sector-specific derivatives.
The continued evolution of global financial markets should and needs to come with greater diversification of market structure and flow.
What we heard
The panel exposed the proposed solutions to fill the gap between the European market and the US. From improving screen price quality by forcing more on-screen liquidity rather than through off-book trading, to exchanges incentivizing participants to move OTC trades into listed via more retail-friendly blocking rules.
One of the panellists also highlighted the importance of financial education in tackling the lack of retail participation in Europe. Apparently, the Netherlands have the highest retail participation across Europe as there once was a minister who introduced financial education as part of the school curriculum.
* source: www.msci.com/indexes/group/developed-markets-indexes
Where is trading heading to?
By Oliver Deutschmann
Head of Equity Derivatives, EMEA
What’s going on
2025 has been marked by periods of high volatility as well as trade policy uncertainty. However, this isn’t the first time in the past five years that we've faced challenging periods. We experienced similar difficulties during the COVID-19 crisis in 2020 and again amid the inflation concerns in 2022. What’s clear is that the current environment is once again putting significant pressure on both trading desks and clearing brokers alike.
These challenges include not only scale and resilience but also liquidity, as top-of-book notional has steadily decreased in response to volatility. At the same time, futurization can be observed across all asset classes.
Why it matters
Lower margins will continue to pressure costs on both the buy-side and sell-side. Furthermore, direct market access and the growth of algorithmic trading will also contribute to this pressure, while introducing the risk of insufficient human oversight.
On the flip side, although top-of-book liquidity appears low, overall market volumes have reached record highs during recent periods of high volatility, raising further questions about the efficiency of voice and electronic trading.
In addition, regulatory demands are increasingly pushing more flow toward centrally cleared products such as futures, resulting in a greater need for specialisation on both sides.
What we heard
The market coped better with the high volatility we experienced in April this year than it did in previous years. Another key topic was technology. Clients are becoming more sophisticated and the sell side needs to keep innovating. Last but not least, market makers have been challenging the exiting model of banks holding the pricing power. Agency execution to access larger liquidity pools will play a bigger role going forward for buy-side execution desks and we, at Liquidnet, are at the forefront of this development.
No one-size-fits-all in trading technology
By Daniel Noorian
Head of Execution and Quantitive Services
What’s going on
Trading technology encompasses a wide array of topics related to execution. However, not all technological advancements are broadly applicable; their relevance largely depends on the specific client type being considered.
For instance, the improved RFQ functionality has become increasingly important for real money accounts but is not always as relevant for individuals beyond this scope. A portion of the industry is also advocating for technological advancements to help solve the regulatory side of execution, but while some view this as a necessity, others consider that is simply about improving execution outcomes.
This situation takes the challenge of bringing on new technological advances to another level as vendors try to maximise the value of their tech investments as much as they can.
Why it matters
As mentioned, there are a lot of different takes on this subject. Liquidnet, for example, pays close attention to the execution side of things when it comes to technological advancements. Clients have become more sophisticated in the way they approach execution, making more of the options available to them. As a result, a number of clients take a more hybrid approach, making use of low-touch execution via algos wheels and turning to high-touch desks for orders that are significantly larger or where liquidity is more challenging to find.
Most of the time, this tends to happen in futures block trading or in the options execution space. It is on the latter, where there have been the greatest advancements at improving client outcomes. The rise of synthetic option trading, where clients trade inside the bid/offer spread, is one of the areas with more technological progress, especially coming from vendors such as Quantitative Brokers and the Striker option algo.
What we heard
The conversation around technology has evolved significantly as clients have become more sophisticated. What was once a simple “buy vs. build” decision has shifted toward customisation, with clients now coming to the table with very specific requirements. The panel agreed that this evolution should be client-led, highlighting the need for better coordination between infrastructure providers’ product development and client needs. At Liquidnet, this is a key area of focus, with continued investment in buy-side-driven technology, such as pre-trade analytics.
When it comes to challenges, regulation and the operational demands of 24/7 trading ranked highest in an audience poll. Interestingly, only 4% of the audience cited AI as a challenge, prompting one panelist to express surprise, noting that AI is coming fast and is poised to transform the industry.