DataCRaiM

Success Stories

Optimizing Options Exchange Performance: Data-Driven Market Design

Advanced analytics unveils new revenue streams while enhancing market efficiency

The Challenge

A leading clearing house faced the challenge of a significant number of untraded options, which led to inefficiencies and limited revenue potential.

The dataCRaiM Solution

To address this challenge, DataCRaiM partnered with the clearing house to leverage the power of the Databricks platform. We analysed over a billion historical trading records to identify patterns that make certain options more likely to be traded. Our team employed a Random Forest predictive AI model to uncover key predictors of trade volume.

Impact

Our analysis revealed that a significant number (41%) of listed options had never been traded. This analysis enabled the customer to:

  • Improve trading efficiency - By identifying and prioritizing more liquid options and reducing the waste, inefficiency and confusion for market participants.
  • Explore new revenue streams - By focusing on more tradable options, optimizing product offerings and by starting to charge exchanges for certain positions.
  • Gain valuable insights - Understand the factors that drive option trading activity allowing our client to move from a descriptive to predictive to prescriptive analytics roadmap.

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