This summer, Meaghan Dugan was named Head of NYSE Options to manage the exchange’s options business across its two markets, NYSE Arca Options based in San Francisco and NYSE American Options in New York. The NYSE’s options markets both have active trading floors, combining human judgment and cutting-edge technology to provide superior execution quality.

Dugan is well-positioned to lead the NYSE Options business, having begun her career at the old Pacific Exchange, which through acquisition evolved into today’s NYSE Arca Options market. Following her time at the Pacific Exchange, Dugan was a market maker at Spear Leeds & Kellogg, moved to New York City to become a specialist at Morgan Stanley, and then worked at Bank of America Merrill Lynch on its electronic trading team overseeing Options and Futures products.

In 2019, she joined the NYSE to run product and competitive strategy for NYSE Options. Within months of her arrival, options volumes began their climb to historic levels as the well-documented boom in retail trading activity created what Dugan describes as a “new normal” for the industry.

Curatia had the opportunity to ask Dugan about her new role and her thinking as NYSE Options looks ahead to 2023 and beyond. Here are her responses.

When I joined the New York Stock Exchange 3 years ago, I was in a sense returning home since my first job in the industry was at the Pacific Exchange, which today is known as NYSE Arca Options. At that time, stocks were still traded in fractions and transactions were largely recorded on paper tickets. It’s a different world today, with the NYSE operating the most powerful technology platform in the industry.

Returning to the NYSE has allowed me to leverage the breadth of skills developed over the course of my career in New York and San Francisco, both as a specialist market-maker and across client-facing positions in options trading.

The thing I enjoy most about my position is the opportunity to work with our extraordinarily talented NYSE team and our remarkable members. These two groups make our markets what they are today.

Yes. In fact, November was an incredibly busy month on the options markets. Multi-list industry volume rose to average daily volume (ADV) of about 40 million contracts, which makes last month our second busiest this year.

Since July, the industry’s strength has been demonstrated by accelerated improvement of quote spreads and increased posted size. We have seen three days added to the industry’s Top 10 volume days of all time, three new Top 10 days across our NYSE Options group, and three new Top 10 days on NYSE Arca Options! I am so proud that we’ve remained strong and resilient during these periods of high volatility.

Interestingly, across NYSE Arca Options and NYSE American Options we have seen larger institutional-sized orders grow this year relative to retail-sized orders, which we define as 10 contacts or fewer.

We have achieved two major milestones this year that are noteworthy. First, we have worked to ensure our trading communities have choice and opportunity by transitioning to an open architecture for our two open outcry trading floors. In February, we launched a new floor order management system (OMS) across both markets. This provides more flexibility and the ability for members to choose the best OMS for their businesses.

Then, in July we successfully migrated NYSE Arca Options to our highly deterministic, in-house trading platform called NYSE Pillar. Pillar is the trading system powering all five of our NYSE equity markets. By moving NYSE Arca Options to Pillar, we can offer market participants the great benefits of a lower latency, more deterministic and fully redundant trading system. This was a massive effort and close collaboration with our members made it a success.

One of the main benefits of Pillar is the reduction of latency, the length of time for an order or quote to be processed, in comparison with our legacy platform. We have seen reductions of more than 50% thus far using Pillar, which also offers simplified order types that improve liquidity opportunities. We plan to implement additional enhancements to provide even better performance as we move into 2023.

Even though we completed our NYSE Arca Pillar migration, we’re not slowing down. We plan to add additional features while continuing to tweak our performance profile. In addition, we’re highly focused on workflow enhancements across our trading floors and more electronic connectivity to allow brokers to deliver faster executions.

Even with all those initiatives, our main goal for 2023 is continuing to invest in functional and performance improvements to Pillar, ultimately bringing Pillar to NYSE American Options! This will represent an enormous organizational milestone, as it will complete the migration of all seven of the NYSE Group’s options and equity exchanges to Pillar. By having both of NYSE’s options exchanges on the same platform as our five equity markets, we will have an extremely scalable, shared technology platform that will enable us to develop new and innovative product offerings in 2023 and beyond.

At the NYSE, our goal is to expand what we list and trade, and there are a few areas we’re particularly focused on in terms of new products. The first is providing access to new index options products, which is a huge growth area both at the NYSE and our parent company, Intercontinental Exchange.

In addition, we are focused on adding new features across NYSE Arca Options and NYSE American Options by offering Tied to Stock orders, which combine a stock and options order, and Implied orders, which offer additional matching opportunities. Finally, with our shared technology platform, Pillar, we can work more closely with our NYSE equity markets on innovative cross-asset product offerings.

Over the longer term, I see the industry looking to expand with new clients and an even more diverse, international footprint across retail participants, market makers and institutional customers. We also will continue to improve the quality of our markets with initiatives such as efforts to reduce message traffic on zero interest or illiquid series.

In terms of market performance, I think you’ll see us sustaining the “new normal” of multi-list ADV with increased participation from retail and larger institutional-sized orders.

Liquidity concentration as a function of options volume has drastically migrated into shorter expirations, 10 trading days or fewer, and this has become very popular with retail. This is a trend I expect will be with us for some time. Additionally, given the recent correction in equity markets, we’ve seen very compressed symbol concentration in the major equity index ETF options and in the high dollar, high beta, high volatility equity names. This, too, I believe will be an options-market trend over the longer term.

Overall, I’m quite optimistic about the future of the options industry and the ability of NYSE Options to continue delivering for our clients.