When a market introduces options or other derivatives, brokers face a practical question: can our systems handle them? Equity systems understand buying, selling and holding shares. Derivatives add a lifecycle that equity systems were never designed for.
Events that need processing
- Exercise: a holder decides to use the right the option gives them.
- Assignment: a writer is required to fulfil the other side.
- Expiry: positions reach the end of their life and must be closed or settled.
Each event changes positions and cash, and each must be processed correctly and on time.
Premium and margin
Derivatives also bring new calculations. Premiums are paid and received, and margin must be computed so the broker knows how much collateral each client needs to hold. The OTS Options Platform computes premium and margin and keeps derivative positions for every client and account.
One view of exposure
A client trading both shares and options is still one client. The Options Platform monitors derivative positions together with brokerage credit control, so the firm sees total exposure in one place rather than in two disconnected systems.
A client trading shares and options is still one client.