Why can't we place true multi-leg options orders?

F&O
1

If there are multiple legs in my options order, that entire order is best effort on a leg by leg basis when it should be for the entire multi-leg.

It goes without saying, but this creates high risk scenarios where one leg is executed while the other is not. For good or for worse, that changes the entire risk profile as well as affects the marketplace asymmetrically given the number of options trades that we have.

That is not how it’s done in several other countries and the positive side is retailers are better protected.

What is the blocker to move in this direction?

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2

@nithin Can you share some insight on this topic?

3

For guaranteed execution, you must have those contracts traded on the market. For example, the Nifty 23000 Strangle is a 100-point strangle. The issue with our markets is that very few people do anything other than buy OTM options.

4

Thanks for the reply.

Sounds like there is no solution in the near term.

Can’t we deal with liquidity or counterparty issues in the manner similar to how others do?

I assume we have options market maker / dealer in India? Can they not deal with this, or is there a lack of incentive?.

This also feeds into efficient market theory.

5

Nope, all orders have to be placed on the exchanges in India. There is no concept of a market maker in equity and derivatives. The only place market-making is allowed is in ETFs.

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6

Thanks for sharing.

Good to know.