We are constantly refraining the three reasons why market structure matters to IROs – right answers to questions, right places for IR time and effort, right IR measurements. Now, let’s apply options expirations to these hooks.

Last week marked monthly options expirations. We noticed that overall market structure changed in advance on Monday October 15. We also observed how European, Asian and American markets behaved like pistons, going up and down in small increments. Market gurus would have us believe these swings are manifestations of fear and greed tied to credit or economic concerns. Whether investors are engaged in continual bipolar reaction or not, we don’t think this explanation holds up under scrutiny.

Why does it matter to investor relations efforts? Because it’s important to understand the mind set of your shareholders – both long-term and short-term – if you’re to accurately answer questions, effectively expend effort and correctly measure results. Poring over data as we do, here’s what we think: Regulation National Market System (Reg NMS) in the U.S. markets has propelled the search for arbitrage beyond individual market centers onto the global stage (it’s not fully possible yet, but the data tell us it’s getting easier). This comes as no surprise. But the degree to which volume distributes among big American broker-dealers, and big European broker-dealers and Asian structured-products specialists is quite remarkable. » Read more: Investor Relations, Reg NMS, Options And Global Markets

We are constantly refraining the three reasons why market structure matters to IROs – right answers to questions, right places for IR time and effort, right IR measurements. Now, let’s apply options expirations to these hooks.

Last week marked monthly options expirations. We noticed that overall market structure changed in advance on Monday October 15. We also observed how European, Asian and American markets behaved like pistons, going up and down in small increments. Market gurus would have us believe these swings are manifestations of fear and greed tied to credit or economic concerns. Whether investors are engaged in continual bipolar reaction or not, we don’t think this explanation holds up under scrutiny.

Why does it matter to investor relations efforts? Because it’s important to understand the mind set of your shareholders – both long-term and short-term – if you’re to accurately answer questions, effectively expend effort and correctly measure results. Poring over data as we do, here’s what we think: Regulation National Market System (Reg NMS) in the U.S. markets has propelled the search for arbitrage beyond individual market centers onto the global stage (it’s not fully possible yet, but the data tell us it’s getting easier). This comes as no surprise. But the degree to which volume distributes among big American broker-dealers, and big European broker-dealers and Asian structured-products specialists is quite remarkable.

And no matter what traders may say, options expirations are like Santa Ana winds for equity values these days. Derivatives are very liquid and constantly in motion. Still, swings of a percent or two each day played out over a year…the opportunity for gains – and losses – is both alluring to investors and difficult to measure. It’s not 5-10% at a whack, but little pieces done fast and continuously. These actions impact availability of liquidity to fundamental investors, and the transactional nature of equity markets reshuffles sellside priorities. » Read more: Investor Relations, Reg NMS, Options And Global Markets