OSI Conversion Finishes with Twitter Buzz, Consolidation Next Step

CHICAGO - Despite industry concerns about the tight deadline for the options symbology initiative (OSI), the conversion to the new options symbols on February 12 went smoothly.

The day started with a Twitter buzz. "Goodbye old option symbology. You will not be missed," tweeted optstrategist, while bwstein followed up with: "Conversion happened and we're still alive!"

At the Options Clearing Corporation's (OCC) press briefing the following Wednesday, a spokesperson commented that it almost went too smoothly, which was probably why there was not "much attendance here today."

OSI has previously been compared to Y2K, a change that touched a large number of systems, and resulted in expensive projects and increased operational risk. Yet, the new OCC codes did not seem to end up having the same impact. "We have not heard of any firms that can't trade," said Chicago-based Dave Harrison, the OCC's vice-president, member services.

In fact, the market turned out to be fully prepared. "The real help for us were the weekly meetings, and (the fact that we were) distributing new information," he said.

In addition, market participants completed five months of testing in the run-up to the conversion. "For an implementation this large, we always expect to have some issues, and the lack of issues is testament to the testing period that it all went well," he told Inside Reference Data.

Mark Woolfenden, managing director of futures and options symbology feed provider FOW TRADEdata, says the OSI conversion required changes to its Xymbology service, particularly affecting the mapping process. But "so far so good," he says, adding that the part of the market FOW is involved in has been fine post-conversion.

Consolidation to Add Clarity

The next step now is the consolidation period, when positions will be consolidated. This change, which was one of the drivers for the symbology change, will give users the ability to understand what options they are trading as an IBM option, for example, will have IBM in the symbology.

"The consolidations will be a challenge, but we've tried to break it up in order to make it more manageable," he says. The consolidation started with flex options with open interest on February 26, and continued with a conversion of all-point index strike prices and cash settled FCOs on March 5.

Woolfenden says the schedule appears to be well planned. "I think the consolidation part of the OSI is well defined," he says, adding that it will lead to clearer processing, with fewer trade failures, and the system will be more scalable as transaction volumes increase.