Competition Without Fungibility: Evidence from Alternative Market Structures for Derivatives

  title={Competition Without Fungibility: Evidence from Alternative Market Structures for Derivatives},
  author={S{\"o}hnke M. Bartram and Frank Fehle},
  journal={Financial Accounting},
In this paper, we compare option contracts from a traditional derivatives exchange to bank-issued options, also referred to as covered warrants. While bank-issued option markets and traditional derivatives exchanges exhibit significant structural differences such as the absence of a central counterparty for bank-issued options, they frequently exist side-by-side, and the empirical evidence shows that there is significant overlap in their product offerings although options are not fungible… Expand
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4 While issuing banks continuously quote bid and ask prices, the bid quotes are conditional on the investor having previously purchased the option
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