Policy Recommendations to Unlock Retail Participation in Europe’s Options Markets

In a new white paper, Cboe examines the pivotal role listed equity options can play in empowering retail investors and strengthening Europe’s financial ecosystem, while also outlining key policy measures to support market growth. We believe that a vibrant options market—particularly for single-stock options, which offer a wide range of use cases including the hedging of equity exposures—can significantly enhance liquidity in related instruments and contribute to the overall health and resilience of European capital markets.

Read the full paper, here.

Europe’s options markets have consistently trailed other developed markets in terms of volumes. However, with the region becoming an increasingly attractive destination for global capital, and growing interest in options among retail investors, the market is on the cusp of transformation—if this demand can be effectively unlocked.

Against this backdrop, the EU’s Savings and Investments Union (SIU) initiative is well-timed. One of its core goals is to mobilise an estimated €10 trillion in retail savings and channel it into productive investments across European markets. We believe listed options can play a vital role in achieving this ambition.

As the founder of the US listed options market over 50 years ago, Cboe has witnessed the evolution of a robust US options ecosystem where both institutional and retail investors use options to manage risk, enhance returns, and express market views. The US market is now entering its fifth consecutive year of record volumes, supported by:

• Deeply liquid, on-screen markets
• A competitive multi-exchange environment
• Efficient post-trade infrastructure
• Widespread, engaging investor education

In contrast, Europe’s options markets are being held back by a siloed and fragmented infrastructure along national boundaries, leading to high costs and inefficient capital usage. The dominance of OTC and off-screen trading has discouraged new entrants, particularly systematic trading firms. The lack of meaningful retail participation further limits growth, partly due to persistent misconceptions about the risks of exchange-traded derivatives.

At Cboe, we see these challenges as opportunities—and the US model which Cboe has pioneered as a blueprint for success in Europe.

Through Cboe Europe Derivatives (CEDX), we’ve built a pan-European ecosystem that simplifies access to options markets and significantly reduces costs for both institutional and retail investors. With a single access point, investors can trade over 320 options on leading European companies across 14 countries.

Yet infrastructure alone isn’t enough. To truly unlock retail participation, Europe must cultivate a stronger investment culture and regulatory framework that supports the use of listed options.

In the US, accessible and engaging investor education has been instrumental in driving retail adoption. Europe can follow suit—led by exchanges and supported by policymakers—to dispel myths and position options as valuable tools for retail investors.

CEDX is working closely with The Options Institute, Cboe’s educational arm, and retail brokers to provide European investors with the knowledge and resources they need to confidently engage with options.

We also believe policymakers have a critical role to play and in our white paper, we outline several key recommendations:

• Competitive market structure: Options on the same underlying stock should be tradeable across multiple exchanges, with the aim of creating a more integrated, liquid and competitive market for single stock options.
• Best Ex Requirements: Order execution policies should require prices of single stock options to be compared with sufficiently similar products on the same underlying shares, to enhance investor outcomes.
• Suitability and Appropriateness Testing: Commonsense suitability and appropriateness standards that empower retail investors and champion access to listed options.
• Improved Disclosures: Disclosure requirements should be refined to prevent the generalisation of risks in ways that conflate products with distinct and differing risk profiles
• Capital Requirements: Capital rules for liquidity providers and banking institutions designed in such a way as to attract such firms to public markets, providing sufficient incentives for their continued growth and success in Europe

With the right market structure, education and regulatory support, we believe Europe can seize this moment to build a more inclusive, dynamic, and competitive options market.

Read the full paper, here.