The Nordic marketplace offers exchange-traded futures and options on Swedish, Danish, Finnish and Norwegian equities. These trades are made through a bank or an investment company that is a derivatives member of OMX Nordic Exchange.
There are three categories of participants on the derivatives market:
Investors
Members
Market makers
Investors
In principle, any individual or legal entity can trade with OMX Nordic Exchange. The investor is required to accept and follow the applicable rules governing trading and clearing at OMX Derivatives Markets. Typically, investors are divided into those who take risks (the traders), and those who mitigate risks (the hedgers). The trader assumes positions in the options market to achieve a high return based on his or her degree of belief in the market. The hedger is normally the manager of a share portfolio, which he or she wishes to manage without taking unnecessary risks, and therefore often uses strategies designed to protect the portfolio against falling share prices and/or increase the return in a stagnant market.
Members
Since it is not realistically possible to allow every investor to deal directly with the derivatives exchange, the services of a bank or brokerage firm that is a derivatives member of OMX Nordic Exchange must be engaged. The member's job is to place the order in the marketplace. Today, virtually all Nordic banks and major brokerage companies are linked to the options and futures market.
The third player in the market is the market maker. The market maker's duty is to constantly set prices for options and futures, and thereby assume responsibility for ensuring the stability and continuity of price-fixing. There should be only a certain degree of difference, known as the spread, between the bid price and the asking price. The fact that the market maker bears this responsibility guarantees that the holder or writer can close the derivatives position at any point.
