https://www.fr24news.com/2020/01/airbus-plans-to-trade-derivatives-for-airline-tickets.html Someone expect retail also to be able to gain access to these derivatives?
Obviously not for American retail traders. And retail traders don’t even trade much options on futures, bitcoin, or other non-index non-equity underlyings, only ask whether they can trade them and then disappear when they find out that they can
It’s a dumb idea. There isn’t natural flow and airlines don’t need to hedge this volatility. They profit from it.
The problem with all these niche products is that they throw them out there with this "build it and they will come" mentality....and they don't. So there's no volume, so no one uses it, so it dies. It's remarkably short-sighted, given the positive returns to adoption that you get when you can build volume, but ICE especially is littered with these kind of failures. Interestingly I've had conversations with them on bringing some products on-exchange that we had set up our own "exchange" at my first company and they seem to think it's somehow unseemly to actually work to build volume on both sides of a product. Something gentlemen at an exchange don't engage in as we were told in so many words. From some basic research it appears that the people doing this don't really even grasp what a market maker is and vaguely hope that "travel agencies" will take the other side of this trade. Seriously, 1990 called and wants it's travel agencies back Airbus. Not to mention that even in 1990 travel agencies just processed transactions and had no need or value in hedging costs for their customers. And you're right, the whole fare structure of the airlines is built on charging for a scarce resource with an unpredictably volatile price structure to the individual consumer that is actually quite steady and predictable on the aggregate to them, so it's idiotic for them to dismantle that by producing volume on this exchange. Not to mention that airlines are always skirting the edge of the price fixing anti-collusion laws so if this was successful it would probably be shut down by the feds precisely because of its success. I only wish I could short the actual exchange!