Wells Fargo & Co’s global-markets business is expanding into options clearing, a capital intensive and operationally arduous corner of finance dominated by Bank of America Corp and Goldman Sachs Group Inc.The fourth-largest US lender has been striving to build a larger presence on Wall Street, and a major roadblock was removed in June, when the bank was released from a regulatory punishment that had banned it from expanding its assets beyond its 2017 level of $1.95tn. The markets business had felt the impact most, squeezed by limits on the capital and balance sheet it could commit.Market makers can rely on the capital of their clearing broker to finance trading activity. That allows trading firms to provide constant liquidity to the market, and even take directional positions themselves, with the support of clearing partners.In November, the chief executive officers of the world’s largest options exchange and the world’s largest options clearing house both sounded the alarm about the level of concentration risk, given the reliance of market makers on a handful of banks.Wells Fargo started exploring options clearing earlier this year, and has already had a flurry of client interest in the offering, said DJ Langis, co-head of equities at the firm’s global-markets division.“The number of conversations we’ve had over the last quarter plus on this effort, it seems to indicate that there is a demand in the marketplace for this,” Langis said in an interview.The move is part of a strategy at Wells Fargo to more closely align its securities sales and trading unit with the needs of market makers, Langis said. His team has started to hire for the effort. Half a dozen people have already joined, including Kevin McCarthy, the head of market-maker clearing, and Mark Morrison, a market-maker clearing product manager. They both worked in Bank of America’s market-maker clearing arm for years.The build-out of options clearing was envisioned prior to the asset cap being lifted, and is one of the many trading-desk initiatives under planning for some time, Langis said.Around $3.9tn a day in notional volumes trade in the US options market, according to data from Cboe Global Markets. In November, US options average daily volumes grew to 68mn contracts, up 24% from a year earlier.Derivatives clearing is a capital-intensive business because brokers perform a credit-intermediation function when they handle client trades. If a client goes bust, it’s the broker’s responsibility to make the clearinghouse whole, and if a broker goes bust, other brokers are liable to ensure the survival of the clearinghouse.The largest market-making firms, including Citadel Securities, Jane Street, Optiver and Hudson River Trading, remain reliant on clearing brokers to process trades. They are the main driver of a surge of options volume since 2020, according to data from the Options Clearing Corp., which clears all US-listed options trades.Wells Fargo CEO Charlie Scharf marked the firm’s investment-bank business for growth shortly after taking the helm in late 2019.Wells Fargo sees the work at an early stage. Market makers are expected to begin clearing at the bank during the second half of 2026, but the team is not bound by any time line.“We want to be thoughtful and intentional around this build,” Langis said.
Tuesday, February 10, 2026
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Daily Newspaper published by GPPC Doha, Qatar.
