Why aren't lengthier expirations offered, especially when a competitor offers it?

Question

My grandparents in Canada screenshot from their Questrade IQ Edge.

Why wouldn't the options exchange sell options with lengthier expiration dates for Vanguard's Russell 2000 ETF, when they do for iShares's? Wouldn't Vanguard complain to Vanguard about this, because Vanguard desires to indirectly benefit from option traders who desire dates after 18 Dec 2020?

In general, why aren't lengthier expiration dates offered at all for some stocks or ETFs? For instance, FXB is the only ETF for GBP, but doubtless some traders desire dates after 18 Dec 2020?

Brian Romanchuk · Answer

I am not sure of the exact procedure, but it is not purely an administrative decision of the exchange - they need market makers who want to support the product. Given the rise of algorithmic trading, one could imagine that any conceivable product could be created, and hope that people set up algorithms that create a two-way market. However, exchanges have rules about margin calls, and so sketchy financial products raise the concern of entirely artificial squeezes.
The revealed preference is that not many entities want to trade long-dated equity options, and so we return to the previous point. This is not a general property across all financial products; fixed income supports long-dated option trading (swaptions) as a side effect of hedging embedded call options in bonds/mortgages.

Why aren't lengthier expirations offered, especially when a competitor offers it?

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