Commentary

Richard Repetto
Traders Magazine Online News

Why Do Exchanges Own Multiple Licenses? It's Not Hard To See, Look at the SEC

In this recent research note, Sandler O'Neill + Partners, L.P. Principal Richard Repetto examines why the public exchange operators hold multiple licenses and that rationale behind this phenomenon.

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August 31, 1998

AT Deadline - PCX Sale

By John A. Byrne

The Pacific Exchange (PCX) is putting its equity business on the block with the help of New York-based investment bank Wasserstein Perella & Co. The spin-off follows the planned acquisition of the PCX by the Chicago Board Options Exchange (CBOE), which has given the PCX 12 months to complete the sale. The CBOE, for its part, is primarily interested in the PCX's options business.

If the sale proceeds, the combined exchanges would handle an estimated 65 percent of all U.S. securities-options trading, and 60 percent of trading in individual stock options, accounting for more than one-million contracts daily. The merger must still be ratified by two-thirds of the PCX's members, and a majority of the CBOE's members.

It is not exactly clear how a sale of the PCX's equity business would affect the plan by OptiMark Technologies to use the PCX as a facility for institutional orders executed on its trading system.

Jersey City-based OptiMark says the PCX would remain a member of the Intermarket Trading System if it merges with the CBOE. As such, OptiMark does not feel the merger would hurt OptiMark's initial plans to go live this fall.