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March 1, 2002

Infant Options Market Historic Public Move?

By Staff Reports

The International Securities Exchange (ISE) wants to demutalize and it eventually will likely ask the public to take a stake in it.

The plan, if granted approval by the Securities and Exchange Commission, would turn the all electronic options exchange into a for-profit company.

The plan would call for the separation of ownership rights from trading rights at the exchange.

Although several other exchanges are also looking to demutualize, the move is a bit of a surprise. That's because the ISE has had such a short history. It was only launched two years ago, becoming the first exchange approved by the SEC since the early 1970s.

Even though it is a young exchange, the ISE has become a large part of options trading in the U.S. For example, last year, the ISE's first full year of operation, its market share of options trading went from about one percent to eight percent. And recently its market share increased to about 15 percent. The ISE lists options in some 450 stocks. This dramatic growth has been taking place at a time when other options markets have had sluggish trading business. This may be why ISE officials think they could eventually execute a successful IPO.