Commentary

Jared Dillian
Traders Magazine Online News

Was it Worth It?

In this piece from 10th Man, author Jared Dillian discusses how the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

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September 30, 2003

Older Options Marts Prepare for Turmoil

By Staff Reports

The oldest players in the U.S. options markets face a fresh assault from a pugnacious young competitor.

The International Securities Exchange (ISE), an electronic equity options mart, is pressing regulators to mandate decimal pricing. That's a measure that could crimp margins for traditional U.S. options exchanges, according to some pros.

The ISE, in another challenge, wants the Securities and Exchange Commission to ban the right of exchanges to handle exclusive index contracts.

Both measures were outlined in a petition to the SEC late last year from the New York-based ISE. Now the SEC is said to be looking favorably at the petition. As Traders Magazine went to press, the SEC was thought to be considering a public comment period on the ISE's requests.

The ISE - three-years old but already the largest U.S equity options exchange - urged the SEC "to remove the last bastion of anti-competitive listing practices in the options markets." It said options exchanges in the U.S. should be prohibited from "being a party to exclusive or preferential licensing arrangements with respect to index option products." The SEC had no comment.

The prospective changes sent shock waves through the other options marts. Nevertheless, the traditional players are fighting back.

For instance, the Chicago Board Options Exchange, the American Stock Exchange and the Pacific Exchange have incorporated elements of electronic trading to attract order flow.