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Tim Quast
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In this guest commentary, author Tim Quast looks back at the history of HFT and how the market has evolved to where many firms now fit the definition of high-frequency trader.

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June 20, 2005

New York Stock Exchange Roils Options World

By Mark Longo

As expected, the talk of the town at the 23rd annual Options Industry Conference in Bonita Springs, Fla., was the purchase of Arca-Ex by the NYSE. Arca-Ex had just set the options world on fire a few months ago when it purchased the Pacific Coast Exchange (PCX). The ink on the Arca/ PCX deal was still wet when the NYSE announced its intention to gobble up the combined Arca-Ex entity. This purchase has unleashed yet another round of speculation about the future of the options industry. Some believe that the combined market power of Arca-Ex, NYSE and the PCX will throw off the delicate competitive balance of he options markets. "The question remains whether this merger provides a disincentive to competition in the industry," says Bill Brodsky, chairman & ceo of the Chicago Board Options Exchange (CBOE). However, others believe that this merger has more to do with competition in the equities markets than in the options markets. "I don't think the driver of the merger was options," says Ken Leibler, ceo of the Boston Options Exchange (BOX). "I think the real driver was access to electronic equity trading. Options were just an interesting side benefit." The truth is unlikely to be revealed anytime soon as the deal still has to pass muster with members and regulators. In the meantime, speculation and rumormongering will continue in the options world.