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Spotify Puts Wall Street’s Old Ways on the Spot

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July 11, 2011

Goldman Likes Clean Cross

By Peter Chapman

The biggest institutional options brokerage gave a thumbs-up to the International Securities Exchange's new clean cross.

"It makes a lot of sense to have the ability to cross institutional block flow," Goldman Sachs options exec Liz Martin said at this year's Options Industry Conference. "The fear that it will go from 1,000 contracts to 10 is just crazy." Martin runs the global equity derivatives and Americas equity trading management groups at Goldman.

While institutional brokers largely remained silent during the two years of public debate over the ISE's qualified contingent cross (QCC), competitor exchanges and market makers were outspoken in their criticism of the product. Because clean crosses are not exposed to other traders, the product is tantamount to internalization and threatens the market's integrity, they argued. Although a QCC must be for at least 1,000 contracts, some predict, that in time, that number will come down, removing even more order flow from public competition.

The Securities and Exchange Commission approved the QCC earlier this year.


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