NYSE Arca Options will not immediately list so-called “jumbo” options contracts on the SPDR S&P 500 exchange-traded fund.
According to a memo sent to customers Monday, the unit of NYSE Euronext is concerned about the impact on the marketplace of the decision by the BOX Options Exchange to offer the 1,000-share “jumbo” product. BOX began trading the new option Friday.
Still, Arca is monitoring the amount of trading done in the new institution-sized contracts and may at some point decide to offer trading in the product.
In March, Arca petitioned the Securities and Exchange not to approve BOX’s proposal. It argued that a new 1,000-share SPY contract could syphon liquidity away from the standard 100-share instrument. That would be bad for the marketplace, it said.
The SEC approved the instrument on May 3.
In Monday’s memo, Steve Crutchfield, NYSE Euronext and senior vice president in charge of U.S. options, reiterated the NYSE’s position.
“Our concerns about creating a two-tiered market for products offering identical economic exposure persist,” he told Arca customers. “Jumbos offer no new benefits. It has always been possible to execute large trades using standard SPY options.”
Crutchfield added that “so far, Jumbo SPY options have met with extremely limited uptake.”
According to the Options Clearing Corporation, only 6 SPYJ contracts traded on Friday, the first day of trading.
