CBOE gets SEC okay to launch hybrid trading system
Reuters, 06.02.03, 4:59 PM ET
CHICAGO, June 2 (Reuters) - The Chicago Board Options Exchange said on Monday it has received regulatory approval to launch its hybrid trading system and plans an initial roll-out of the system on June 12.
The system, dubbed CBOEdirect HyTS, has been developed by CBOE in a bid to strengthen its position in the U.S. equity options market.
The CBOE, the world's largest options market, but one facing a competitive threat from electronic trading, has opted for a platform that integrates elements of open-outcry and electronic trading.
The system will combine the "speed, efficiencies and transparency of a screen-based trading system with the liquidity and superior price discovery of a competitive, open outcry marketplace," said CBOE Chairman and Chief Executive William Brodsky in a statement.
Individual market makers will be able to use CBOEdirect technology to input their own prices, creating deeper markets and a narrower bid-ask spread.
The system also allows customers to point and click on prices and execute orders instantly, up to the size displayed.
The system will debut with the trading of Harmony Gold Mining (nyse: HMY - news - people) options.
Other U.S. options exchanges are moving to counter the threat posed by the New York-based International Securities Exchange, an all-electronic options exchange.
In May, the Pacific Exchange received approval from the Securities Exchange Commission for its new electronic trading system, dubbed PCX Plus.
That screen-based platform will allow members to make markets from the exchange floor or from remote locations, which the San Francisco mart hopes will boost liquidity.
PCX Plus is set to launch in the fourth quarter.
And last year, the Philadelphia Stock Exchange gave options traders and broker-dealers remote access to its electronic trading system, AUTOM, or automated auctions market.
The four U.S. equity options exchanges, including the American Stock Exchange, that operate traditional open-outcry markets, revolving around a trading floor, have lost market share over the past few years to ISE.
In February, ISE overtook the CBOE to become the industry's largest equity options exchange.
The CBOE is still the largest options exchange if index options trading is counted, but its stock options volumes in April were down on the year, while ISE rose strongly.
CBOE said it expects to have the most actively traded option classes, which account for 80 percent of U.S. options volume, available on its hybrid system by year-end.
Options are contracts that give their owners the right to buy or sell stocks at predetermined prices within a set time period.
Copyright 2003, Reuters News Service |
