ISE moves closer to becoming largest options mart
Reuters, 08.04.03, 4:25 PM ET
By Doris Frankel
CHICAGO, Aug 4 (Reuters) - The all-electronic International Securities Exchange moved a step closer to overtaking the Chicago Board Options Exchange as the world's largest options exchange, according to July volume figures.
"The ISE is the current (equity option) leader right now. Electronic trade is the future for options. It's faster, it's more efficient, customers get better execution and professionals are able to trade more effectively," said Dan Rosenthal, chief technology officer for PEAK6, an options trading firm in Chicago.
The CBOE, which first listed equity options in 1973, remains the world's busiest options exchange if index options trading is counted, but its monthly lead had narrowed to just 727,786 options contracts at the end of July.
CBOE's exchange-wide options volume last month fell 14 percent to 24,727,786 contracts, compared with the 28,610,135 contracts traded in July 2002 while ISE's monthly volume jumped 27 percent to 24 million contracts for the year, according to data released on Friday.
"The ISE is making a continued push to add index products. Once they have done this, the likelihood is that they will run ahead of the CBOE in total exchange wide volume," said Jeff Shaw, head trader for Timber Hill, a division of Interactive Brokers Group.
For the first time since April 2002, a span of 14 straight months, total index options volume failed to post a gain at CBOE, CBOE said.
Last month, the New York-based ISE said it has selected options on the Standard & Poor's SmallCap 600 index, as the basis for its first index options product to be rolled out, pending regulatory approval.
As ISE's market share rose again in July, the four U.S. options exchanges that run a traditional open-outcry auction marketplace have seen their market share in equity options erode from the heat of electronic trade.
Launched in May 2000, the ISE toppled CBOE as the largest U.S. equity options exchange in February.
ISE said it was the lead market for options last month for options on 22 of the 30 stocks in the Dow Jones industrial average, which accounted for 71 percent of the index's total weighting.
ISE was also the lead market for options on 234 of the stocks in the Standard & Poor's 500 index, which represented 67 percent of the index's total weighting.
In its listings, ISE said it traded more volume in 406 of its 577 issues than any other options exchange.
The expansion of trading on ISE has been partly fueled by the launch in January of a "one size fits all" trading initiative. This initiative allows all market participants to receive the full size available at the quote for their orders.
ISE's market share in equity options volume in July stood at 31.43 percent, up from 24.56 percent in July 2002, according to the Options Clearing Corp.
At the same time, the CBOE's market share dropped to 25.6 percent in July from 27.27 percent in July 2002.
The New York-based American Stock Exchange ranked No. 3 with equity options market share of 21.27 percent, followed by the Philadelphia Stock Exchange at 11.68 percent and the San Francisco-based Pacific Exchange at 10.01 percent.
Options are contracts that give holders the right to buy or sell a stock at a preset price within a set time frame.
Copyright 2003, Reuters News Service |
