CBOE Disappointed in SEC Approval of BOX; Plans Competitive Response
CHICAGO, January 14, 2004 - Chicago Board Options Exchange (CBOE) officials today expressed disappointment and concern regarding the Securities and Exchange Commission's (SEC) approval of the Boston Options Exchange (BOX) proposal to trade listed options. CBOE had made its concerns known to the SEC in comment letters filed prior to the SEC's decision.
"While any form of 'price improvement' would seem to benefit the customer, it is not necessarily so in the form endorsed today by the SEC's approval of the BOX Exchange. One penny better than the prevailing quote does not amount to a significant price improvement for customers, but the ability to "penny jump" by market participants will, in the long term, surely degrade the quality of option markets by causing wider and costlier spreads," said CBOE Chairman and CEO William J. Brodsky.
"Despite the well-documented concerns about the BOX model, the other exchanges, including CBOE, will be forced to adopt similar measures in order to compete. Thus, the ability to trade in one increment (pennies) while quoting in another (nickels) will result in a widespread change in the market structure before all of its implications have been fully studied," Brodsky added.
In order to participate in the growing segment of internalized order flow that will surely result from the SEC's approval of the BOX, CBOE will file immediately with the SEC for the ability to trade orders in pennies, while quoting in nickels, as is allowed by BOX.
CBOE, regulated by the Securities and Exchange Commission (SEC), is the creator of listed options, and the world's largest options marketplace. For additional information about the CBOE and its products, visit the CBOE website at cboe.com . |
