Boston Options Market Will Seek Exchange Status
By Edgar Ortega
May 2 (Bloomberg) -- The Boston Options Exchange, the second-smallest of seven U.S. options markets, will seek to become the third market since November to be granted official status as a U.S. securities exchange.
The move would give the four-year-old market more independence and extra control over trading, Chief Executive Officer Scott Morris said in an interview late yesterday. The BOX had operated as a unit of the Boston Stock Exchange, which agreed last year to be acquired by Nasdaq OMX Group Inc.
Other deals among exchanges last year will reduce the number of independent markets to four from nine. That's spurred the BOX, as well as Bats Trading Inc. and Direct Edge ECN LLC, to pursue official registration with the U.S. Securities and Exchange Commission as way to bolster competition.
``We have gotten only encouragement on it from the SEC,'' Morris said in the interview at the annual conference of the Options Industry Council in Las Vegas, Nevada. ``They understand our predicament: that we're being regulated by one of our competitors and that's not a good long-term situation.''
Nasdaq, the all-electronic market that handles the most shares in the U.S., hopes to gain regulatory approval this year to purchase the Boston and Philadelphia stock exchanges. Under terms of the deal, Nasdaq would assume the regulatory responsibly for the BOX, which handles about 4.8 percent of equity-based options traded in the U.S.
The BOX is also seeking SEC approval for a deal of its own. Montreal Exchange Inc. agreed in December to spend $52.5 million to boost its stake in the BOX to 53 percent.
Approval Within a Year
The BOX may gain approval for its registration within the next year, Morris said. The BOX won't seek to change its current trading rules, which may make the approval easier than for a new market, Morris said.
If approved, the BOX would be the second registered securities exchange under control of a foreign company. Frankfurt-based Eurex AG last year paid 2.8 billion for the International Securities Exchange Holdings Inc., the second- largest U.S. options market.
Since the creation of the Chicago Board Options Exchange in 1973, regulators have only approved applications from Nasdaq OMX Group Inc. and International Securities Exchange Holdings Inc. Nasdaq's application was reviewed for 5 years and approved in January 2006.
The SEC is gathering public comments on Bats Trading's November application. Direct Edge, the equity-trading system partly owned by Goldman Sachs Group Inc., announced plans to file applications for two exchange approvals with the SEC last month.
To contact the reporter on this story: Edgar Ortega in New York at ebarrales@bloomberg.net.
Last Updated: May 2, 2008 13:33 EDT |
