International Securities Exchange Announces Primary & Competitive Market Makers
Business Editors
NEW YORK--(BUSINESS WIRE)--Dec. 9, 1999--The International
Securities Exchange (ISE) announced today seven Primary Market Maker
(PMM) members: Arbitrade Holdings; The Arbitrage Group; Bear
Specialist Inc./Hunter Specialists, LLC; Deutsche Bank Securities,
Inc.; Goldman Sachs & Co. and The Hull Group; Knight/Trimark Group,
Inc.; and Morgan Stanley Dean Witter & Co.
As Primary Market Makers, these firms will provide liquidity in
their assigned options by making continuous two-sided markets and
ensuring that orderly market conditions are maintained in the first
fully electronic options market in the United States.
Patrick Whalen, managing director and head of equity sales of
Morgan Stanley Dean Witter & Co., said, "We are dedicated to creating
a more equitable and efficient market structure for options trading.
The ISE will provide an environment that is potentially capable of
achieving these goals. We look forward to working with the ISE in the
further development of their market."
The combined trading experience and order flow capabilities of
this group of leading institutions will contribute significantly to
the launch and growth of the ISE. These firms have successfully traded
equities and/or options, "upstairs" and on trading floors and
electronic systems worldwide.
David Krell, president and CEO of ISE, said, "These firms provide
the balance of experience that we have sought. They provide the market
making expertise and significant capital commitment that a successful
options market requires. The options industry is growing in size and
sophistication; we could not have asked for a better team with which
to move forward."
In addition to these seven PMMs, Adirondack Trading Partners
(ATP) will operate two PMM memberships. "ATP is considering the
formation of a joint venture with an established options market making
entity," said Marty Averbuch, president of ATP, "and this will enable
us to contribute liquidity early on."
ATP is the consortium of broker/dealers that is funding the ISE,
providing the capital necessary to develop the trading and regulatory
systems, acquire hardware, and accomplish all other endeavors
associated with establishing the Exchange.
Scott Prince, managing director of Goldman Sachs, said, "It is
clear that electronic platforms create market efficiencies and cost
savings that directly benefit our clients. An electronic exchange such
as the ISE will provide a competitive alternative for our clients and
enable our Hull Group affiliate to more effectively provide liquidity
to the options marketplace."
Including ATP, these firms will also trade as Competitive Market
Makers (CMMs) in 59 of the 100 available memberships. In their roles
as Competitive Market Makers, these and other firms will provide
additional depth and liquidity. Each CMM will quote independently,
thereby ensuring a competitive quoting process that will provide
narrow spreads with quotes in size.
ATP has been accepting indications of interest from financial
institutions and is in the process of negotiating the sale and/or
lease of the remaining 1 PMM and 41 CMM memberships. Mr. Averbuch
said, "There is very significant interest from international firms,
already experienced in electronic trading, and domestic firms involved
with the current floor-based exchanges."
Ken Pasternak, president and CEO of Knight/Trimark Group, said,
"The combination of the ISE's fully electronic options trading
platform, a first in the U.S., and Knight's proven business model will
provide investors with cheaper and faster execution on all of their
options transactions. Knight and the ISE, by setting options execution
standards on paR with those found in the equities market, will benefit
institutional investors and attract self-directed retail investors to
utilize options as part of their individual portfolios. Knight
believes that the application of best execution standards will be the
cornerstone of the options market's evolution and growth in the U.S.
and abroad."
Peter Hajas, CEO of Arbitrade Holdings, said, "As an established
options market maker, Arbitrade understands that a growing need exists
for a fully electronic U.S. options trading platform. We believe that
our advanced trading technology, which dovetails nicely with that of
the ISE, will be a significant addition to the new options exchange.
We look forward to working with the ISE and its partners to create a
venue in which all investors will win."
Ralph Reynolds, managing director, equity derivatives trading of
Deutsche Bank, said, "We are excited to be a part of the first
completely electronic derivatives exchange in the United States. This
is a continuation of Deutsche Bank's electronic business strategy,
which is being implemented across the globe. The new environment for
exchange traded derivatives should expand the universe of options
users and facilitate liquidity in the overall marketplace."
Gary Katz, senior vice president of marketing and business
development of ISE, said, "The three major deliveries necessary to
meet our targeted launch date of March 24, 2000 are on track to
completion: regulatory approval, technical systems and memberships. We
anticipate SEC approval o& our exchange application, the trading
system has been accepted by ISE and is currently undergoing stress
testing, and this announcement of members is a major step toward the
development of deep, liquid markets at the ISE."
Members' Background
Morgan Stanley Dean Witter: Morgan Stanley Dean Witter & Co. is a
global financial services firm and a market leader in securities,
asset management and credit services. The company has offices in New
York, London, Tokyo, Hong Kong and other principal financial centers
around the world and has 464 securities branch offices throughout the
United States.
Knight/Trimark Group: Knight/Trimark Group, the parent company of
Knight Securities and Trimark Securities, is the largest wholesale
market maker in U.S. equity securities. Knight Securities makes
markets in over 7,500 equity securities listed on Nasdaq and the OTC
Bulletin Board. Trimark Securities trades NYSE-listed and AMEX-listed
equity securities over the counter - the Third Market. Knight/Trimark
Group employs more than 600 people worldwide with offices in Jersey
City, NJ; Jericho and Purchase, NY; Chicago, IL; Boston, MA; and
London, England. The firm has been selected to the "Fortune e-50"
stock index.
Goldman Sachs & The Hull Group: Goldman Sachs is a leading global
investment banking and securities firm, providing a full range of
investing, advisory, and financing services worldwide to a substantial
and diversified client base, which includes corporations, financial
institutions, governments and high net worth individuals. Founded in
1869, it is one of the oldest and largest investment banking firms.
The firm is headquartered in New York and maintains offices in London,
Frankfurt, Tokyo, Hong Kong and other major financial centers around
the world. The Hull Group is a leading global market maker in
exchange-traded equity derivatives and an active market maker in
equity securities worldwide.
Deutsche Bank: With over $869 billion in assets as of September
30, 1999 and approximately 90,000 employees, Deutsche Bank offers its
clients unparalleled financial services throughout the world. It ranks
among the leaders in asset management, capital markets, corporate
finance, custody, cash management and private banking. Deutsche Bank
is divided into five major business units: Global Corporates and
Institutions, Global Technology and Services, Asset Management,
Corporates and Real Estates, and Private and Retail Banking.
Bear Specialist Inc./Hunter Specialists, LLC: Founded in 1975,
Bear Specialist Inc./Hunter Specialist, LLC (Bear/Hunter) unites the
financial resources of Bear, Stearns & Co. Inc., one of Wall Street's
leading investment banks, with the market knowledge, advanced
technology and trading expertise of Hunter Specialists, LLC.
Bear/Hunter is one of the largest specialists units on each of the
NYSE and AMEX , in terms of number of specialists, volume of
transactions and capital resources. Bear/Hunter is also one of only
two specialist units to operate among the top ten specialist units on
both the NYSE and AMEX, and functions as market makers for over 180
securities on the NYSE and over 150 securities and derivatives on the
AMEX. Bear/Hunter has positioned itself to be a principal market maker
at the point of price discovery and believes its ability to use
capital to create fair and liquid markets is essential in all of its
exchange activities. Through its joint account and separately, Bear
Stearns & Co., Inc. and Hunter Specialists LLC will operate the
memberships.
The Arbitrage Group: The Arbitrage Group, LP founded in 1992 by
Bernard L. Rice, has developed a leading position within the
exchange-traded individual equity options market by implementing a
combination of state-of-the-art technology and communications systems.
The Arbitrage Group utilizes a proprietary system, integrating
communications and risk management functions, to analyze real-time
data feeds, thereby automating the decision-making process.
Arbitrade Holdings LLC: Arbitrade Holdings is a high-tech
combination of trading firm and research lab, integrating
state-of-the-art technology, sophisticated financial trading practices
and a team of talented individuals to forge a major presence in select
areas of the financial marketplace, including proprietary trading and
investment management. The firm employs approximately 190 people
worldwide with offices in Minnetonka, MN; Chicago, IL; White Plains
and New York, NY; Santa Clara, CA; and London, England.
ISE Market Structure/Membership Information
The ISE plans to list and trade 600 stock options, which will be
divided into ten groups of approximately 60 stock options each. Market
makers will be assigned to provide liquidity in each group.
There are three types of ISE members:
Primary Market Maker ("PMM") - PMMs, similar to specialists (DPMs
or LMMs on other exchanges), are market makers with significant
responsibilities, including overseeing the opening, providing
continuous quotations in all of their assigned options classes, and
ensuring that customer orders are not automatically executed at prices
inferior to those available at other options exchanges. One PMM will
be assigned to each of the ten groups of options traded on the
Exchange.
Competitive Market Maker ("CMM") - CMMs are market makers that
add depth and liquidity to the market and are required to provide
continuous quotations in at least 60% of the options classes in their
assigned group. Each CMM quotes independently. Up to ten CMMs will be
appointed to each of the ten groups of stock options traded on the
Exchange.
Electronic Access Member ("EAM") - EAMs are broker/dealers that
represent agency and proprietary orders on the Exchange. An EAM does
not purchase a membership. Rather, once approved as an ISE member, an
EAM pays an access fee that permits the firm to place orders in all of
the options traded on the Exchange.
ISE Background
ISE will become the first fully electronic options exchange in
the United States and the world's first options marketplace combining
electronic trading and auction market principles.
On February 2, ISE filed its application for registration as a
national securities exchange with the Securities and Exchange
Commission (SEC). Upon approval by the SEC, ISE will become the first
new registered U.S. securities exchange in 26 years. ISE plans to list
options on 600 of the most widely owned and popular stocks.
ISE headquarters is located at 60 Broad Street, New York, NY
10004 and can be reached at (212) 943-2400 or, for additional
information, visit its web site at www.iseoptions.com.
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CONTACT: Keating Communications
Rick Keating, 973/376-9300
rick@keatingpr.com
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