|
Abstract
The US Equity Options market is poised at an interesting
point in time. The dominance of the traditional floor
based options exchanges has been challenged by an all
electronic options exchange, International Securities
Exchanges (ISE) launched over three years ago. ISE has
been growing steadily in a market which was once the
bastion of floor based exchanges viz. Chicago Board
of Option Exchange (CBOE), American Stock Exchange (AMEX),
Philadelphia Stock Exchange (PHLX) and Pacific Stock
Exchange (PCX). The success of ISE has caught the attention
of players like Boston Option Exchange (BOX) and Eurex,
now eyeing an entry in the equity options market with
their electronic outfits.
The traditional floor based exchanges, have responded
to the ISE competition by introducing automation and
electronic trading in varying degrees. But the maintenance
of a high cost floor infrastructure alongside electronic
systems makes executions costly and unattractive from
an investors’ point of view. Among new entrants
planning an entry in the equity options market is BOX,
a partnership between Boston Stock Exchange, Bourse
de Montréal Inc. and Interactive Brokers Group
LLC (IB). BOX plans to enter the market in the fourth
quarter of 2003, as soon as its application pending
with Securities and Exchange Commission is approved.
Eurex, the market leader in European Derivatives market,
plans to make a giant entry in the US Futures &
Options industry in early 2004, subject to SEC clearance.
The paper tries to paint the canvass of the changing
US Equity Options market, showcasing initiatives and
developments taken by the various exchanges. The paper
ponders over the state of things to come as electronic
trading grows in strength and maintaining floors becomes
challenging and unwieldy.
Author
Sandeep Chandane
To know more about Wipro in finance, go to www.wipro.com/finance
|
