Nasdaq to offer options routing

Nasdaq to offer options routing

Nasdaq is to begin offering connectivity and routing to options exchanges early next year in a bid to provide cross asset trading services and cash in on the fast-growing options market.

The stock market says it will not match options orders, but instead will start routing trades to six US options markets in the first quarter of 2006. The timing of its entry means Nasdaq will enter the market months ahead of its main rival, the New York Stock Exchange.

Nasdaq is already a member of five of the exchanges - American Stock Exchange, Boston Stock Exchange, International Securities Exchange, Pacific Stock Exchange, and The Philadelphia Stock Exchange. The number two US stockmarket says it also intends to obtain access to the sixth and largest mart, the Chicago Board Options Exchange.

Chris Concannon, EVP of Nasdaq transaction services, says: "With the shift in options trading to electronic platforms, options volumes have grown 20% year over year. As the options industry continues to evolve, we are poised to become an attractive options smart-routing provider for market participants."

Concannon says traders are increasingly looking for ways to trade more efficiently across all asset classes and by utilising its distribution network for options trading, Nasdaq is positioning itself as a one-stop platform for both equities and options trading.

Nasdaq rival New York Stock Exchange is gaining a foothold in the options market by buying the Archipelago ECN, which is finalising its acquisition of the Pacific Exchange options business announced in January.

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