CBOE to launch stock trading market
28 July 2006 | 8655 views | 0
The Chicago Board Options Exchange says it is teaming with a group of dealing firms to launch a new securities trading marketplace. The move follows the decision by its main rival - The International Securities Exchange (ISE) - to establish its own stock trading operation.
Like the ISE Stock Exchange, CBOE is partnering with a number of broker-dealers to launch the new marketplace.
Interactive Brokers, LaBranche, Susquehanna International and Van der Moolen will collectively hold a 45% in the CBOE Stock Exchange (CBSX), which will be based on the exchange's existing hybrid market model which combines elements of both screen and floor-based trading.
Interactive Brokers and Van der Moolen have also bought into the ISE Stock Exchange, which will be an all-electronic operation.
The CBOE's decision to maintain a trading floor is in direct contradiction of industry trends for closing down floors and swithing to all electronic trading. But the Chicago exchange argues that its hybrid trading system has been highly successful in the extremely competitive US options industry. In 2006, CBOE market share of total industry volume increased seven percentage points during H1, climbing from 30% in January to 37% at the end of June.
William Brodsky, chairman and CEO, CBOE, says: "This venture recognises the proven success of CBOE's hybrid market model, which enables professional brokers to represent customer orders in an open outcry environment that is integrated with a state-of-the-art electronic system offering sub-second execution.
"We believe the CBOE Stock Exchange and its hybrid market model can extend these same advantages to the stock world by providing it with this economical and proven alternative market."
CBSX is expected to launch in early 2007 and will provide an additional venue for the trading of New York Stock Exchange, Nasdaq and American Stock Exchange listed securities.