CBOE Announces Board Approval of Strategic Plan to Include Screen-Based Trading

The Chicago Board Options Exchange (CBOE) announced today that its board of directors approved a comprehensive strategic plan recommended by CBOE's Strategy Task Force. CBOE formed its Strategy Task Force earlier this year with the mandate to reexamine the Exchange's competitive strategy in light of sweeping industry-wide changes fueled by new technology, new competitors, and, in large measure, by the very success of CBOE itself. "Today CBOE competes not only against other options exchanges, but against an array of new competitors, products and marketplaces that seek to exploit the success of listed options," said CBOE Chairman and CEO William J. Brodsky. "Increased competition, however, also signals increased opportunity - if we are willing to change. The Strategy Task Force was formed to draw upon the collective expertise of the CBOE community to recalibrate our strategic direction, which in large part will be driven by technology." Screen-based trading to run side-by-side with open outcry CBOE will pursue an ambitious plan that calls for the development of parallel paths in trading technology. Floor-based trading as practiced at CBOE is still the preferred method of trading in more actively traded options classes. The Exchange, where over 85% of the orders are processed electronically, will continue to enhance its "open outcry" method of trading with new technology. At the same time, CBOE will develop a separate screen-based system to complement, not to supplant, floor-based trading. CBOE will begin next year to move less actively traded stock options to a screen-based trading system. Exchange officials said the screen-based system will also be used to facilitate "after hours" trading which is expected to commence in the middle of next year. The composition of CBOE's Strategy Task Force reflects its broad mandate. Members of the Task Force include CBOE market makers, member firm principals, lessors, and senior staff; as well as consultants from The Hawthorne Group; Deloitte Consulting, LLP; and Brecker and Merryman, Inc. Exchange officials declined to elaborate on other details of CBOE's new competitive plan. "The steps that follow will speak for themselves," said Brodsky. "CBOE has undergone an intense period of reevaluation. We have concluded extensive analyses of the competitive landscape and of how CBOE can best compete in a rapidly changing environment. In other words, we've done our homework. Both the CBOE membership and its management are eager now to press forward. Suffice it to say that our strategic direction will be expansive." CBOE, regulated by the Securities and Exchange Commission (SEC), is the pioneer of listed options and the world's largest options marketplace. For additional information about the CBOE and its products, access the CBOE site on the World Wide Web at http://www.cboe.com.