In separate rule filings submitted to the Securities and Exchange Commission, both the ISE and CBOE requested the approval of rules that would implement this proposal. These rules were approved on January 30, 2001.
Initially, this plan will be implemented for a limited number of issues with three ISE Primary Market Makers (PMMs) linking to the appropriate Designated Primary Marketmakers (DPMs) on the CBOE and will be expanded during the next several weeks to include additional PMMs and issues. KBC Adirondack Electronic Markets LLC, Morgan Stanley & Co. Incorporated and Timber Hill LLC will be the first PMMs included in this program and will provide linkage with respect to the following issues: Bank One Corporation, Commerce One, Inc., Home Depot Inc., Mattel Inc. and Tricon Global Restaurants.
Market data studies indicate that the spread (difference between the bid and offer) on the ISE is narrower or equal to the other options markets 80% of the time. As such, ISE members have found the markets on the ISE to be equivalent or better than competing markets in most cases. This has enabled ISE to attract significant order flow since its launch in May of last year, achieving approximately 12% market share in the 269 issues it currently trades. The linkage program will permit ISE market makers to provide improved service during those instances when there are more competitive prices displayed on an away market.
David Krell, president and CEO of ISE, said, “Providing our PMMs with this enhanced service ensures that ISE continues to be at the forefront of leading the industry toward greater efficiency.”
On May 26, 2000, the ISE listed three issues as a first step in its rollout to trade the top 600 equity options on the world’s only exchange to combine electronic trading with auction market principles. Currently, ISE trades 269 issues and is continuing to increase the roster in its rollout toward the full contingent of 600 listings. The updated list of issues traded is available on ISE’s web site (www.iseoptions.com) within the section entitled “Product Information.”
In a recent announcement, ISE indicated that all ten Primary Market Makers (PMM) and fifty-one of 100 CMMs have been activated; the remaining CMMs will become operational during ISE’s continuing rollout phase. Additionally, 85 broker/dealers have been approved as Electronic Access Members (EAM), with several more in the process of attaining EAM status.
