The International Securities Exchange (NYSE: ISE) said today that average daily trading volume in its Second Market for options has grown to approximately 35,000 contracts since its launch on October 16, 2006. ISE introduced the Second Market to create tight markets and additional liquidity for options classes that have typically experienced lower trading volumes.
As a result of increased competition, Second Market symbols currently trade an aggregate of 55% more volume across all exchanges than in the three months prior to ISE listing these names. This volume growth reinforces ISE's belief that enhanced competition among exchanges improves market quality, which leads to greater trading interest. In the past, similar volume increases also occurred in equity, ETF, and certain index options when greater competition was introduced for these products.
David Krell, ISE's President and Chief Executive Officer, noted, "We are very pleased with the results of the first month of trading in ISE's Second Market. As we anticipated, overall market quality has improved and volumes have grown as a result of greater competition in these listings. We expect this trend to continue as more names are added to the Second Market in the coming weeks."
Currently, 260 symbols are traded in the Second Market. ISE plans additional listings and expects to include approximately 800 options classes in the Second Market by the end of January 2007. The Second Market offers separate quoting rules and access standards from ISE's primary market to provide greater flexibility for competitive market making. Citadel Derivatives Group LLC, Merrill Lynch Professional Clearing Corporation, Morgan Stanley & Co. Incorporated, SLK-Hull Derivatives LLC, Timber Hill LLC, and UBS Securities LLC act as Primary Market Makers (PMMs) in the Second Market. Additionally, ten firms currently participate as Competitive Market Makers (CMMs) in these listings.
