To ensure a smooth transfer, Merrill Lynch has temporarily leased the bin 5 PMM trading rights to Citadel Derivatives Group LLC. Citadel Derivatives currently serves as bin 8 PMM and as CMM in nine bins.
"We are pleased that Merrill Lynch has decided to enter the ISE options market as a market maker. Merrill Lynch has a great deal of experience making markets in stocks, and we are excited that they have decided to make markets in equity options at ISE," said Gary Katz, ISE's Chief Operating Officer.
Bear Stearns will retain its ISE Electronic Access Member (EAM) privileges, which allows the firm to route orders for execution. Bear Stearns, which is an ISE equity owner, is represented on ISE's Board of Directors and will continue to act as a market maker through an affiliate.
In slightly more than three years since ISE opened for trading on May 26, 2000, the exchange's low-cost, high-efficiency business model has attracted a new class of participants to the options market whose embrace of electronic trading has fundamentally changed the nature of US options trading. Until ISE was established, many firms that are now PMMs and CMMs had never before participated as market makers in the options market. Since such firms have entered the market, investors have benefited from greater liquidity, better prices, and increased competition.
