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NYSE Euronext (NYSE Euronext: NYX) today announced that its U.S. options market, NYSE Arca Options, submitted its report to the SEC detailing the success and benefits to the investing public of the SEC’s industry-wide penny pilot program. NYSE Arca and the options industry experienced a number of key market quality improvements with respect to the 13 option classes trading in the pilot program.
NYSE Arca’s analysis of the options penny pilot focused primarily on quote rates, data mitigation, effective and quoted spreads, available liquidity, and volume changes. NYSE Arca Options continued to attract more liquidity and investor participation, earning a 35% increase in its share of trading in the SEC penny pilot issues through May 31, 2007. NYSE Arca’s quote mitigation plan reduced average daily quote traffic by 13%, or 12.1 million quotes, which more than offset the increase in quoting in the penny classes.
“We are very pleased with the initial results of the pilot program and the overall performance of the NYSE Arca Options platform. Since the SEC introduced the program on January 26, the investing public has seen considerable savings through the significantly tighter spreads,” said Vice President, Derivative Products, Jon Werts. “Our mitigation technology reduced the number of quotes we published in the inactive issues while allowing the industry’s most active products to be dynamically published in the most robust manner. We feel that the benefits to the retail customer have been clearly demonstrated and substantiate the need to expand the program.”
For all 13 pilot classes, there was an industry-wide net increase in average daily volume of 23.9%, or 283,562 contracts per day, during the pilot. This compares to a volume increase of 662,952 contracts, or 8.0% growth, for all equity options during that same period. Much of this can be attributed to across-the-board savings realized by the substantial reduction of 45% to 61% in the effective price spreads for all the penny pilot classes.
Designed to maximize speed and capacity, NYSE Arca Options offers customers unique order types and the choice between an all electronic or a floor based execution in over 2,000 options issues. As a participant in the SEC’s penny pilot program, NYSE Arca Options introduced a unique pricing structure designed to reward those participants who provide liquidity and aggressive markets.
Please click here to view NYSE Arca’s complete review of the SEC Penny Pilot Program.
