.jpg)
The CBOE Stock Exchange will feature a Hybrid market model that will combine elements of both screen and floor-based trading; and provide a new venue for the trading of New York Stock Exchange, NASDAQ Stock Market, and American Stock Exchange listed securities. CBSX is expected to launch in early 2007, pending final regulatory approval from the Securities and Exchange Commission (SEC).
Hybrid Market Model
CBOE Stock Exchange will employ a Hybrid Trading System, similar to the highly successful Hybrid environment currently being utilized for options trading at CBOE, the largest options exchange in the United States. Hybrid combines the point-and-click functionality of screen-based trading with the versatility of floor trading, providing for a best-of-both-worlds trading experience. CBOE's Hybrid model was created to provide flexibility for all customers, including those who prefer to have their orders negotiated in an open-outcry setting, as well as those who seek a screen-based trading experience. CBOE's Hybrid Trading System has been highly successful in the extremely competitive U.S. options industry. In 2006, CBOE market share of total industry volume has increased seven percentage points during the first six months of the year, climbing from 30% in January to 37% at the end of June.
"We're privileged to be partnering with some of the largest, most respected trading firms in the securities industry to launch this exciting new venture. Collectively, these firms represent significant portions of volume at our nation's securities exchanges and the expertise and liquidity they will bring to the CBSX marketplace will be invaluable," said William J. Brodsky, Chairman and Chief Executive Officer of the Chicago Board Options Exchange. "This venture recognizes the proven success of CBOE's Hybrid market model, which enables professional brokers to represent customer orders in an open outcry environment that is integrated with a state-of-the-art electronic system offering sub-second execution. We believe the CBOE Stock Exchange and its Hybrid market model can extend these same advantages to the stock world by providing it with this economical and proven alternative market."
DPMs & Market Makers
Each stock that is traded on CBSX will have an assigned Designated Primary Market Maker (DPM). CBSX DPMs will be located at a designated trading post on the CBOE trading floor and will have the primary responsibility for maintaining a fair and orderly market in the stock. Additional liquidity will be provided by multiple competing Remote Market Makers (RMMs) who will have the ability to stream quotes and trade electronically from any location; greatly expanding the number of potential participants in the trading universe.
Order Handling
It is anticipated that CBSX will feature a matching algorithm that emphasizes price/time priority. CBOE and CBSX floor brokers will represent orders in the open outcry portion of the Hybrid Trading System. Unlike traditional Specialist roles, CBSX DPMs will not act as agents on behalf of orders.
Products
Products available for trading at CBSX will include the most active 2500 New York Stock Exchange, NASDAQ Stock Market, and American Stock Exchange listed stocks, as well as exchange traded funds (ETFs) and other listed securities.
Trade Engine
CBOEdirect, the highly versatile and incredibly robust trading platform developed by CBOE that currently serves as the trade engine that powers CBOE's Hybrid Trading System; OneChicago, the all-electronic single stock futures exchange that is a joint venture between CBOE, the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT); and the all-electronic CBOE Futures Exchange (CFE), will serve as the trade engine for CBSX. Built entirely in-house by CBOE, CBOEdirect was constructed to be extremely flexible and easily adaptable for a variety of uses.
Access
Access to CBSX will be assigned through a trading permit program. Any qualified members of CBOE will automatically receive a trading permit and be granted access to CBSX. Non-CBOE members will be issued a permit to trade at CBSX upon completion of a standard membership-application process.
Business Model
CBOE Stock Exchange, LLC is a facility of the Chicago Board Options Exchange, Incorporated. Ownership of CBSX will be divided between CBOE and the partner firms, with approximately 50% of the venture owned by CBOE and 50% owned by the partner firms.
Market Regulation
CBOE's Regulatory Services Division will provide all market surveillance services for CBSX. CBSX will be regulated by the Securities and Exchange Commission (SEC).
About CBSX
The CBOE Stock Exchange, LLC (CBSX) is a newly created stock trading facility of the Chicago Board Options Exchange, Incorporated (CBOE).
About InterActive Brokers
Interactive Brokers provides professional traders and investors with direct access to stocks, options, futures, bonds, and forex on over 60 market centers worldwide from a single IB Universal Account. With consolidated equity capital that exceeds US $2.5 billion, IB and its affiliates execute in excess of 500,000 trades/day and trade 20% of US options. In 2006 Barron's awarded Interactive Brokers its top star ranking overall and for lowest cost broker. For more information, please see the Interactive Brokers Web site at www.InteractiveBrokers.com.
About LaBranche
LaBranche & Co Inc. (LaBranche) is the parent of LaBranche & Co. LLC, one of the largest Specialists in equity securities listed on the New York and American Stock Exchanges. LaBranche is also the parent of LaBranche Structured Holdings, Inc., whose subsidiaries are Specialists and market-makers in options, exchange-traded funds and futures on various exchanges domestically and internationally. Our specialists and market makers are leading liquidity providers, bringing capital and critical expertise to securities markets. Another subsidiary of LaBranche, LaBranche Financial Services, Inc., provides securities execution, clearing and direct-access floor brokerage services to institutional investors. For more information, visit www.labranche.com.
About Susquehanna International Group, LLP
The Susquehanna International Group of Companies (SIG) is a leading institutional sales, research, investment banking and market making firm. For institutional investors, SIG offers brokerage in listed and NASDAQ stocks, Exchange Traded Funds (ETFs), options, program trading and American Depositary Receipts (ADRs), as well as differentiated equity research. For corporate clients, SIG offers a range of traditional investment banking services. SIG encompasses a market making operation in over 6,000 stocks, is among the nation's largest option market makers, is the leading sector index options trading firm and is one of the largest liquidity providers in ETFs. SIG's domestic and international market making, specialist and electronic trading operations are among the most sophisticated in the industry, ranking SIG among the leading liquidity providers. SIG has offices in Bala Cynwyd, Boston, Chicago, Dublin, Los Angeles, New York, Philadelphia, San Francisco, Shanghai, Stamford and Sydney. For more information, visit www.sig.com.
About VDM Specialist, LLC
VDM Specialists represents over 400 leading issues, including Pfizer, Hewlett-Packard, Disney, and Tiffany & Co.The company is part of publicly traded Van der Moolen Holdings NV (NYSE: VDM). An affiliate of VDM Specialists recently began market-making in equity and index options traded on the Chicago Board Options Exchange. For more information about VDM Specialists, please visit www.vdm-usa.com.
