Futures Industry magazine (Short Takes):
Trading Places
How times have changed. Derivatives used to treated like a second-class citizen; now everyone wants to get into the business. Take the stock exchanges, for example. Both the New York Stock Exchange and the Nasdaq Stock Exchange are determined to capture a piece of the burgeoning stock options business. The NYSE, led by John Thain, jumped into the business through its acquisition of Archipelago and its Pacific Exchange subsidiary. Nasdaq, led by Robert Greifeld is starting from scratch, saying it wants to attract traders to options listed on its own electronic platform starting sometime next year. Clearly 2007 will be a year of fierce competition in the options business as the stock exchanges go head to head with the options exchanges in the battle for market share.
Meanwhile, the two leading options exchanges are heading in the opposite direction. Both the International Securities Exchange, led by David Krell, and the Chicago Board Options Exchange, led by William Brodsky, are starting up stock exchanges to compete with, yes, the NYSE and Nasdaq. Krell and Brodsky see their opportunity in Regulation NMS, which starting in February will require exchanges to route customer orders to whatever market has the best price. So 2007 looks to be a year of fierce competition on both sides of the securities exchange world.
