(February 24 – 17:55 ET) – The first international electronic options market has been given the go-ahead by the U.S. Securities and Exchange Commission.
The International Securities Exchange is the first registered exchange to be approved by the SEC , since 1973, when the Chicago Board Options Exchange was born.
The ISE is a fully-electronic options exchange, backed by E*Trade, Goldman Sachs and Morgan Stanley Dean Witter. It intends to trade 600 of the world’s most active options on an auction basis.
“Although it has yet to begin operating, ISE has already had a positive impact on the options market”, says the ISE. Since the ISE filed its application, trading spreads have dropped by between 15% and 42%, and transaction fees have come down too.
By registering as an exchange, the ISE also becomes a self-regulatory organization that must conduct its own surveillance. It intends to harmonize its rules with the other SROs and it will contract out some of its regulatory functions to the NASD Regulation Branch. The ISE has a few other regulatory hurdles, but it plans to open shop in May.
-IE Staff