ISE Lifts a Leg: Plans to Introduce Yet Another New Options Exchange

The International Securities Exchange (ISE), the venue that bills itself as the first all-electronics options exchange in the United States will open a second by year’s end. The company has has filed a Form 1 application for a second exchange license with the Securities and Exchange Commission.

No details about the products to be traded, market structure, or fee schedule of the new exchange have been announced – except that it will run on ISE’s “Optimise” technology.

“Our Optimise technology platform was designed to support multiple markets and will enable our member firms to leverage their existing connectivity for our new exchange,’’ said Gary Katz, President and Chief Executive Officer of ISE.

The new exchange, the company said, however, will make use of a new piece of functionality added to Optimise: Legging orders.

According to a document filed with the SEC, a legging order is an order on the regular order book in an individual series representing one leg, or side, of a two-legged complex options order.

A legging order may be automatically generated for one leg of a complex order under two circumstances.

First, when the price matches or improves upon the best displayed bid or offer on the regular limit order book.

Secondly, when the net price can be achieved as the other leg is executed against the best displayed bid or offer on the regular limit order book.

The multiple-legged order type, ISE believes, will improve liquidity for complex orders by enabling interaction between the complex and regular order books.