Tag Archives: options exchange


Options Mart CBOE Rumored to Merge with BATS Exchange

Following a decade of new exchange launches, which led to a series of aggressive fee competition to attract order flow and elevated the ‘pay-for-order-flow’ game, the more current trend towards consolidation, fueled by an industry-wide race to zero fees and commissions is sparking rumors that the CBOE and BATS are planning to marry..This on the heels of the still uncompleted deal between Deutsche Boerse and London Stock Exchange (LSE), a transaction that according to one MarketsMuse “has been put on hold pending further impact analysis” of this late summer’s BREXIT vote.”

(Traders Magazine)-CBOE Holdings’ reported talks to acquire Bats Global Markets would be the latest in a long line of exchange tie-ups, with one common denominator: the drive to have more trades execute under the same roof.

“Exchanges are a scale game,” said Brad Bailey, research director at Celent’s securities and investments practice. “Running exchanges in a regulatory, market-structure-complex world is tough. There is tremendous operational leverage available to bigger, more complex exchanges.”

Yesterday, Bloomberg News reported merger talks between CBOE and Bats, citing people familiar with the situation. A deal could be announced within weeks, thought it still may not happen, according to the report.

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CBOE’s eponymous options exchange is the largest of 14 in the U.S., with market share of 26.5% this month, according to OCC data. Chicago-based CBOE has a virtual stranglehold in the index-options business via its dominant CBOE Volatility Index (VIX) product.

Bats, which purchased rival exchange operator Direct Edge in 2014 and itself went public earlier this year, runs the BZX and EDGX options exchanges, which have a combined market share of about 12%. Bats also operates four of the 13 U.S. equity exchanges, with a combined market share of about 20%.

Equity and options exchange operator Nasdaq bought options bourse International Securities Exchange earlier this year. In the equities space, IntercontinentalExchange bought New York Stock Exchange in 2013. In Europe, Deutsche Boerse and London Stock Exchange are planning to merge. And there have been a host of exchange mergers over the past half-decade that have been discussed or proposed but ultimately didn’t happen.

“Think about the size and scale across asset classes of most exchanges,” Bailey told Markets Media. “ICE gobbled up NYSE, DB/LSE are attempting a marriage despite the complexities that Brexit has added to that equation.”

MarketsMuse editors are gearing up to profile ‘What’s Next?’ Anti-Trust Fever Sweeps Regulators as Exchanges Consolidate to Revert To Predatory Pricing Model..” To read the entire story CBOE Rumored to Merge with BATS Exchange from Traders Mag, click here

Add One More Options Exchange To Your Menu-Its About Rebates, Silly!

MarketsMuse options market update courtesy of extract from our friends at MarketsMedia LLC and their profile of yet another proposed options exchange with yet another “rebate” scheme intended to capture market share in the very competitive world of order routing.

International Securities Exchange will have its ISE Mercury exchange ready for trading by the end of the second quarter, though the launch remains subject to approval by the U.S. Securities and Exchange Commission.

New York-based ISE is the ‘s flagship ISE options exchange has market share of about 10.5%, 3rd-most of 12 U.S. options exchanges, while its Gemini exchange, launched in August 2013, has a 3.1% share, according to the OCC.

Gary Katz, ISE
Gary Katz, ISE

ISE has said Gemini is differentiated by offering transaction rebates to liquidity providers and prioritizing orders based on price, rather than prioritizing orders based on price and time. Mercury is expected to have its own differentiated market structure, though details have yet to be specified.

“We look at our exchanges as a group because they’re intended to work together,” said ISE Chief Executive Officer Gary Katz. “They address certain segments of the market, and offer pricing to attract different types of customers, whether they be professionals or priority customers. This strategy is working well in a super-competitive environment.

For the full story from MarketsMedia, please click here.

ISE To Launch Another Options Exchange Platform

Below courtesy of extract from Bloomberg LP 29 Sept reporting.

International Securities Exchange Holdings Inc. applied to create its third U.S. options exchange, to be called ISE Mercury.

ISE, a unit of Deutsche Boerse AG that already operates two options venues in the U.S., said the new venue’s structure, fees and products will be made public at a later date. Should ISE Mercury open, it would be the nation’s 13th options market.

“ISE Mercury will use our proven technology platform to service a segment of the options market not currently active on ISE or ISE Gemini,” Boris Ilyevsky, managing director of ISE’s options exchanges, said in a statement. “Our goal is to reach broadly across market segments and to deliver innovative trading functionality, superior customer service and competitive fees to different constituencies in the industry through our three exchanges.”

The firm last year started a second exchange, ISE Gemini, that had a market share of 3.8 percent at the end of last week, according to data from Options Clearing Corp. ISE’s namesake platform’s market share was 11.1 percent, placing it fourth among the 12 options venues.