CBOE to launch 2nd exchange in late October

By Reuters
Posted Oct. 5, 2010 at 4:34 p.m.

CBOE Holdings Inc., the biggest U.S. options market, will launch its planned second exchange targeted at high-frequency traders between Oct. 15 and Nov. 1, Vice Chairman Edward Tilly said on Tuesday.

The new electronic exchange, known as C2, will start by offering options on stocks that are also listed at the nation’s eight other options exchanges, including sister market Chicago Board Options Exchange, Tilly said in an interview on the sidelines of a Futures Industry Association conference in New York.

Options on the Standard & Poor’s 500 Index will be offered starting in the first quarter, he said. S&P 500 options currently only trade in face-to-face deals on the floor of the CBOE, and are the exchange’s biggest revenue producing product.

Offering electronic trading of S&P 500 options could double or even triple current volumes, analysts have predicted, providing a large new revenue stream for the options exchange operator.

The new exchange may also boost CBOE’s market share, which fell to 26.3 percent in October, behind rival NASDAQ OMX Group’s (NDAQ.O) venues. Year to date, CBOE remains the biggest U.S. options market.

Tilly did not offer any details on CBOE’s pending share buyback, which is due to be offered to its former members by the middle of this month.

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CBOE Holdings

CBOE Holdings Inc. claims it is the largest option exchange in the United States. The company, in addition to its core options trading business, provides marketplaces for trading futures contracts...

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