International Securities Exchange

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International Securites Exchange
Image:ISE_logo2.jpg
Founded May 26, 2000
Headquarters New York
Key People David Krell, Chairman; Frank J. Jones, PhD, Vice Chairman; Gary Katz, President/CEO; Other select ISE Staff
Products Options, Stock, Alternative Markets, Market Data
Web site www.ise.com

International Securities Exchange Holdings, Inc., is a wholly owned[1] subsidiary of German derivatives exchange Eurex. ISE Holdings acts as the umbrella organization for three ISE arms: an options exchange, a stock exchange and an alternative markets platform. ISE also has division that focuses on market data.

ISE began in May of 2000 as the first fully electronic U.S. options exchange. Its options arm currently touts itself as the largest equity options exchange in the world, with 30 percent of the listed equity options volume of the six U.S. options exchanges.

ISE regularly hosts a live webinar series designed to educate investors about options investing, trading strategies and new product offerings. ISE also recently launched podcasts, containing options trading information for both the beginner and the advanced options trader.

Contents

News

  • On May 5, ISE and the Taiwan Stock Exchange Corporation (TSEC) signed a Memorandum of Understanding (MOU) on information sharing and cooperation[2]
  • On Feb. 19, ISE announced the launch of new ISE FX Options currency pairs the Australian dollar and the Swiss franc.[3]
  • On Jan. 30, ISE announced a joint technology initiative with Eurex. Plans are in the works to develop an options trading system for ISE, which will provide members with greater platform flexibility and an improved trading experience. This multi-year project will draw on the expertise of ISE and Deutsche Boerse AG’s technology teams and ISE will continue to run on the OMX CLICK technology platform until the new platform is rolled out.[4]
  • On Nov. 1, 2007, ISE reported that in October 2007, its options exchange traded a record average daily volume of 3.7 million contracts. The ISE Stock Exchange traded an average daily volume of 62.8 million shares in the same period after only a little more than one year in operation.[5]
2007 Volume

In 2007, average daily trading volume of equity and index options increased 35.9 percent to an annual record of 3.2 million contracts traded as compared to 2.4 million contracts traded in 2006. Total equity and index volume for 2007 increased 35.9 percent to 804.4 million contracts from 592 million contracts in 2006.[6]

History

The International Securities Exchange grew took root in 1997 when then-chairman of E*Trade, William A. Porter and his colleague, Marty Averbuch, approached David Krell and Gary Katz about the concept for an all-electronic options market. The four founded what today is known as the International Securities Exchange.

Just 10 years after Porter, Averbuch, Krell and Katz conceptualized the market, ISE traded its two-billionth options contract (March 9, 2007).

A month later, in April 2007, Eurex and ISE announced that they had signed a definitive agreement under which Eurex would acquire ISE by way of a merger. Late in July, stockholders approved the merger, which was completed on Dec. 20, 2007. Eurex acquired ISE for approximately $2.8 billion in cash, or $67.50 per share. Eurex’s two parent companies, Deutsche Börse AG and SWX Swiss Exchange, provided the necessary financing in line with the economic interests of 85 percent and 15 percent respectively that both companies have in Eurex.

The combined entity is now the largest transatlantic derivatives marketplace, with offerings in index, equity and long-term interest rate derivatives in USD and EUR.[7]

Membership

ISE has more than 100 broker-dealer members, in three categories: Primary Market Makers (PMM), Competitive Market Makers (CMM) and Electronic Access Members (EAM).


ISE Education

ISE provides education in the form of seminars and webinars for individual investors, options user groups, fund managers, trading desks, corporate treasurers and hedge fund managers. ISE also participates in a number of annual educational investor conferences including Optionetics’ OASIS conference and optionsXpress’s investor XPO, as well as Traders Expo and Money Show.

As a member of The Options Industry Council (OIC), a non-profit joint venture by the six U.S. options exchanges and the Options Clearing Corporation, ISE participates in the creation and delivery of programs designed to reach investors and brokers alike.

ISE regularly hosts live webinars, allowing participants to interact directly with expert education instructors. ISE also recently launched a podcast series that lets options traders of all skill levels to download educational material directly to their MP3 devices.

ISE Options

ISE is the world’s largest equity options exchange and currently lists more than 1800 equity, index, ETF, FX and quarterly options. ISE introduced index options in October 2003 and later in 2004 launched ISE Proprietary Sector Indexes, industry indexes that track the performance of publicly-traded companies in various industries. ISE also lists options on the proprietary sector index products, in addition to options on a variety of licensed benchmarks.

ISE Indexes

ISE Sector Indexes


ISE Broad Based Indexes


Other Major Indexes


ETFs on ISE Proprietary Indexes In 2007 ISE announced partnerships with both First Trust Advisors L.P., to launch ETFs on ISE proprietary indexes.

Futures on ISE Indexes ISE announced a partnership with U.S. Futures Exchange (USFE) to launch several cash-settled futures contracts based on ISE proprietary indexes.

ISE FX Options

In April 2007 ISE listed ISE FX options with dollar-based underlying values[8] on the euro (EUI), British pound (GBP), Canadian dollar (CAD) Japanese yen (JPY), Australian dollar (AUX) and Swiss franc (SFC). Though strategies for ISE FX options are nearly identical to equity options strategies, ISE FX options are cash settled, thus eliminating the requirement to hold the actual foreign currency.


ISE Stock Exchange

ISE, along with a group of strategic partners, launched the fully electronic ISE Stock Exchange on Sept. 8, 2006. The exchange offers two primary capabilities integrated on a single platform: 1) MidPoint Match, an exchange-based anonymous (non-displayed) platform for trading equities at the exact midpoint price of the National Best Bid and Offer (NBBO), which was launched in 2006. 2) Displayed market, as its name implies, is a fully electronic displayed market of best bid and offer trading for common stock s and ETFs listed on the NYSE, Nasdaq and Amex.

Displayed market orders first receive exposure to the non-displayed MidPoint Match order book and may be automatically executed with price improvement.

The ISE Stock Exchange is Regulation NMS-compliant. It is able to receive orders routed to the ISE Stock Exchange from other equity markets. Orders placed on the ISE Stock Exchange have complete trade-through protection.

According to ISE, the launch of their equities market, in an atmosphere they characterize as "radically different from that of only a couple of years ago," with new regulatory changes, such as Regulation NMS, will "transform the competitive landscape to a more equitable and efficient trading environment." Thus, the trend toward automation and algorithmic trading, they believe, plays to their strengths.[9]


ISE Stock Exchange Dual Platform Demo The exchange provides expanded information about these concepts, in addition to an online demo[10] that shows how ISE Stock Exchange's platform integrates a dark pool, MidPoint Match, with a fully displayed stock market.


Volume Records On Sept. 19, 2007, the ISE Stock Exchange set a new daily trading volume record of 115.7 million, surpassing a previous record of 109 million shares set on Sept. 18, 2007. On Jan. 22, 2008 the ISE Stock Exchange hit another daily trading volume record of 145.1 million shares traded.


ISE Market Data

ISE is a leading provider of enhanced market data products for sophisticated investors. Investors have access to ISE Depth of Market Feed, ISE Historical Options Tick Data (ISE HOT Data), the ISE Sentiment Index (ISEE), ISEE Select(SM), ISEE Select XML Feed and ISE Open/Close Trade Profile.

ISE Depth of Market Feed is a real-time data feed that provides the aggregated volume of all quotes and orders available at each of the top five price levels for options that trade on ISE. This offering provides transparency beyond the Best Bid Offer (BBO) and helps subscribers improve trading efficiency.

ISE Historical Options Tick Data (ISE HOT Data) includes the full daily tick file of all trades and BBO quotes for equities, index and ETF options that are reported to the Options Pricing Reporting Authority (OPRA).

ISE Select XML Feed, a direct XML feed of data, is used to create ISEE Select(SM), ISE’s customized sentiment data offering. This data is also used to create ISE Sentiment Index (ISEE), a calculation that provides a single put/call value for overall market sentiment.

ISE Open/Close Trade Profile provides aggregated volume and the number of trades by series for opening and closing transactions executed on ISE's options exchange [11]. End-of-day data files are available to subscribers in a .csv format.


ISE Alternative Markets

On March 24, 2006, ISE acquired the intellectual property and related assets of a patented, parimutuel trading platform called Longitude, Inc. This strategic acquisition paved the way for ISE to establish ISE Alternative Markets. On March 12, 2008, ISE announced the planned launch of ReXX Commercial Property Index Auctions. Trade is expected to begin in 2008.[12]

References

  1. ↑ Eurex & ISE Complete Merger. Eurex. Retrieved on December 21, 2007.
  2. ↑ Taiwan Stock Exchange and International Securities Exchange sign MOU. International Securities Exchange. Retrieved on May 5, 2008.
  3. ↑ ISE Expands FX Options Offering with Two New Currency Pairs. International Securities Exchange. Retrieved on February 19, 2008.
  4. ↑ ISE Teams with Eurex to Develop New Options Trading System, Replacing OMX by 2011. Advanced Trading. Retrieved on January 30, 2008.
  5. ↑ ISE Reports Monthly Volume for October 2007. International Securities Exchange. Retrieved on January 25, 2008.
  6. ↑ ISE Reports Monthly Volume for December 2007, Full Year 2007 Average Daily Volume Increases 35.9% to a Record 3.2 Million Options Contracts. International Securities Exchange. Retrieved on January 6, 2008.
  7. ↑ "Merger Eurex International Securities Exchange (ISE)”. Eurex. Retrieved on Jan. 12, 2008.
  8. ↑ ISE FX Options. International Securities Exchange. Retrieved on January 25, 2008.
  9. ↑ International Securities Exchange Annual Report. ISE. Retrieved on October 21, 2007.
  10. ↑ Online Demo. International Securities Exchange. Retrieved on January 25, 2008.
  11. ↑ ISE Announces Launch of Open/Close Trade Profile Data Offering Extensive Put/Call Data Now Available for All ISE Options Series. International Securities Exchange. Retrieved on Nov. 27, 2007.
  12. ↑ ISE Alternative Markets to Launch New Auctions Based on ReXX Commercial Property Indices. ISE. Retrieved on March 12, 2008.

External links

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