Howdy from Planet Options!

By: Amy Farnstrom

File Under: Options

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My name is Amy. I'm director of derivative products for NYSE Arca, and I'm going to be bringing you fun facts and updates about NYSE Arca Options, the electronic trading platform that was launched last August and has been enjoying steady growth ever since. We are proud and excited to bring the cutting edge technology of our NYSE Arca Equities platform to the Options world. NYSE Arca Options was built on the same principles of speed, transparency and reliability that have made NYSE Arca's equity trading platform such a star.

I'll give a few highlights of the platform. Rather than divvying up contracts using size pro rata or strict price-time, NYSE Arca Options instead offers a modified price-time market structure. What does that mean? Speed of quoting gets rewarded, because the platform grants priority on a first come, first serve basis for all market participants, but then combines that with the benefits of guaranteed quoting from lead market makers (LMMs) who get a 40% guarantee of incoming order flow-- if they are quoting at the national best inside market. LMMs are required to quote in all series, and the modified price time structure rewards LMMs who provide liquidity for thinly traded options, tighten spreads and improve overall execution quality, which in turn benefits the order sending firms who interact with them, making the public investor the ultimate winner.

While I'm tooting the horn, I'll also mention that for a measly $16,000/month, an Options Trading Permit holder (registered Market Maker) can trade every option listed on NYSE Arca. That is significantly lower than our competitors. And the platform electronically trades every single-leg option order we accept—no manual handling required. We even brought a couple of order types over from equities that no other options marketplace offers-- e.g. reserve orders (like having an electronic crowd broker "work" your order for you) and NOW orders (which are basically routable IOC orders), with more unique order types to come. If all of this sounds great (we think it does) -- keep your seatbelt on, because the ride is going to get better and better. In the upcoming weeks and months, I'll be bringing you more news about innovations and ideas that are coming to market, and what it all means to the changing landscape of the options industry.

NYSE Arca Options has arrived!

Tags: New York Stock Exchange, NYSE Arca Options, NYSE Arca, Arca, options, NYSE, NYSE Euronext, NYX, trading, stock market