The International Securities Exchange (ISE), a US equity options exchange, has announced plans to enhance its FX options product suite at the beginning of next year.
The exchange’s product offering will be extended to include options on the Brazilian real. In addition, penny strikes will be introduced for each expiration month, creating a deep-in-the-money call option for all currency pairs. According to the ISE, penny strikes will enable investors to have a more direct exposure to the FX spot price. Both additions to the product suite are subject to regulatory approval.
“Demand for exchange-traded, centrally-cleared FX products continues to grow,” said Kris Monaco, director of new product development, ISE. “Options on the Brazilian real will provide investors with exposure to one of the fastest growing emerging market currencies. Penny strikes will allow investors to execute tied-to-spot trading strategies without the counterparty credit risks associated with the over-the-counter FX spot market. For the first time, investors will be able to trade such multi-leg FX spread strategies without legging risk.”
ISE FX options can be accessed through most major brokerage accounts that are approved for trading equity and index options. ISE currently lists FX options on nine currency pairs, each available with US dollar-based currency convention.
Meanwhile, the ISE has also revealed that Knight Equity Markets, a subsidiary of broker Knight Capital Group, has purchased 10 competitive market maker (CMM) rights on the ISE trading platform, effective from the first quarter of 2010. Knight bought the CMM trading rights from broker-dealer TD Options and will retain the firm’s electronic access member trading rights on the exchange.
“Knight is developing options market making capabilities as an extension of our equities and fixed income trade execution services for broker-dealers,” said Thomas M. Joyce, chairman and chief executive officer, Knight Capital Group.
“As a CMM, Knight will play a key role in providing competitive quotes and deep liquidity for all options products traded on ISE,” added Gary Katz, president and CEO of ISE.