The Nasdaq OMX PHLX options exchange, formerly the Philadelphia Stock Exchange, has completed the roll-out of a complex order system, while rival platform NYSE Arca Options revealed it was piloting a similar initiative.
Philly’s offering is an electronic system for options that automates the process for handling and executing two-sided complex orders that are priced as a single order. The system supports various order types, including strategies consisting of two options on either a single underlying stock, exchange-traded fund (ETF), currency or index.
The system includes a price improvement auction, as well as national best bid and offer pricing protection, strategy price protection and a complex order opening auction. The system is offered for each of the 2,250 classes 250,000 individual options traded on the exchange.
Orders may trade in penny increments, even in classes not participating in the options penny pilot programme. In 2009, the system is expected to offer complex strategies with more than two option legs, plus options with underlying stock capabilities. The two-sided order types currently being offered include spreads, straddles, ratios, combinations, collars and risk reversals.
NYSE Arca Options said its system, called Complex Order Book, will allow customers to trade multiple option and equity issues in one order type. The pilot, which began on Monday, will only trade the Nasdaq 100 Trust ETF (QQQQ) while the exchange gathers performance information and customer feedback.
According to the exchange, the system provides automatic executions for customer and broker-dealer orders as well as a low-cost venue for both lead market makers and market makers to stream quotes from the trading floor or remotely.