The US options market is set for an overhaul after the Options Clearing Corporation (OCC) along with all 12 exchanges agreed to the adoption of new risk control standards.
The reforms include price reasonability checks, drill-through protections, activity-based protections and kill-switch protections.
“Working with all of the U.S. options exchanges, we have adopted principles-based exchange risk control standards that are critical to protecting market participants and OCC against financial loss,” said Craig Donohue, OCC executive chairman.
“These comprehensive risk control standards, and the incentives that we have designed to encourage their adoption by all US options exchanges, further our collective goal of enhancing industry protections.”
The news coincides with an announcement from the International Securities Exchange (ISE) that it plans to launch a new platform, ISE Mercury, in the first half of 2015.
The venue would become the 13th US options exchange in operation, and represents ISE’s second launch in the same amount of years after going live with Gemini in 2013.
ISE has applied to the US Securities and Exchange Commission for approval with details on the platform’s market structure, fee schedule and product offering to be announced at a later date.
“ISE Mercury will use our proven technology platform to service a segment of the options market not currently active on ISE or ISE Gemini,” said Boris Ilyevsky, Managing Director of ISE’s options exchanges.
“Our goal is to reach broadly across market segments and to deliver innovative trading functionality, superior customer service, and competitive fees to different constituencies in the industry through our three exchanges.”