CBOE moving stock exchange to East Coast

Discussion in 'Trading' started by uptickk, Jun 30, 2011.

  1. uptickk


    Sad day for Chicago...


    (Reuters) — CBOE Holdings Inc. will relocate the trading operations of its wholly owned Chicago-based stock exchange to the East Coast as it steps up efforts to capture business from high-speed traders.

    The CBOE Stock Exchange will start operating out of Equinix's Secaucus, New Jersey, data center on Friday, the company said in a statement on Thursday. The Equinix center also hosts CBOE's new electronic stock-options exchange, C2.

    Firms that use computers to make rapid-fire market bets account for an increasing percentage of trading in the United States, and most of the high-frequency traders who specialize in stocks are on the U.S. East Coast.

    The microseconds saved by trading at a New Jersey hub rather than one in Chicago can make the difference between profit and loss. Other electronic traders can also benefit from the faster speeds.

    CBOE's move is aimed at making the regional stock exchange more relevant in a world that largely shuns local exchanges in favor of giant incumbents NYSE Euronext -- parent of the Big Board -- and Nasdaq OMX Group, or rapidly growing rivals like BATS Global Markets and Direct Edge.

    CBOE Stock Exchange handled 0.26 percent of daily U.S. equities trading over the last 12 months, CBOE said. CBOE owns the majority of the CBOE Stock Exchange; several financial companies also have stakes.

    CBOE Holdings, which first sold shares to the public last year, has stood on the sidelines as other global exchanges have dived into a new wave of industry consolidation.

    Bill Brodsky, CEO of CBOE Holdings, said last month he is looking at "all opportunities" for expansion, a comment that appeared to open the door wide to partnerships. The majority of CBOE's revenue comes from its Chicago-based options market, which handles trading both face-to-face and electronically.

    In another move aimed at winning new business, CBOE'S stock market this month simplified its trading fees, charging the same for transactions that add liquidity to the marketplace as for those that feed on the liquidity, it said on Thursday.

    Typically, exchanges charge "liquidity takers" more than "liquidity makers."

    "We've now addressed our customers' priorities by reducing execution latency and making available a very attractive pricing model," CBOE Stock Exchange CEO David Harris said.

    Shares of CBOE Holdings were up 0.9 percent at $24.60 on Thursday afternoon.
  2. I'd like the CME to leave Illinois and put all its servers+data in NJ also.
  3. bone

    bone ET Sponsor

    You are also going to see either the Texas or Florida Mercantile Exchange.
  4. nitro


    I think this is for the electronic markets, or basically C2 based instruments. I for one have seen this long time coming. MMs are at a huge disadvantage to the other options exchanges that are on the east coast because the stock feeds are literally a few miles away for them, if not a cage away in some cases. The speed of light has always been an issue with people trading on the CBOE equity options getting picked off due to this latency. Now all the options exchanges will converge near stock feeds and a genuine level playing field. CBOE volume should go up over time, taking share away from the other exchages (although CBOE has to make their engines far far more efficient and make them super developer friendlier than they are.)

    If this is also for the pit traded options, that would be a sad day, but it would never make sense for the SPX or NDX etc pits, since the driver of those are in Chicago.'

    Equity option pits are dead anyway. Electronic options are making records each year in more and more volume.

  5. bone

    bone ET Sponsor

    Yep, we have gotten to the point where layups from that Broker you blew and gang-banging your Brother-in-Law's customer deck with a wink and a nod and a few grams of coke are just nowhere to be found these days. Chicago pit traders will have to actually take on some risk and use the computer for a bit more than porn and emails.
  6. CBOE, biggest den of thieves I can think of.

    What are they going to do with the "C"?