Philly Exchange Ready for Price War
PHILADELPHIA (AP) _ The Philadelphia Stock Exchange was preparing for a possible price war in the lucrative stock-options business after two of its biggest rivals said they planned to muscle in on the exchange’s turf.
The Chicago Board Options Exchange said it will begin listing the Philadelphia exchange’s top product _ Dell Computer Corp. stock options _ on Monday. The Nasdaq-American Stock Exchange also said it planned to cross-list Dell.
PhilEx traders and executives came close to selling the exchange’s trading floor last year after a group of customers threatened to move their Dell business to Chicago.
``We’re ready to go to the races,″ said PhilEx chairman Meyer ``Sandy″ Frucher. The Chicago board ``tried to steal Dell a year ago. But now we’ve got our technology in place and created a more level playing field.″
The Philadelphia exchange said it plans to fight back by listing three popular Chicago options _ Coca-Cola Co., IBM and Johnson & Johnson, members of the PhilEx options committee said. It also intends to list Apple Computer, whose options had been an Amex exclusive, officials said.
The new listings, all of which are to take effect Monday, threaten the long-standing division of hundreds of popular stock options between markets in New York, Chicago, Philadelphia and San Francisco. PhilEx is considering other cross-listings _ including some of the nation’s most valuable stocks, Frucher said.
Trading in equity options nationwide has set records in the last six years. Last year, nearly 330 million contracts, representing 33 billion shares of stock, were traded, according to the Options Industry Council.
Frucher said the planned listings could be the first in a series of moves that would allow customers to soon electronically choose the best prices offered by traders on all four U.S. options markets, as well as new online markets. The increased competition is also expected to prod options firms to cut their fees.
Lynn Howard, a CBOE spokeswoman, said the Chicago market’s move on Dell came at the request of customers who wanted to trade Dell in Chicago.