On Monday, the International Securities Exchange (ISE) announced that it had eliminated plans to trade?large-size options on the SPDR S&P 500 ETF Trust (“SPY”).
These are 10 times bigger than the current product,which is the most-active U.S. equity derivative. They are based on the Standard & Poor?s 500 Index.
The exchange made the decision after receiving market liquidity concerns for the product. It had previously obtained feedback on it from its market makers and brokers who trade equity options on ISE. ?
Its move came to light in letter to ISE members, reported Traders Magazine, with?Boris Ilyevsky, managing director of the ISE Options Exchange, writing on Monday,??We have concerns about the potential negative impact this product could have and, therefore, have chosen not to join BOX in opening them for trading. The jumbo options would not create incremental volume and, even worse, could harm liquidity.”
Meanwhile, after announcing last week that it had received Securities and Exchange Commission approval to trade these jumbo options on the S&P 500 ETF, the BOX Options Exchange started quoting the product on Friday, May 10.?
So what’s next for ISE and SPY?
Ilyevsky added,??Our plan is to monitor jumbo SPY?s volume trends and to continue to be ready to trade the product if it does gain industry acceptance. We have taken all the necessary steps in order to list jumbo SPY options, including submitting an initial rule filing to the SEC that is already posted on our website and ensuring our technical readiness.?