ISE Upgrades Trading System

Terry Flanagan

The trading platform will now include additional order types to its price improvement auction system.

The International Securities Exchange has announced that multi-legged orders that include a stock component can now be entered through its Price Improvement Mechanism, or PIM, as part of overall enhancements made to its Optimise trading system.

“PIM was originally something that came out about 7 years ago as a way for a broker-dealer to auction off small orders for price improvement over the existing market,” said Boris Ilyesvky, managing director with the ISE. “A few months ago, we made it available for spread orders, which was a significant enhancement to the mechanism since this is a popular strategy. Now, we have also expanded the functionality to include orders that have a stock leg. For instance, PIM can accept a buy-write, which is a very common order type to buy stock and sell calls against it. Exposing these orders to a price improvement auction is a feature that no other exchange currently offers.”

“When you have any type of auction, in an electronic market, you will see price improvement and get the best possible price,” added Ilyevsky. “This creates a much better experience for the end customer.”

With the upgrade of its PIM system, ISE can now accept multi-legged strategy orders of up to eight options legs and one stock leg. Other improvements made to its Optimise trading system include performance enhancements aimed at reducing latency. Optimise is the proprietary global trading architecture of the Deutsche Borse Group, and was introduced to ISE in April 2011. The Deutsche Borse Group, along with the SIX Swiss Exchange, are the owners of ISE through their jointly-operated Eurex exchange. The acquisition closed in late 2007.

The ISE was among the exchanges that saw substantially boosted volumes during the volatility seen in recent months. It saw average daily volume of 4.1 million contracts traded in August, a 75.2 percent bump compared to a year earlier. Total options volume for the month was at 94.8 million contracts. It was the third largest in market share for the month among options exchanges at 18.9 percent, behind Nasdaq PHLX and the Chicago Board Options Exchange.

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