Nasdaq OMX Plans to Launch New Retail Options Market

Nasdaq OMX said it will launch a new retail market and new trading platform for U.S. equity options in June 2012, pending SEC approval.

The new market, to be known as Nasdaq OMX BX Options, will target retail customer orders who wish to access liquidity and provide market makers with additional incentives to provide liquidity, initially with a price/time trading system.

BX options will complement the exchange group’s existing U.S. options venues with “unique enhancements” that include a hybrid allocation model, directed order flow for market participants and a new multi-faceted improvement auction. Customers using the new market will benefit from microsecond trading speeds, bulk quoting, rapid fire risk protection and low-latency protocols — innovations known to both Nasdaq OMX PHLX and Nasdaq Options Market (NOM), according to the exchange which announced the news at the Options Industry Conference in New Orleans.

In order to facilitate an inexpensive and easy connection for options trading customers, BX Options will leverage the same architecture, data center and INET technology as other Nasdaq OMX platforms.

Commenting on the new options market, Tom Wittman, SVP and Head of U.S. Options at Nasdaq OMX, said: "Our new platform will be a home for retail order flow that is transparent and it will complement PHLX and NOM, giving our customers a complete liquidity destination for options trading."

As a result of the new platform, Nasdaq OMX will give market participants the ability to choose from three different market models for U.S. equity options trading. BX Options will reward retail customers for accessing liquidity with innovative structure and functionality; PHLX will offer electronic and floor-based trading with a traditional allocation model and NOM will provide investors a fully electronic market with a price/time allocation model. Nasdaq OMX will continue to leverage the speed and efficiency of its core INET technology across all exchanges, the exchange said in its release.

Nasdaq OMX will utilize the options trading license from its 2007 acquisition of the former Boston Stock Exchange to launch BX Options. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio