Wall Street Letter VOL. XLV, NO. 36 - December 2013 | Page 15

DECEMBER 2013

FEATURE

Dissecting the issues
WSL collects top quotes on the big issues for options exchange
executives who spoke at last month’s FIA Expo in Chicago

A

t the FIA’s 29th Annual Futures
and Options Expo in Chicago
last month, options exchange
execs talked fragmentation, the
culmination of the penny pilot,
and the first big meeting with the

mandate but the SEC would like to see this thing,
as we all would, become a permanent fixture in the
industry and no longer be a pilot… This is a pilot
that is seven years old, it almost doesn’t make sense
that it’s still a pilot.”
– Ed Boyle, senior vp of business development &
strategy, BOX Options Exchange

On the meeting between exchange leaders and
SEC chair Mary Jo White:
“[During the Nasdaq] outage, we did not feel like we
could get on phone calls together and have a conversation where we could set that timestamp as to what
the exact halt time was. I think as a result of the meeting with Chairman White and with these working
groups, I think going forward… we can handle those
types of situations more prudently than in the past.”
– Andrew Lowenthal, vp of business development,
Chicago Board Options Exchange

“I think, realistically, we’re not going to get it done
before the end of the year, we’re looking at another
extension of the Penny Pilot as an industry, unfortunately. Is it worth some time thinking about this
and trying to get it exactly right? That sounds nice
philosophically. I think we want to pull the trigger
and move on and find something that works for
most participants.”
– Crutchfield

new SEC chair.

“The other thing I think was that, as Gary [Katz]
mentioned, communication seemed to be a big point
to [Chair White]. Even if you don’t know specifically
what is causing an outage at this point in time we
would much prefer sooner than later, even if it has
to be sooner with caveats. That was one of the things
that I took away… even if you don’t know exactly
what is causing your problem, tell us something.”
– Thomas Gallagher, chairman and CEO, Miami
Exchange
On harmonizing trading halt rules
“We’re going to be making some recommendations here in advance of the 60 day deadline, but the
expectation I think, based on a lot of feedback from
the marketplace, is there should be a general bias
that when OPRA goes down we halt and then we, on
a best efforts basis, announce a time when we expect
the market would resume trading and attempt to
have a coordinated reopen around that time while
also avoiding sort of the lowest common denominator problem of always waiting for the last exchange
to be ready before we begin trading again.”
– Steven Crutchfield (pictured), executive vp and
head of US options, NYSE Euronext
On amending the Penny Pilot
“It’s not motivation to reduce it but to take some
of the noise out of it… I’m not going to say it’s a

On fragmentation due to new venues
“I think that the fragmentation Ed [Boyle] talked
about is just another thing that hurts because
these market makers need to have their markets
on 11 exchanges, and that makes it tougher for
new entrants to come and get market makers to
participate because they have to decrease their
size. So I think [it’s something] I am fearful of, and
that a couple years from now that will hurt our
marketplace.”
– Thomas Wittman, senior vp of Transaction Services, Nasdaq OMX Group
“We spent over $185m dollars to bring a new
exchange entrant to the space. We’re not like some
of the other ones that are recently either a pricing
strategy or a business strategy. We spent that kind of
capital and I think when you can bring new tech and
automated safety features, I think there is room…
We developed a tool called th