Pacific Exchange (PCX) announced that it will become the
first US options exchange to begin quoting and trading all
listed options in penny increments, a move that renews the
debate about the viability of penny pricing.
PCX's attempt to implement penny pricing rests on simply
changing its rules, which requires Securities and Exchange
Commission (SEC) approval. But industry participants said the
issue is considered far more complicated than a simple rule
change and most likely will not be settled without a full
industry comment period and hearings.
PCX said it planned to submit the paperwork to SEC shortly
and hoped to receive the green light in the fourth quarter of
this year. Options industry executives estimated the process
could stretch into the first quarter of 2006.
One positive sign for faster approval has come from SEC
officials, who voiced support for penny pricing of equity
options. Elizabeth King, associate director at the division of
market regulation, told an audience at the options industry
conference in May that, "A move to penny pricing in options
could lead to reducing or eliminating payment for order
This article is available exclusively to subscribers
Please log in to continue reading.
Not yet a subscriber?
Click here to take a free trial.
Already have an account? |
Please fill in your details below and a customer service representative will contact you.