US equity options exchanges submitted their first reports to
Securities and Exchange Commission (SEC) on the penny pricing
pilot with mixed views on whether the programme is a success or
undermining the customer base.
Some exchanges are concerned about how pennies are harming
the institutional side of the business, a sector that the
options industry has worked hard to attract. Deep liquidity
pools in options contracts that were once traded in nickels
have seen a massive drop in depth at the top of the order
Chicago Board Options Exchange (CBOE) said the size of the
quotes is 80% smaller in pennies, therefore making it harder
for hedge funds and large money managers to execute large
orders. Ed Provost, CBOE executive vice president, business
development, told FO Week his feelings were mixed.
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