Less than six hours after the
Chicago Board Options Exchange
announced its unprecedented decision to list options on
American Stock Exchange
matched its Midwestern rival.
In answering the
salvo fired Wednesday morning by the CBOE, the Amex said later in the day it would also list options in Dell, once the exclusive province of the fourth-ranked
Philadelphia Stock Exchange
. An Amex spokesman declined to comment beyond the press release.
Dell is the Philly's busiest listing, and the Austin, Texas, boxmaker's multiple listing may spell further problems for the small, regional exchange, which has struggled during the past three years. Trading in Dell had accounted for 29% of the Philly's year-to-date volume through the end of July. Dell brought in 34% of the exchange's volume in 1998.
The Philadelphia exchange, meanwhile, tried not to look like the dog that got kicked while it was down. It is launching its own little Molotov cocktails: The PHLX will register to list formerly CBOE-listed
Johnson & Johnson
, as well as
, which was exclusive to the Amex. The PHLX allocation committee is meeting over the next two days to decide which firms will register those "books."
According to PHLX Chairman Sandy Frucher, specialists haven't been chosen yet, but there are some "disgruntled" specialists from the CBOE who are defecting from the Chicago floor to apply to trade those issues on the Philadelphia exchange. "We'll see what happens in the next few days," he said in an interview.
And this isn't some isolated, market-geek skirmish. Regulators expect multiple listing of all options to tighten options price spreads as exchanges compete for customer orders. As a result, the CBOE's move could help individual investors but hurt professional traders.
At this point, the four options exchanges have dry powder ready to fight for order flow.
In San Francisco, the
remains mum on its plans. "We don't have a statement yet, we're still sorting things out here," said a P-Coast spokesman at midday.
, a major options-trading firm, was awarded the market-maker designation for options in Dell on the CBOE, meaning that it takes responsibility for pricing and liquidity. The firm had lobbied CBOE brass to list Dell last year, but the exchange wouldn't budge.
The Amex said its specialist hadn't yet been selected, but the chatter on the Trinity Place trading floor in New York was that
Spear Leeds & Kellogg
will step up to trade the Dell options.
The word from CBOE Chairman William Brodsky was, "Stay tuned. We're not reacting. We're making decisions.
"It's certainly not the end of the story, but the beginning," the executive continued. Brodsky said the CBOE didn't want to let the screen-based
International Securities Exchange
make a grab for listed options. "If ISE has said it's going to start by next March and list 600 options, 400 of those that we trade, are we going to sit there and let them do it to us?"
For now, the rules of war reign. The CBOE was required to give at least 72 hours' notice that it was about to list a grandfathered option. But the PHLX had been using Amex technology on loan to trade Dell options, since the merger of the two exchanges fell apart. That agreement ends Sept. 1.
But one market maker at the PHLX warned that the exchange of brotherly love has "nothing to lose and everything to gain" by returning the favor and listing as many options as possible. "The ball is really in our court." Philly traders think they see weak spots in CBOE's
listings, and could make a move to list them.
What the Philly has to lose, however, is the value of its seats. Today the bid for a seat was $130,000, down from the last sale of $160,000 just two days ago.