Chicago Board Options Exchange (CBOE) is set to launch C2 Options Exchange (C2), a new electronic options exchange, in late October that will feature a maker-taker pricing model.
“The maker-taker business model is rapidly becoming the wave of the future in the options market. As a traditional exchange, CBOE is ill-prepared to compete in the maker-taker arena," says Mark Longo, founder of TheOptionsInsider.com "C2 allows CBOE to offer a maker-taker model that can compete with similar offerings from NYSE Arca, Nasdaq OMX and other maker-taker exchanges. C2 also offers CBOE the opportunity to pursue other competitive models currently popular in the options space, such as selling ownership interests to generate order flow.”
While it is expected that nearly all of the industry’s multiply-listed, penny pilot option classes will eventually be listed on C2, they will be launched on a rollout schedule with 25-50 being included in the initial launch. C2 also will be able to list CBOE’s exclusive products such as S&P 500 Index options, although they will not be included in the launch.
“C2 is essentially starting from scratch, so it will face the same hurdles confronting other new exchanges in the options space. The primary consideration will be attracting order flow to the exchange,” Longo says.