The International Securities Exchange has tapped Timber Hill, the market making subsidiary of Interactive Brokers, as the primary market maker (PMM) for the first four currency pairs of ISE FX options to be listed.
FX options are scheduled to launch early in the second quarter of 2007, pending SEC approval, with the following four currency pairs: USD/EUR, USD/GBP, USD/JPY and USD/CAD.
Sean Flynn, a trader at Timber Hill who oversaw the firm’s bid to become a PMM, believes ISE FX options will enable retail investors to easily enter and trade the market. He says, “Foreign exchange continues to grow in importance as an asset class, and we believe the FX market offers substantial opportunities for investors.”
Citigroup Derivatives Markets, Lehman Brothers and Optiver US, will act as competitive market makers in a variety of the products.
ISE has established a new type of market maker membership class for quoting in ISE FX options; a PMM trading license extends for three years and specifies certain market quality commitments. CMM trading licenses have a one-year term. ISE Electronic Access Members (EAMs) will be able to trade this innovative new product using their current memberships.