Click Trade is the Microsoft Windows-based front-end to the Unix-based Click exchange system used by the ISE. Its primary users are the ISE’s broker-dealer members that handle large amounts of institutional traffic, Goldberg said. ISE is responding to clients’ concerns about shrinking desktop "real estate", he added.
Open-outcry exchanges such as the American Stock Exchange and the Chicago Board Options Exchange were the first to make the move to help members consolidate options trading terminals by offering similar "away-routing" capabilities, rather than obligate traders to support a terminal for each exchange. Customers can also send all orders to one exchange and have them filled at the best bid/offer (BBO) rate via the Options Linkage Authority (OLA) network between the exchanges.
The OLA is not necessarily the fastest way to execute large-size institutional orders. Some markets, such as the ISE, have primary market makers that encounter the orders and attempt to offer a better price than the BBO, Goldberg said. Unlike its rivals, there is no software license fee for ISE’s Click Trade, he added.
Although electronic trading has made switching options exchanges easier, it is still a much more static community than the equities world, says Damon Kovelsky, analyst at IDC/Financial Insights. Only recently did some of the exchanges allow electronic trading for users without memberships, the prices of which range from six to eight figures per year.
Kovelsky said the market is still up for grabs. "My research indicates that the options inter-market, both the linkage and front-end routing, has not gained a lot of traction," he said.