The Chicago Board Options Exchange, the largest U.S. options market, said on Tuesday that it is developing a separate all-electronic options market to boost its competitive position.
The exchange, referred to as "C2," will compliment CBOE's hybrid market as the exchange expands its customer base. The new exchange is expected to be launched in 2009, pending U.S. regulatory approval, CBOE said in its quarterly earnings statement.
The capital investment for C2 is anticipated to be about $25 million, with the majority of the systems development and capital outlay occurring in 2008.
The exchange will operate under a separate license with a separate access structure and fee schedule. It will have its own board of directors, rules, connectivity and systems architecture.
CBOE announced the alternative exchange initiative to its members on the CBOE Web site.
Once complete, C2 would be a subsidiary of CBOE and would become a subsidiary of CBOE Holdings Inc, in the event of CBOE's demutualization to become a shareholder-owned company.
The CBOE said its third-quarter profit after taxes rose 56 percent, helped by a rise in trading volume and expanded product offerings.
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