CBOE Holdings Inc., which operates the Chicago Board Options Exchange, is getting out of the stock business, though it never was a major player in that market.
CBOE, the biggest U.S. options exchange, said in a statement that “it is no longer in the company's strategic interests to pursue the stock business at this time.” The company's CBOE Stock Exchange and National Stock Exchange operators handled less than 1 percent of stock order flow.
CBOE hasn't determined a date for ending the operations, and the move is subject to regulatory approval by the Securities and Exchange Commission, a CBOE spokeswoman said. The exchange alerted traders to the change yesterday.
The move by CBOE comes as other stock exchanges are consolidating in an industry where profit margins have shrunk in recent years, partly because of increased stock order flow moving off exchanges at venues such as Chicago-based Citadel LLC's Connect service.
For instance, Lenexa, Kan.-based BATS Global Markets and Jersey City, N.J.-based Direct Edge announced last year that they would merge, creating a combined company that has a bigger market share than Nasdaq OMX Group Inc., the No. 2 player behind the New York Stock Exchange.
The Chicago-based CBOE Stock Exchange was created in 2007 by CBOE and four market-making partners and was majority-owned by CBOE, though a consortium of nine broker-dealers also had a stake in the company. The all-electronic exchange, which operated as a facility of CBOE, acquired Jersey City-based National Stock Exchange in 2011.
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