ISE membership is required for participation in the ISE Options Exchange. ISE Exchange participants can be either Primary or Competitive Market Makers, or simply Electronic Access Members. All three member types can trade on the ISE Options Exchange with no additional requirements. Information on these membership types is provided below.
In the options market, there are 10 trading bins in our first market, and six trading bins in our second market. One PMM is assigned to each trading bin. A PMM posts two-sided continuous quotations in all of the options classes to which it is appointed and undertakes special responsibilities for maintaining fair and orderly markets. A PMM must purchase or lease the PMM trading rights assigned to the particular trading bin in order to act as a PMM in that bin. An important advantage of having a PMM assigned to each option is that members have a point of contact who is responsible for maintaining orderly markets and is available to answer market questions and resolve trading-related issues.
In the options market, there are up to 16 CMMs assigned to each trading bin in our first market. The second market is structured so that there is no limitation of the number of CMMs assigned to any trading bin. In the first market, a CMM posts two-sided continuous quotations in at least 60% of the options classes in its assigned trading bin or 40 option classes in its assigned trading bin, whichever is less. There are no minimum quotation requirements in the second market. A CMM in the first market must purchase or lease CMM trading rights assigned to the particular trading bin in order to act as a CMM in that bin. To act as a CMM in the second market, members must either possess trading rights in the first market or pay a monthly CMM access fee.
An EAM enters orders in all trading bins in the options market on the Exchange’s trading system, and may clear trades executed on the Exchange. To act as an EAM, it is not necessary to purchase or lease trading rights. Rather, EAMs pay a monthly EAM access fee.
FXPMMs are market makers that have very similar responsibilities to PMMs for equity and index options. The most significant difference between the two types is that the responsibilities of a FXPMM are limited only to ISE’s FX Options. A FXPMM must purchase a Trading License directly from the Exchange via an auction for each currency pair. The auction process promotes competition because it requires prospective FXPMMs to provide market quality commitments as part of its bid. One FXPMM is assigned to each currency pair traded on the Exchange. A FXPMM Trading License does not confer the right to trade equity and index options. Similarly, a PMM in the equity and index options markets must purchase a Trading License in order to make markets in FX Options.
FXCMMs are market makers that have very similar responsibilities to CMMs for equity and index options. FXCMMs are only permitted to make markets in FX Options. A FXCMM must purchase a Trading License directly from the Exchange via a “Dutch” auction process. A Trading License entitles the member to make markets in one currency pair. Up to 10 FXCMMs are appointed to each currency pair traded on the Exchange. |