Wall Street & Technology: Blog
subscribe January 09, 2008

Lime Brokerage Acquires Stake in CBOE Stock Exchange

Lime Brokerage has acquired a minority stake in CBOE Stock Exchange, a subsidiary of the Chicago Board Options Exchange (CBOE). The investment was made on Jan. 3, although financial terms of the deal were not disclosed.

According to George Hessler, Lime’s EVP and head of strategy, there are two reasons why the investment makes sense. The first reason is that the CBSX has one of the protected quotes under Reg NMS which means that if Lime’s customer “To the extent that either our clients or other clients of CBSX post the best bid or offer in a given named, nobody can trade through them. We feel that that will lead to some growth in their numbers,” says Hessler.

The second reason is that CBOE options traders use cash equities to hedge their options positions. Since the CBSX has a relationship with the CBOE, Lime expects that over time, the CBSX would “benefit from the hedging of the flow from options traders into cash equities,” notes Hessler.

Lime, an agency broker, known for its low-latency trading technology, clearing and reporting services, is eyeing the growth potential of the CBSX because of its relationship with the CBOE, one of the top two U.S. equity options exchanges.

Since its launch on March 5, 2007 with twelve stocks, CBSX has traded over a billion shares in 10 months. The average daily trading volume in 2007 was 4.8 million shares and its crossing business grew to 100 million shares by December. Also, it established a CBSX stock desk on the CBOE trading floor.

Meanwhile, CBOE handled one-third of all industry volume in U.S. options. In 2007, CBOE’s market share in U.S. equity options was 25.7 percent in 2007, down slightly from 26.1 percent in 2006.

In a statement, Alistair Brown, Lime’s chief executive, said that Lime looks for unique pools of liquidity “CBSX offers a displayed and non-displayed market for Lime’s customers to provide liquidity for CBOE options traders’ hedging activity. We believe this market structure is good for our customers and CBOE’s option traders seeking to hedge their options positions,” stated Brown in the release.

This is not the first time that Lime has acquired a minority interest in the evolving U.S. equity market structure. Known for its low-latency electronic trading infrastructure, Lime was one of the early investors in BATS Trading, operator of BATS ECN. BATS coincidentally announced two new investors, Deutsche Bank and JPMorgan, earlier this week.

In the release, David Harris, CBSX’s CEO noted that “Not only is Lime among Nasdaq’s largest liquidity providers, but Lime has also demonstrated its ability to support the development of new market centers.”

Lime, whose clients are a collection of hedge funds, broker dealers, traditional asset managers and some professional traders, provides a platform for its clients to anonymously execute equities, futures and options transactions on multiple exchanges, ECNS and trading venues.

Posted by Ivy Schmerken at 02:03 PM



This is a public forum. CMP Media and its affiliates are not responsible for and do not control what is posted herein. CMP Media makes no warranties or guarantees concerning any advice dispensed by its staff members or readers.

Community standards in this comment area do not permit hate language, excessive profanity, or other patently offensive language. Please be aware that all information posted to this comment area becomes the property of CMP Media LLC and may be edited and republished in print or electronic format as outlined in CMP Media's Terms of Service.

Important Note: This comment area is NOT intended for commercial messages or solicitations of business.


CHECK THIS OUT

Novell Real Time Linux Webcast Series
In order to succeed, companies must be able to respond quickly, deliver superior value and quality of service, and carefully manage their costs. In this series of brief webcasts, you will learn how SUSE Linux Enterprise Real Time from Novell enables organizations to respond quicker by delivering low latencies, deliver increased value with fast response times, and better manage costs.

Events

Live Events:
Accelerating Wall Street 2
October 02, 2008

Buy-Side Trading Summit 2008
November 16-18, 2008


White Papers

Level 3 Connectivity Kit
Stay ahead of the bandwidth curve. The Level 3 Connectivity Kit provides full resources to help you make informed decisions regarding your network infrastructure. Download the Data Center Networking Strategies for Financial Services Firms White Paper; Business Class Ethernet: Trends in Perspective eBook and BC/DR Best Practices for the Data-Intensive Enterprise Gartner Webcast

Surviving and Thriving in a Challenging Market
Learn how financial services firms can use customer-centric strategies and tools to maximize client value and loyalty, gain insight into new opportunities, and do more with less, counteracting market volatility.

Marketplace

Career Center


Ready to take that job and shove it?

Function:
Information Technology
Engineering
State:


Keyword(s):

Browse By:
State | City
techweb
Online Communities TechWebInformationWeekLight ReadingIntelligent EnterprisebMightyNetwork ComputingDark ReadingDigital LibraryWall Street & Technology
Byte & SwitchNo JitterInternet EvolutionLight Reading's Cable Digital NewsContentinopleUnStrungBank Systems & TechnologyAdvanced TradingInsurance & Technology
Face-to-Face Events
InteropWeb 2.0 ExpoWeb 2.0 SummitVoiceConBlack HatCSISoftwareEntrprise 2.0 ConferenceGTEC
Mobile Business Expo
InformationWeek 500 ConferenceBuy Side Trading XchangeBuy Side Trading SummitBank Executive SummitInsurance Executive SummitTelcoTVEthernet ExpoOptical Expo
Magazines  
InformationWeekWall Street & TechnologyInsurance & TechnologyBank Systems & TechnologyAdvanced TradingMSDNTechNetSmart EnterpriseThe Architecture JournalDatabase Magazine
 
Research & Analyst Services  
Heavy ReadingInformationWeek ReportsInformationWeek Analytics