NYSE Arca Seeks to Make Penny Pricing for U.S. Options Permanent

NYSE Euronext (NYX) asked regulators to end a six-year test of quoting U.S. options in 1-cent increments by making the system permanent while limiting the program to the 150 most-active securities.

The trial, which began in January 2007 amid attempts by the U.S. Securities and Exchange Commission to cut investors’ trading costs, now includes 363 options classes. NYSE Arca, the fifth-biggest U.S. options exchange by volume last month, said this should be reduced by more than half, according to an SEC filing dated yesterday.

“Benefits have been concentrated in the 150 most-active” options families, the NYSE Euronext division said. Including less-traded contracts “resulted in more technology overhead costs to provide for capacity and speed for quote activity.”

Before the test of 1-cent increments, U.S. options were commonly traded in 5- and 10-cent increments.

To contact the reporter on this story: Nick Baker in Chicago at nbaker7@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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