SEC delays S&P options ruling in setback for CBOE
U.S. regulators dealt a fresh setback to CBOE Holdings Inc, delaying a decision on CBOE's plan to offer electronic trading of its exclusive options on the Standard & Poor's 500 Index.
The parent of the oldest and largest U.S. options exchange had expected the Securities and Exchange Commission to rule by June 6 on its application to list the index options on its secondary market. But the Commission decided to extend its evaluation by 45 days to gather more information, according to a CBOE statement issued late Friday.
The options are CBOE's highest-revenue product but had always been traded only on the Chicago Board Options Exchange's face-to-face trading floor. Offering them electronically, on CBOE's new C2 market in New York, could attract high-speed traders and boost trading volume, analysts have said.
The delay means CBOE will not be able to list the contracts until at least the third quarter. The CBOE launched the all-electronic C2 market last year and had initially expected to offer S&P 500 Index options in the first quarter.
Shares of CBOE were down 1.3 percent to $25.19 on Monday.
We suspect consensus estimates were building in a lift in index option volumes in 3Q11, Evercore Partners analyst Chris Allen wrote in note Monday to investors. The SEC's decision is likely to result in negative estimate revisions, he said.
Macquarie Securities analyst Ed Ditmire also said the decision could delay the listing until as late as November and would cause him to revisit his earnings projections.
CBOE Holdings Chairman and CEO William J. Brodsky said CBOE was disappointed by the further delay.
We left no stone unturned in developing this important product and, for that reason, we remain hopeful that the SEC, as it receives more information and has more time to consider the facts of this matter, will arrive at that same conclusion, Brodsky said in the Friday statement.
CBOE planned to list the electronic version of SPX options after June 6 on C2 pending approval by the SEC.
(Reporting by Doris Frankel and Ann Saphir, editing by Dave Zimmerman)
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