July 6, 2005
I would like to voice my strong disapproval for the ISEs proposed rule change. This proposal will have a negative impact on most of my active options traders, dramatically increasing their costs and potentially driving away that sector of my business. I do not understand the rational behind this latest change, but I do know it is not the way to encourage continued growth. To single out active traders solely based on canceled contracts runs contrary to the ISEs model of a low cost, all electronic exchange. Active options traders routinely cancel multiple times due to market conditions. More importantly, when a customer receives a partial execution and cancels the balance, the ISE proposes charging based on the difference between the canceled and executed amounts. Given the volatility of the market, it seems ludicrous to charge customers for orders that are not executed.
I would propose the ISE charge for orders that ARE executed, which would be by and large a far smaller number and would be in line with other market venues, such as the futures and equities markets, where customers are charged on executions, not non-executions. I cannot imagine what the current market environment would look like if exchanges like Archipelago charged customers for every order canceled.
I implore the Commission not to approve this latest attempt to penalize the most active customers and endanger the continued growth of the industry.