CHICAGO BOARD OF OPTIONS, PACIFIC EXCHANGE MERGING.Byline: Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. The San Francisco-based Pacific Exchange and the Chicago Board Options Exchange Chicago Board Options Exchange (CBOE) A securities exchange created in the early 1970s for the public trading of standardized option contracts. Primary place for the trading of stock options, foreign currency options, and index options (S&P 100, 500, and OTC 250 index) are merging in an effort to trim costs and become more competitive. The boards of governors of both exchanges announced Thursday that they had approved an agreement that outlines broad terms for the consolidation. Under the proposed agreement, the Chicago facility, the world's largest option exchange, would be ``the successor entity.'' The Pacific Exchange, the world's fifth largest exchange, would remain in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden and would be supported by the Chicago exchange's technology. The new exchange, which doesn't have a name yet, will handle 65 percent of all U.S. securities options trading, including options on 1,700 stocks and 40 indexes. The combination could save some $80 million over seven years, which would be passed on to traders, exchange officials said. The bulk of the savings would come through combining work on technology for computer-assisted trading. An option allows its holder to either buy or sell shares at a certain price before a deadline. Some investors use options to manage risk. Options are traded on stock, currencies and stock indexes. The new options exchange will have to compete with the combination of the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. and the Philadelphia Stock Exchange Philadelphia Stock Exchange (PHLX) A securities exchange trading American and European foreign currency options on spot exchange rates. , which are preparing to join the National Association of Securities Dealers National Association of Securities Dealers (NASD) Nonprofit organization formed under the joint sponsorship of the investment bankers' conference and the SEC to comply with the Maloney Act, which provides for the regulation of the OTC market. , the mother company of the Nasdaq stock exchange. The American and the Philadelphia exchanges are the other two places that options are traded in the U.S. The San Francisco trading floor of the Pacific Exchange will remain open, and the exchange is still interested in building new offices, officials said. An undisclosed number of jobs in California will be cut after the merger. Executives said they will also try to find a way to continue equity trading in San Francisco and Los Angeles. |
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