Traders who are interested in moving large options contracts on the SPDR S&P 500 ETF (NYSEArca: SPY), the biggest exchange traded fund, can now utilize the “Jumbo SPY options” in the BOX Options Exchange.
The Securities and Exchange Commission gave the green light for the BOX Options Exchange to trade the jumbo-sized contracts, reports Doris Frankel for Reuters. Other option venues can list the contracts after filing with the SEC. [BOX Options Exchanges Prepares ‘Jumbo’ Contracts on S&P 500 ETF]
The Jumbo SPY options are based on 100 shares of SPY, whereas the standard contract is based on 100 shares. The new contract is designed for institutional investors who prefer large blocks.
The International Securities Exchange, though, did not take up the new options, citing concerns that this will cut into interest for standard SPY options and diminish overall liquidity.
“We believe Jumbo SPY would not create incremental volume and, even worse, could harm liquidity in SPY,” Boris Ilyevsky, ISE managing director, said. “Larger sized ETF contracts do not address any unmet need in the industry and in fact would serve primarily to further fragment one of the few healthy centers of liquidity,”