The moratorium on expansion of trading in stock options on U.S. exchanges imposed by the Securities and Exchange Commission benefits the Chicago Board Options Exchange in the short run, CBOE chairman Joseph W. Sullivan told members yesterday.
At the annual meeting of the exchange here, Sullivan said the moratorium halts further dual trading in the same issue on different exchanges and "evidences a wariness" about the New York Stock Exchange and National Association of Securities Dealers plans to trade options.
He conceded that the moratorium hurts the CBOE's volume and revenues by delaying expansion of puts and bond options and its proposal to trade stocks.
The CBOE pioneered call options trading on exchanges in 1973. Four other options exchanges have developed since then. This spring the five markets began a pilot trading program in 25 put options.
Put options give the buyer the right to sell blocks of 100 shares of a specific stock at a fixed price within nine months. Call options are traded in more than 200 underlying stocks.
In addtion to the moratorium, the SEC has proposed by Jan. 1 to expand trading in stocks away from exchange floors. Sullivan called that one of the major problems facing options exchanges.
"The loss of an auction market for stocks impinges on us because the traders relate to a tape, so sequentiality and last trades," he said.