Replies to post #295572 on Zeev's Turnips Patch-No Politics (ZEEV)

[Train Guy]

Timber Hill Asks Options Exchanges to Ban Specialist Fees; Offers to Handle SIG's Options Classes for Free

GREENWICH, Conn., Sept. 14 -- In a bid to keep investors' trading cost low, Interactive Brokers Group (IBG) has asked two U.S. exchanges to reallocate to its options specialist unit Timber Hill a number of options classes handled by Susquehanna Investment Group (SIG).

IBG's request follows SIG's Sept. 1 decision to introduce specialist fees of $1 per options contract and $0.16 per order cancellation. IBG has asked three exchanges -- the American Stock Exchange (Amex), the Chicago Board Options Exchange (CBOE) and the Philadelphia Stock Exchange (PHLX) -- to bar SIG from imposing those fees, which are bound to penalize investors and negatively affect volume.

Amex last week filed with the Securities and Exchange Commission (SEC) a proposal that would limit Susquehanna's ability to maintain those fees. IBG General Counsel David Battan is now asking the Chicago Board Options Exchange (CBOE) and the Philadelphia Stock Exchange (PHLX) to bar Susquehanna from imposing those fees.

"In the alternative, if the Exchange determines not to ... prevent specialists from imposing execution and cancellation fees, Timber Hill formally hereby requests that the Exchange reallocate from Susquehanna to Timber Hill the options classes listed below," Battan wrote to the CBOE and PHLX, referring to options classes such as Microsoft on the CBOE and the Semiconductor Index on the PHLX.

The issue is particularly important for investors as Susquehanna's decision could set a precedent for other specialists to charge fees on orders automatically handled by hybrid exchanges' electronic execution facilities. "We charge our customers only $1 per options contract, without passing on any exchange or other trading fees," said IBG Chairman Thomas Peterffy. "We could not keep those low fees if specialists charge additional execution or
order cancel fees, particularly as high as these."

Timber Hill is a leading global options specialist and market-maker. Interactive Brokers is a leading low-cost, direct-access broker-dealer, trading stocks, ETFs, options and futures on 40 markets in 13 countries. IBG also is a co-owner of the electronic Boston Options Exchange.