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    PlanYourTrade > TradeYourPlan RichKid's Avatar
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    Default Increased Liquidity for ASX ETOs? US SEC "No Action" Relief

    These recent changes (around August 2007) apparently mean that certain US financial institutions and brokers can now gain direct access to certain ASX eto's. The documents referred to in the body of the text below are available via this link: http://www.asx.com.au/professionals/...c_approval.htm

    Have any options players here noticed any improvement in the spreads or volumes yet in the instruments mentioned or is it too early? I've attached a chart of eto volume and OI from the link above. A look at a chart six months from now showing the volumes and OI for the particular eto's which enjoy 'No Action' relief may be of interest- we will have to account for organic growth though and try and filter out US-origin trades, not sure if this is easy, especially in large corporate plays.

    SEC "No Action" Relief Granted
    The Securities and Exchange Commission in the United States (SEC) has granted ASX "No Action" Relief in relation to ASX equity and index options. This is the first time ASX has obtained this type of relief from the US regulator.
    What does "No Action" Relief mean?

    This relief enables eligible registered broker-dealers and large financial institutions in the United States to deal in ASX exchange traded options (ETOs). In particular, the relief enables ASX and ASX Participants to familiarise these institutional clients with a limited range of ETOs and ASX Participants to accept orders for ETOs from those clients.

    "No Action" Relief: In Summary
    US Eligible Broker-Dealers and Eligible Institutions may transact in:

    1. ETOs over the S&P/ASX 50 Share Price Index, S&P/ASX 200 Share Price Index and the S&P/ASX 200 Property Trusts Sector Index; and
    2. ETOs over Financial Products approved by ASX with the exception of low exercise price options, FLEX options and options where a foreign exchange is the primary exchange for the Financial Product.

    Approved ETO classes (PDF 110KB)
    ASX Participants approved to execute client orders in ETOs (PDF 54KB)
    ASX Exchange Traded Options brochure (PDF 273KB)
    More Information

    US broker/dealers and institutions seeking more information and wishing to receive a copy of the ASX Options Disclosure Document should contact ASX at secetos@asx.com.au.

    ASX Exchange Traded Options Market
    The regulatory approval is expected to generate substantial liquidity from offshore which will further deepen the ETO market. There were 91,000 ETOs traded on average each day on ASX in financial year 2007, valued at AUD15billion.
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    Last edited by RichKid; 10th-December-2007 at 09:13 PM. Reason: inserted date of changes and misc editing

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