The International Securities Exchange (ISE), the options market which went public on Wednesday by listing on the New York Stock Exchange, must have got the price wrong: the shares soared 69% on the first day of trading yesterday, the best first day performance for an IPO since the top of the Dot Com boom in May 2001.
The New York-based options exchange, which only opened for business in 2000, capitalised on an IPO-starved market as well as confidence in its future success. Its debut coincides with a number of debt-laden IPOs launched bny private equity firms rushing to exit. The ISE, by contrast, increased net income 30 per cent in 2004 to $26.2 million, helped by a recovery in equity markets and rising options volume.
The 10 million shares offered to investors represent about 28 per cent of the firm’s total equity, with the proceeds going toward expansion of the exchange’s products and services.
Of the six options exchanges in the United States, the ISE has the largest market share. It handled 30.8 per cent of total options volume last year, according to the Options Clearing Corporation. Overall options trading volume has risen 65 per cent in the past five years.
The ISE is the first stand-alone options market to go public in the US. Shares in the futures-focused Chicago Mercantile Exchange have risen nearly sixfold in value since going public in late 2002. Besides the CME and the ISE, Archipelago and Nasdaq are also listed.