What Is the International Securities Exchange (ISE)?
The International Securities Exchange (ISE) is an electronic options exchange that was launched in 2000. The exchange provides investors with greater liquidity and the ability to execute transactions at a much faster rate than the open outcry trading floor that has historically been the basis for options trading. In addition to being an options exchange, the ISE is also a publicly-traded company. In 2008, ISE became a wholly-owned subsidiary of the communications company Direct Edge, and in 2016, ISE became a wholly-owned subsidiary of Nasdaq.
Understanding the International Securities Exchange (ISE)
The advent of the International Securities Exchange (ISE) was considered revolutionary. Computerized trading has proven to be extremely efficient, and has added to the liquidity in the options markets. This added liquidity has helped to reduce pricing volatility. Prior to electronic trading, investors looking to purchase or sell options relied solely on floor brokers to execute their trades.
The ISE offers index and equity offerings—among them, proprietary index products and foreign currency exchange options. The ISE’s market data tools provide information on risk management, investor sentiment, and other important data.
Milestones of the International Securities Exchange (ISE)
Following its launch on Feb. 24, 2000, the ISE traded its 25 millionth contract on May 29, 2001. By November of that year, it had become the third-largest U.S. equity options exchange.
ISE traded its 250 millionth contract on Feb. 20, 2003, and became the largest U.S. equity options exchange on March 1 of that year. It sold shares in an initial public offering (IPO) on March 9, 2005, becoming the first securities exchange to offer publicly traded shares. It traded its one billionth contract on May 24, 2005, and sold shares in a second public offering in December of that year.
In 2007, the Deutsche Börse purchased the ISE. By September 2008, the ISE had set a new record for daily trading volume, selling more than 7.9 million options contracts per day. ISE was purchased by Nasdaq in 2016.
Purchase by Nasdaq
In March 2016, Nasdaq bought the ISE for $1.1 billion, purchasing it from Deutsche Börse of Germany. At the time, ISE exchanges represented over 15% of U.S. trading in stock and index options. The purchase of ISE allowed Nasdaq to take over ISE’s stake in the world’s biggest clearinghouse for equity derivatives, the Options Clearing Corporation, bringing Nasdaq’s holdings in the Options Clearing Corporation up to 40%.