When the Nasdaq Stock Market announced a year ago that it would be opening an options exchange, analysts and traders were skeptical--after all, there are already six options exchanges, so carving out a niche would be difficult and gaining market share harder still. Chris Concannon and Adam Nunes, who run the transaction services division, added a major twist to the puzzle by buying the Philadelphia Stock Exchange, whose options market has been humming along with 15% market share. To stand out from the pack, Nasdaq will continue to run the traditionally market maker-driven Phlx while simultaneously launching a price-time priority options market.
Chris Concannon		Adam Nunes

Sandy Frucher

The dual structure is expected to put Nasdaq in the lead in the options market, and traders and analysts alike expect Nasdaq to offer cutthroat deals on transaction fees to cement its position. "If you want to try to steal business from people, you need to make it hurt. Nasdaq's technology and willingness to cut prices could put some of its competitors into a predicament," said Ron Ianieri, chief options strategist at Options University, an options education firm. Both Meyer "Sandy" Frucher, who will continue to run the Phlx side, and Adam Nunes, who is responsible for Nasdaq's own platform, have maintained that they expect to keep prices low and believe that offering two models will capture both those investors who want an ECN-like structure and those who want price discovery through market makers' services. "In the current market, you need both models to stand out," Frucher said on an analyst call following the merger announcement.

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