(Bloomberg) -- Wall Street’s biggest exchanges quietly altered rules this summer, fast-tracking investor access to options trading on newly listed companies.
This month’s large initial public offerings — Arm Holdings PLC; Maplebear Inc., known as Instacart; and Klaviyo, Inc. — each saw options trading two days after shares started to trade. Under old rules, the exchanges waited four sessions to allow for such trades.
Traders flocked to options of the recent entrants. On Thursday, two days after the shares started trading, Instacart attracted 23,000 options contracts, roughly split between calls, betting on a stock rise, and puts, positioning for the opposite. In its first day of derivatives trading, Arm saw volumes triple that size, with a heavy weighting toward bearish bets.
Nasdaq, Inc., which operates six U.S. options exchanges, added that industry participants — from investors to liquidity providers — agreed that the shorter timeframe would be beneficial for larger new issuers “Collectively, we all came to the consensus that essentially, options being available sooner helps mute volatility” in the shares, said Greg Ferrari, Nasdaq’s head of exchange business management. “The transparency and the resiliency of the listed options market helps investors make some prudent choices around how the stock is going to perform.”
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