ISE Trading System Overview

Theory for the "Project 2012"

Both market makers and EAMs can use ISE-supplied terminals to send quotes and orders to the ISE, or they can design their own systems to connect through our API. In either case, both market makers and EAMs can connect to our system though the use of one or more T-1 communication lines. Thus, the Amex’s unsupported "understanding" that our system will handle 40 to 60 messages per second for market makers, but only two messages per second for EAMs, is incorrect. Because we will have multiple market makers independently quoting, and because those market makers need to update multiple series of an options class upon a change in the underlying security, capacity needs are far greater for market makers than for customers placing or canceling individual orders.
Accordingly, market makers may communicate quotation changes in multiple series
within a single message. However, the speed at which market maker quotations and
customer orders are communicated to the ISE is the same. This is in contrast to the floorbased options exchanges, where there is an inherent time advantage for market makers, since quotations are updated on the floors immediately, while customer orders must be communicated to the exchanges.