The Chicago Board Options Exchange, the International Securities Exchange and the Philadelphia Stock Exchange are planning to start trading options on streetTRACKS Gold Shares ETFs (GLD) next month, making their first foray into commodities. Options exchanges have been trying to convince the Securities and Exchange Commission to let them trade options on commodities such as gold, silver and oil for three years, but the regulator balked, citing unresolved regulatory overlap issues with the Commodity Futures Trading Commission.
Now that the two regulators have worked out a memorandum of understanding for regulating gold derivatives, options exchanges are anticipating a windfall from brokerages that have been clamoring for the offerings. The two regulators agreed on common guidelines for gold derivatives last week. "Options on gold ETFs are the single most requested product at brokerages and the regulatory uncertainty was preventing us from delivering. While it is unclear what the move means for other commodities, this is a great first step in providing legal certainty for the options," said Dan Carrigan, v.p. new product development with the Phlx.
According to State Street Global Advisors, assets invested in commodity ETFs made up $25.6 billion at the end of last year, up 90.3%