The Founders

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    The concept of a third market for equity securities cannot be translated readily to a third market for options. Equity securities are created and originally issued by companies to raise capital. In contrast, stock options are not created by the company. Rather, when someone buys an option on an exchange, he or she actually initiates the creation of a new options contract. Equity options contracts traded on a national securities exchange are issued and guaranteed by The Options Clearing Corporation ("OCC"). These options are called "standardized" options and are fungible (options purchased on one options exchange can be sold on a different options exchange). That is what differentiates OCC issued options from any other contract between two parties and what facilitates exchange trading of options. Since OCC will only issue and guarantee options contracts if they are traded on a registered market, such as an exchange, Porter and Averbuch decided to create a registered exchange that would be a member-owner of OCC.