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The International Securities Exchange has renewed its exploration of launching a second stock-options exchange, according to the firm's chief executive.

New York-based ISE has dusted off plans that had been in motion ahead of the merger deal between its parent Deutsche Boerse AG (DB1.XE, DBOEF) and NYSE Euronext (NYX), which coincided with ISE's rollout of a new technology platform last year.

The European Union last month officially blocked the merger plan and ISE completed the technology upgrade last summer, clearing the way for the exchange to again entertain launching a second platform.

Consideration of a new exchange is "back on the front burner," according to ISE Chief Executive Gary Katz, speaking on the sidelines of a Futures Industry Association event Tuesday. No decision has yet been made on such a launch or how the market would be structured, he said.

Exchange operators have gravitated toward running multiple exchange platforms for trading stocks and options contracts. Operating different market models allows exchange firms to cater to different sorts of clientele and try out different trading fee schemes.

ISE on Tuesday also unveiled plans for new, larger-sized options contracts linked to the exchange-traded fund tracking the S&P 500, stepping up its challenge to sector leader CBOE Holdings Inc. (CBOE).

The ISE filed plans with regulators to list options contracts on the ISE Max SPY Index, a proprietary measure that represents 10 times the value of the SPDR S&P 500 ETF Trust (SPY), as the options exchange operators battle for trade in contracts used to speculate on major stock-market shifts.

The planned contracts are similar in size and design to a new slate of electronically traded options rolled out last fall by the parent of the Chicago Board Options Exchange, which maintains exclusive rights to trade options on the S&P 500 stock index. Those contracts are CBOE's most popular products and are still traded mostly on the exchange's Chicago-based floor.

A new version of those options, called SPXpm, debuted last fall on CBOE's new electronic exchange C2, which is oriented toward automated trading firms and formulated to be different from the floor-traded version.

A larger-sized version of the SPY contract to be offered by ISE aims to capture rising interest in options trading among financial institutions, as well as the established use of options on the SPDR ETF. ISE may also license the index to other exchanges that want to list their own versions of the contracts, according to Katz.

The ISE estimated that so-called SPY options are the most heavily traded options in the U.S., with more than 2 million changing hands per day so far this year.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

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