NEW YORK -- The grunts on Wall Street have begun to suspect what vacationers and Japanese investors have known for years -- Honolulu may have something to offer.
But for the American Stock Exchange, the ever-struggling stock and options market operating in the shadow of the far larger New York exchange, it's not Hawaii's sun or the surf that beckons but rather its strategic placement in the Pacific.
The exchange announced yesterday that it will begin an 18-month feasibility study, in conjunction with Hawaii's Economic Development Corp., to consider establishing a trading facility in Honolulu.
Among issues under review is whether such a facility would mean merely an electronic network or the construction of a face-to-face exchange, as in New York.
Exchange Chairman James R. Jones said a trading outpost in the western extremes of the United States might be of particular interest to major Japanese companies that have struggled unsuccessfully to make headway in New York, and would permit daylight trading bridging the business day in New York and Tokyo.
The American Stock Exchange's announcement comes as financial markets throughout the world are restlessly pushing beyond venerable chronological and geographic boundaries. Within the past week, the New York and Philadelphia exchanges have moved to extend their trading hours. Current and formerly communist countries are starting stock exchanges, and existing ones are expanding.
Equally important, almost every exchange has begun to introduce new products that often wrest business not only from competing markets nearby but from those in other states and even other countries.
In addition to the Hawaiian venture, the American Stock Exchange introduced yesterday a new options contract allowing retail investors to bet on the direction of the volatile Tokyo market. The Japan Index option should begin trading next Tuesday, pending Securities and Exchange Commission approval, the same day the two vast Chicago commodities exchanges introduce two futures contracts, and two options on futures contracts, that are similarly pegged to the Tokyo market.
Already, the American Stock Exchange has become the core market for another, highly popular strategy for betting on the Tokyo market involving the use of equity warrants, a sophisticated security structured by major Wall Street security firms. Although the warrants have been readily adopted by investors, they have been faulted in Japan for exacerbating the recent fall in its stock market.
Mr. Jones acknowledged that the Japanese would "like none" of the new contracts, either in Chicago or New York, "to go forward."
But with the brutal competition between markets, it seems unlikely that any country can restrict any form of trading.
Mr. Jones said the American Exchange had to react or lose business to the Chicago markets.
Exchange officials said buyers of the new options contracts are expected to be affluent individuals. The volatile movements in Japanese share prices have interested such investors, said Stephen Mitchell, head of options trading at Alex. Brown & Sons, and as long as the tumult continues, at least some products that reflect it will have appeal.