In March, the International Securities Exchange (ISE) kicked off its widely anticipated initial public offering (IPO). In an interesting twist, the all-electronic options exchange chose to list its shares on the New York Stock Exchange, traditionally a floor-based market.

Several sources speculate that ISE chose the NYSE because its CEO, David Krell, and COO, Gary Katz, who together founded the options exchange in 2000, both are former NYSE executives. "David Krell and Gary Katz come from the NYSE, so there may be some natural loyalties," says David Kalt, CEO at Options-Xpress, a Chicago-based online brokerage firm. An ISE spokeswoman declined to comment on the move due to quiet-period restrictions.

When OptionsXpress went public in July, it chose a dual listing on Archipelago Exchange and Nasdaq - both of which are electronic marketplaces. "Nasdaq made more sense for us, being a technology firm," says Kalt. "It just seemed much more natural to equate ourselves with Nasdaq."

However, Joe Gawronski, COO at Rosenblatt Securities, a New York-based institutional agency brokerage firm that operates on the NYSE, says, "As a former NYSE employee, Krell recognizes the unique value the NYSE system provides in terms of liquidity and price discovery." Gawronski adds, "Outside of technology stocks, where Nasdaq has carved out a niche, larger companies that can meet the NYSE's tougher listing requirements choose the NYSE for the prestige factor and the perception that capital-raising is easier with such a listing."

The ISE's IPO may be the harbinger of other exchanges that aspire to go public. Archipelago went public by acquiring the Pacific Exchange. And now, the NYSE announced its plans to purchase the electronic exchange, which would make the NYSE a public entity.

Perhaps the most envied example of an exchange going public is the Chicago Mercantile Exchange, the futures exchange, which went public in late 2002 at $35 a share and whose stock recently was trading at $190 a share.