It might have been Wall Street's worst-kept secret. That David Krell had a broader agenda for his electronic exchange than just trading U.S. options had long been conveyed by the name he and his co-founders chose for it: the International Securities Exchange. But Krell's plans for the ISE Stock Exchange didn't become official until last month. In a mere four years after its 2000 launch, the ISE blew past competitors to become the nation's biggest equity options exchange. Might the ISE Stock Exchange do the same?

The exchange's first phase, dubbed MidPoint Match and set to be launched next quarter, will match market orders at the midpoint of the best publicly quoted bid and offer. The second phase -- essentially, a limit-order book like those operated by Nasdaq and the ArcaEx market, which the New York Stock Exchange acquired in March -- will be introduced when the Securities and Exchange Commission gets around to implementing a vast package of new rules known as Regulation NMS. The regs aim to ensure that investors can trade at the best quoted prices regardless of where they route their orders. The agency has pushed back Reg NMS's effective date from June to September, and many believe that a delay until early 2007 is likely. Major trading firms, including Citadel Derivatives, Interactive Brokers and J.P. Morgan Chase, are seeding the new markets with order flow in exchange for a minority equity stake in it.

"We are offering something that was not being offered," says the 59-year-old Krell, who ran the Big Board's options business before it was sold in 1997 to the Chicago Board Options Exchange. "And we're doing it in a low-cost manner with the infrastructure we've developed to trade options."