The Nasdaq Stock Market Inc. is planning to start up an options market.

The exchange announced plans to introduce an equity and index options market in the third quarter of 2007, pending approval from the US Securities and Exchange Commission. Nasdaq says it will develop the Nasdaq Options Market to leverage its core strengths of high performance technology and connectivity.

Nasdaq plans to operate a fully automated, price/time priority market with an opportunity for price improvement that provides a level playing field to all participants. It claims that the Nasdaq Options Market will be the first options trading platform to offer true price/time priority.

The company entered the options market in April with its announcement that it would provide connectivity and order routing to options exchanges. Nasdaq will continue to offer routing to competing exchanges through its options trading platform.

“The options market is on the verge of a transformative change, driven by the SEC’s call for quotes in increments of pennies versus nickels,” said Chris Concannon, executive vice president of The Nasdaq Stock Market. “The move to decimalization will shift the competitive landscape toward market platforms that are equipped to handle extremely high volume with an equally high level of efficiency. The Nasdaq Options Market will leverage Nasdaq’s fast, fair and transparent equities trading system that it acquired through the INET acquisition.”