Nasdaq Stock Market Inc.'s (NDAQ) plan to offer access to options exchanges is more a matter of dipping its toe into the fast-growing market than taking a bold leap, industry experts say.

Nasdaq plans in the first quarter of 2006 to start allowing customers to route orders to the six U.S. options markets — although it won't provide options order-matching.

Industry experts say the foray allows Nasdaq to hedge its bets without the expense and risk of buying an options exchange or starting its own platform.

"The most aggressive thing that they could have done is start their own electronic options exchange, but competition in that arena right now is pretty fierce," said Harrell Smith, manager of the securities and investments practice at research and advisory firm Celent. "It could be that they're really just testing the waters to see if this is a service that their clients are really interested in having."

The move, announced Thursday, comes as the rival New York Stock Exchange (search) gains a foothold in the options market through its pending acquisition of electronic trading firm Archipelago Holdings Inc. (AX), which in turn is buying the parent of the Pacific Exchange.

In 1997, the NYSE had sold its equity options operations to the Chicago Board Options Exchange — whose growth later exploded.

"I think this is all part of the larger, very substantial paradigm shift that the capital markets in the U.S. are going through," said Bill McGowan, managing director of global electronic broker Interactive Brokers LLC. "Everyone is hedging their bets and they're all going to try to come up with a multiplatform model."

McGowan expects to see some "very unique" combinations of exchanges as the industry changes.

"Is it any good to be a stand-alone stock exchange anymore?" he said. "Don't you have to offer options and futures and global access?"

The options business has been growing at such a rapid rate that exchanges ignore it at their peril.

Options volume is poised to surpass the all-time high of 1.2 billion contracts reached in 2004, according to the Options Clearing Corp., as both retail and institutional investors learn more about the product

Meanwhile, the options industry is undergoing a transformation as electronic trading snatches business from traditional open outcry exchanges — illustrated by the rapid rise of all-electronic International Securities Exchange Inc. Founded five years ago, the ISE now has a market share of about 33 percent.

"When we look at the options industry, we see an industry going through some dramatic change, and we also envision a lot of new products coming on the scene, with some competitive pricing pressures being placed in that environment," said Chris Concannon, Nasdaq's executive vice president of transaction services. "We feel that options routing is our value-add in the space right now."

However, Concannon stresses that Nasdaq remains "extremely" focused on trading equities, particularly competing against the NYSE for trading of securities listed on that exchange.

Concannon said Nasdaq would use the technology it acquired when it bought the Brut broker-dealer about a year ago to generate revenue from routing options. Currently, its smart-order routing sends equities orders to markets outside Nasdaq and Brut, such as exchange floors and electronic communications networks.

He said the options market was "crying for more smart order-routing technology" as it undergoes conversion from manual to automated.