The Chicago Board Options Exchange (CBOE) has issued Regulatory Circular RG14-155 regarding enhancements to its Market-Maker Trade Notification system. When a floor broker uses the CBOE’s Public Automated Routing system to complete the trade endorsement process and a market-maker is a contra party on the transaction, a Market-Maker Trade Notification (MMTN) is generated by CBOE systems and made available to CBOE market-makers and their vendors.
In late November 2014, the MMTN message will be enhanced to give trading permit holders the following additional information on transactions between the market-maker and such floor brokers: (1) the time of execution recorded by the floor broker; and (2) a numeric value that serves as an alert code that is generated when a trade executed between the market-maker and a floor broker is a potential regulatory exception (which will be referred to as a “Trade Through” alert code). There are multiple conditions under which an alert will be included in the MMTN message, such as if the transaction is priced at or through a customer book or through the national best bid and offer (NBBO) or CBOE best bid offer (BBO) at the time the execution is recorded for CBOE audit trail purposes, or if the transaction is priced outside the market that existed when the floor broker pressed the “Represent” button on the PAR terminal. These alerts will be provided only as informational data based on a comparison of the transaction price to CBOE and/or away markets based on specific timestamps and are intended as an aid to trading permit holder compliance.
Click here for Regulatory Circular RG14-155.