May 30, 2015


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May 27, 2015

Chicago Board Options Exchange "CBOE" Proposes to Amend Preferred Market Maker's Continuous Quoting Obligations

On January 18, the Chicago Board Options Exchange (CBOE) issued a proposed rule that would amend the continuous quoting obligations for preferred market-makers (PMMs). CBOE Rule 8.13(d) currently requires PMMs to provide continuous electronic quotes in at least 90% of the non-adjusted option series in each class in which it receives PMM orders. Under the proposed amendment, PMMs would be required to maintain continuous electronic quotes in the lesser of: (i) 99% of the non-adjusted option series that have a time to expiration of less than nine months; or (ii) 100% of the non-adjusted option series that have a time to expiration of less than nine months minus one call-put pair of each class for which it receives PMM orders. The term "call-put pair" means one call and one put that cover the same underlying instrument and have the same expiration date and exercise price. The proposed amendment also adds an interpretation to clarify that a PMM will receive a participation entitlement if it elects to disseminate quotes in series with a time to expiration of nine months or more.

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About this Author

James D. Van De Graaff, Katten Muchin Law Firm, Financial Institutions Attorney

James D. Van De Graaff primarily represents broker-dealers, investment banks and market-making firms in the regulatory aspects of their business. He has more than 20 years of experience representing financial services clients in compliance reviews and training, mergers and acquisitions and responding to inquiries or investigations involving the US Securities and Exchange Commission (SEC) and securities self-regulatory organizations.

Blake J. Brockway, Finance Attorney, Katten Muchin Law Firm

Blake J. Brockway concentrates his practice in financial service matters.

Mr. Brockway received his Bachelor of Science, with distinction, from Iowa State University in 2005. He received his Juris Doctor, magna cum laude, from DePaul University College of Law in 2009, where he was selected to the Order of the Coif. During law school, Mr. Brockway served a research staff member of the DePaul Business and Commercial Law Journal and his comment, "Applying Federal Securities Laws to Chapter 11 Claim Conversions," was published in Volume 7, Issue 4...