The new all-electronic subsidiary will employ different
trading mechanics to lure new types of trading firms.
The CBOE announced that C2 would have two critical
differences from its parent exchange. It will match orders it
receives based on a modified price/time matching algorithm.
This will line up requests to buy and sell equity options in
its trading book according to when the orders were
Orders would then be matched based on that ranking. This
system differs from that employed by the CBOE, which employs an
algorithm that is designed to attract quotes at the best price
for a larger number of contracts.
C2 will also operate a maker-taker system of pricing, not so
far employed by the CBOE. The CBOE said it would publish the
fees to trade on C2 in early October.
CBOE expects to eventually list all of the
industry’s multiply-listed, penny pilot options
classes on C2. They will be rolled out in phases, the first of
which is expected to include 25 to 50 multiply-listed classes
over several weeks. Other rollouts should follow through to
Any firm that wishes to be a market maker — one
that can both stream quotes and submit orders into the C2 trade
engine — will have to pay a fee of $5,000 a month,
while firms that wish only to submit orders will have
Electronic Access Permit status and will be charged $1,000 a
The CBOE said it had received applications from 12 firms for