Coordination with Third Parties

Read frequently asked questions related to the coordination efforts between Cboe and third-party market participants.

The Options Clearing Corporation (OCC)

1. Has Cboe started (or have plans) to work with the other exchanges that expand trading hours to harmonize treatment of corporate actions across exchanges?

   This is an issue equity and options markets are currently exposed to, even during RTH. The topic was raised by Cboe and others early in the consideration of equity options GTH. Advanced announcement must be available to the OCC, and subsequent notification of the action from the OCC is required to ensure that markets are well-served and operating effectively. Events last year surrounding a late announcement of a special dividend during RTH underscores the importance of addressing this for both the equity and options markets. A recent market participant white paper also raised the need for proper handling of corporate action notification.

   Cboe would support a requirement that certain corporate actions be announced a minimum of 24 hours in advance. We recognize there may be special circumstances with dividends for ETFs due to distributions, but for the single-stock equity names that may be designated by Cboe for trading in the new GTH and extended RTH sessions, mandatory advanced notice seems reasonable. Cboe has been deeply engaged with OCC, SIFMA, and directly with its customers and TPHs on this topic. We will continue to work with these groups and recognize the need for the industry to rally around this topic, noting the role of the listing exchanges on this matter. This topic was discussed at recent LOMSWG meetings, with SIFMA represented. We will continue to facilitate further with the broader industry groups and organizations.

2. Will TPHs be required to get an additional letter of guarantee from the OCC to participate in the new GTH and Curb sessions? Or will existing letters be sufficient?

   OCC and Cboe currently require special authorization for firms to trade during GTH. Further, Cboe will not authorize GTH eligibility for any firm that is not so authorized by OCC. Current GTH authorization procedures at OCC and Cboe cover index and equity options collectively. Thus, a firm that is already eligible to trade index options during GTH will not require any further authorizations to trade applicable equity options during GTH. Those firms that are not currently eligible for GTH will have to receive authorization from OCC and Cboe in order to trade during GTH. OCC and Cboe agree that eligibility to trade during the Curb session is granted by Regular Trading Hours eligibility and does not require special authorization.

3. How will TPHs and other market participants manage any delays in file processing times at OCC or clearing firms – or other processing delays outside their control – given that the windows of non-trading hours will be reduced under the Proposal?

   Cboe had discussions with OCC and the major clearing firms regarding this. The proposed after-market session extends trading only 15 minutes until 4:15 p.m. ET and is no later than the RTH hours for some index and ETF options. Other Cboe index products currently trading during extended hours have a close time of 5:00 p.m. ET. As such, this extension of trading hours is not expected to have any impact on existing processes. The proposed early session for equity options will begin at 7:30 a.m. ET, two hours earlier than RTH. OCC and clearing firms have indicated that their EOD processes are designed to complete on the same business day, well before midnight. In such cases, the two-hour extension of early trading hours would not have any impact. However, Cboe has heard of real-world examples where market makers may not have received all of their positions even by the start of the next RTH session. Cboe will continue discussions with clearing agents on this point and encourages market makers and others to continue dialogue with their clearing firms on this point.

4. Will TPHs that are clearing members be required to post additional capital at OCC to participate in the new GTH sessions?

   The OCC has confirmed that it will propose changes to its extended trading hours procedures to accommodate the change in GTH. The 7:30 a.m. ET to 9:25 a.m. ET session would be subject to OCC's extended trading hours procedures, including the existing 10% capital requirement, capped at $10 million to qualify for GTH.  OCC would consider single-name trading through 4:15 p.m. ET as occurring in regular trading hours, whether treated as an extension of RTH or as a separate Curb session.  All provisions remain subject to regulatory review and approval.

5. How will margin calls be handled during the new GTH and Curb sessions?

   Cboe seeks further feedback from OCC, clearing firms, and brokers on this topic. Cboe anticipates that margin processes would be minimally impacted given the modest extension of pre-RTH trading hours and not impacted at all by the 15-minute extension of post-RTH trading hours.

Options Price Reporting Authority (OPRA)

1. Will OPRA charge or apply new or separate fees or policies for access or use of options transaction and quotation information provided by OPRA during the new GTH sessions?

   Cboe has been informed that OPRA will use existing OPRA RTH lines with no additional fees or policies related to the new GTH sessions.

2. Since the new GTH session will operate during OPRA's hours of operation as defined in Section 5.3 of the OPRA Plan, will OPRA continue to use 96 multicast lines to distribute options transaction and quotation information during the new GTH session?

   Yes, Cboe has been informed that OPRA will continue to use the existing 96 channels to distribute quote and trade data for options defined in the Proposal through the existing OPRA RTH platform. Cboe proprietary index options, like SPX, VIX, XSP, and RUT, will quote and trade on the OPRA GTH system during GTH hours. OPRA recipients will need to update their systems to handle options products trading on both OPRA systems during the 7:30 a.m. to 9:25 a.m. ET GTH trading hours.

3. Will there be any data available in the OPRA Certification System?

   Yes, Cboe is sending quotes and trades to the OPRA RTH Certification system for options series in underlying symbol TSLA. This is available now and will continue to be available after the production launch.