Wall Street Letter VOL. XLVI, NO. 1 - January 2014 | Page 8

NEWS

08

ETP Incentive Program. While both
will be funded by issuer payments
that will go to market makers quoting
the ETPs, market makers that are CPs
will compete through competitive
quoting, as opposed to being assigned
to quote a low-volume ETP.
The CP program, which would be
a pilot, would require market makers
to maintain a displayed bid or offer at
the national best bid or national best
offer, respectively, and quotes must
be entered electronically, Arca said.
ETPs are only eligible for the
program if they have not been assigned an LMM or have already opted
to participate in the ETP Incentive
program, stated the exchange. Issuers looking to participate would be
required to submit a written application and could designate the ETP for
inclusion in the program at the time
of issue or at the start of the quarter.
The three programs are expected to
complement each other by offering
issuer choice, Arca said.
“The exchange believes that offering three programs with different
structures and incentives would allow
issuers and market makers to choose
an alternative that makes the most
sense for their business models and
allow the exchange and the [SEC] to
compare the features of, participation
in, and performance of the programs over time before determining
whether to convert the CP program,
the ETP Incentive program, or both
to permanent status,” it said.
EXCHANGES & ATSs

CBOE to cut
transaction
reporting time
Participants on the Chicago Board
Options Exchange will have one-third
less time to report trades back to the
exchange under a rule change proposed
by the exchange earlier this month.
CBOE has allowed its participants
90 seconds to report executions back

(so the exchange can then get the info
out to the consolidated tape). Trades
not reported to CBOE within 90 seconds of execution are considered late.
Now the exchange said it wants
to cut this time to 60 seconds for all
orders except for complex orders.
The change isn’t expected to have
a significant impact on participants
because most trades are reported within
60 seconds already, CBOE told the SEC.
For example, electronically executed
trades are reported automatically and
most open outcry trades are reported
electronically as well, it noted.
A shorter reporting time period is
expected to improve the audit trail
overall, the exchange said. Open outcry surveillance should also improve
with the shorter timeframe. “[C]ondensing the time period within which
an open outcry transaction must be
reported should help to create a more
precise record of the activity on the
exchange,” it said.
EXCHANGES & ATSs

BATS Options
amends Risk
Monitor Mechanism
Users of the Risk Monitor
Mechanism offered by BATS Options
will soon be able to monitor their
executions based on a set percentage
of total executions, according to a
feature the exchange described to the
SEC in a regulatory filing.
The exchange has previously offered the Risk Monitor Mechanism
to its members but the mechanism
only allowed monitoring based on the
number of contracts executed. Once
a user hits a pre-set threshold of executed contracts in a certain period of
time, remaining orders are cancelled.
BATS Options said it would add a
feature to allow users of the mechanism to trigger cancellation based on
the percentage of contracts traded in a
particular option class. Executions are
monitored across all option series in

the class, and once that percentage is hit
remaining quotes are cancelled, it said.
The exchange noted it would also
make the trigger more sensitive
by starting the cancelation process
sooner after a user has hit its specified
execution limit.
It noted that under current rules,
marketable orders execute in full before the mechanism is triggered and
remaining quotes are cancelled, even
if the order would have exceeded preset limits after H\