CBOE has recently introduced new trading systems, including LOU, which are the building blocks of its new "hybrid" trading system. CBOE's Hybrid Trading System offers the best of both worlds: the easy access and speed of an electronic system, combined with the deep liquidity and superior price discovery of the open auction.
"Advances in technology have enabled CBOE to significantly increase transparency, speed and accessibility to our markets," said CBOE Chairman and CEO William J. Brodsky. "Electronic executions on any size order, combined with the opportunity for price improvement that LOU provides will be a tremendous benefit for our customers."
In May 2002, CBOE implemented new technology to disseminate Dynamic Quotes with Size. With Dynamic Quotes with Size, investors are able to see, in real time, the minimum number of contracts that are available to be traded electronically at a given price. The "dynamic size" feature continually updates to provide investors a true indication of depth of liquidity in every series at all times during the trading day.
With the addition of the LOU technology, customers now truly have the "best of both worlds." LOU offers point and click convenience, instant confirmation of order execution on any size order up to the size displayed, and exposure to the trading floor's centralized pool of liquidity. This combination of instant execution with continued exposure to the market for price improvement is not available through any other electronic marketplace or ECN.
In addition, although customers can obtain instant executions up to the displayed CBOE size, the presence of an actual trading crowd offers a centralized liquidity pool which often provides depth and liquidity in excess of the displayed electronic size. This market model offers an ideal forum for institutional and retail customers to obtain single-price executions even on large orders, instantaneous point-and-click executions and the opportunity for price improvement.
CBOE, the world's largest options marketplace and creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, access CBOE's website at http://www.cboe.com.
