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The Remote Market Maker is a new class of CBOE membership designed to allow individual market makers and member organizations to engage in market making by streaming quotes and trading electronically at CBOE from any location, thereby adding additional liquidity and depth to CBOE's markets.RMM quotes and liquidity are consolidated with those of the in-crowd market participants' resulting in a more robust marketplace with an expanded universe of market participants providing unparalleled liquidity for investors.
Initially, there are 59 Remote Maker Makers participating in the program and it is expected that in the future additional individuals and organizations will become part of the program as it rolls out.Initially, it is expected that RMMs will quote in the top 602 Hybrid-enabled options classes.The rollout, which began today with thirteen classes, is expected to continue over a three-month period.
Additionally, CBOE has formally initiated its offer to purchase CBOE exercise rights from CBOT Full Members who want to sell them.The terms of the offer were set forth in written materials that were sent to every CBOT Full Member today, and the thirty day window in which CBOT Full Members can sell their exercise right has now begun.
The purchase will be executed through a modified Dutch Auction process, with a price range of $60,000 to $100,000 for each "exercise right privilege," which is a transferable interest representing the CBOE exercise right component of a CBOT Full Membership.CBOT Full Members who choose to do so, may offer to sell their exercise right privilege for any price within that range.At the conclusion of the offer period, CBOE will determine the clearing price and the number of exercise right privileges it will purchase.All CBOT members tendering at or below the clearing price whose exercise right privileges are purchased in the offer will receive the same price for their exercise right privilege.CBOT members may also offer to sell at the clearing price without specifying an individual sale price.CBOE is not obligated to purchase any minimum number of exercise right privileges.
Lastly, today marks CBOE's 32nd Anniversary, which was founded on April 26, 1973.On its first day of trading, total volume at CBOE was 911 contracts on 16 underlying stocks.Today, CBOE trades more than 1.7 million contracts a day on 1,600+ stocks, 45 indexes and 55 exchange traded funds, plus a variety of interest rate and structured products.
During the course of its thirty-two years, CBOE has been a leader in new product innovation, creating several industry firsts.In 1973, CBOE created the product of standardized options.Ten years later, in 1983, CBOE developed the CBOE 100 Index (OEX), which later became the S&P 100 Index, and options on broad-based stock indexes became a reality.Other new product firsts included:LEAPS, or options with long-term expirations, in 1990 and in 1993, FLEX options, which allowed investors to customize the terms of an options contract.Also in 1993, CBOE unveiled VIX, CBOE's Volatility Index, an industry benchmark that gauges market sentiment and stock volatility.
From its inception, CBOE has been at the forefront of introducing technology to the marketplace.Through the years, the trading that takes place on the CBOE trading floor has been supported and enhanced by electronic systems.Many of these systems, which have been replicated throughout the industry, were first introduced on CBOE's trading floor, including the Retail Automated Execution System (RAES) in 1985 and market maker hand-held terminals in 1991.
Today, CBOE continues to redefine how options are being traded through its Hybrid Trading System, a unique market model that blends the speed and efficiency of electronic trading with the benefits of a floor-based, auction market. Currently, all of CBOE's 1,691 equity options and an additional 24 index options classes are available for trading via the Hybrid Trading System, which was launched on June 12, 2003.
