Bloomberg News

Options Trades From Market Open Under Review by Exchange Owners

August 20, 2013

At least three operators of U.S. options exchanges are reviewing trades that took place at the beginning of the day and NYSE Amex Options said most of the transactions may be canceled.

A “large number” of trades in tickers beginning with letters H through L in the first 17 minutes are being examined by NYSE Amex Options, it said in a statement. CBOE Holdings, the largest venue, said it is examining trades between 9:30 and 9:41 a.m. Nasdaq OMX Group Inc. is reviewing options transactions from 9:30 to 9:47 a.m., according to its website.

“Since the trades happened on more than one exchange, the problem doesn’t appear to be related to an issue at one specific exchange, but maybe a customer of firm,” Frederic Ruffy, a Chicago-based senior options strategist at WhatsTrading.com, wrote in an e-mail.

The announcements created uncertainty among professionals as they waited to determine which transactions would stand from the opening minutes. Option trading in the U.S. is spread out among about a dozen venues that compete in attracting volume through various pricing and order strategies. Chicago-based CBOE is the largest U.S. options venue by total volume, while NYSE and Nasdaq own about 24 percent of the market each, according to data compiled by Chicago-based OCC.

NYSE Amex did not have any technology issues, Eric Ryan, a spokesman for the exchange, said in an e-mail.

Robert Madden, a spokesman for Nasdaq, and Gail Osten, of CBOE, declined to comment. Randy Williams at BATS, and Molly McGregor at International Securities Exchange didn’t immediately respond to phone calls and emails.

‘Systems Issues’

Amex, a unit of NYSE Euronext, reported “systems issues” earlier and asked that orders from the platform be removed from marketwide price quotes, a system known as the national best bid and offer. Options venues run by Nasdaq OMX Group Inc., Bats Global Markets Inc. and CBOE Holdings Inc. (CBOE:US) routed orders away the exchange. Amex said systems were back to normal by 9:49 a.m. in New York.

“NYSE Amex Options is reviewing a large number of erroneous executions that took place this morning,” the exchange said in a note to traders. “As permitted by the rules, we anticipate that most of the impacted trades will be busted.”

NYSE Euronext briefly halted trading yesterday in about 40 exchange-traded funds and notes when the securities were added to a program aimed at curbing sudden price swings. They were set off during implementation of the protocol known as limit up/limit down that pauses securities when bid-ask spreads become too wide, the exchange said.

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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