[ by Howard Haykin ]

CBOE issued an advisory to Trading Permit Holders ("TPH's") alerting them that effective Tuesday, 11/20/12, it will activate the “splitting” feature of the automated processing for certain eligible market stock-option orders following a complex order auction ("COA"). 

CBOE notes that details of the “splitting” feature can be found in Regulatory Circular RG12-88 and in Rule 6.53C.06(d).

Among other things, RegCirc 12-88 provides the following guidance:

Details of Functionality
Automated Order Eligibility.  To be eligible, orders must comply with the Qualified Contingent Trade (QCT) Exemption under Rule 611(a) of Reg. NMS.  TPHs submitting such orders represent that the orders comply with the QCT Exemption.  Further, orders may have up to 3 option legs and 1 stock leg.  CBOE systems require that, for orders with multiple option legs, the ratio of the quantity on the largest-to-smallest option leg must not exceed 3-to-1.  Furthermore, the ratio of the quantity on the smallest option leg to that of the stock leg must not exceed 8 options-to-100 shares.

• Orders not meeting these ratio requirements are ineligible for automated processing and will be routed for manual handling. 
• Orders for which all option legs and the stock leg have the same delta direction are ineligible for automated processing and will be routed for manual handling.
• If the stock leg of an order is a sell order, then the stock leg must be marked “long,” “short,” or “short exempt” in accordance with Reg. SHO.

CBOE Contacts.   Direct questions to:   CBOE Help Desk:  helpdesk@cboe.com, (866) 728-2263.

[CBOE RegCirc RG12-156, 11/19/12]