RegAlert2003-03-31
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SEC no-action letter: CBOEdirect Screen Based Trading System application of Rule 11a2-2(T)
The SEC staff confirms that the Chicago Board Options Exchange's CBOEdirect Screen Based Trading System satisfies the four conditions of Rule 11a2-2(T) under the Securities Exchange Act of 1934, allowing exchange members to effect transactions for covered accounts via this automated platform. The staff determined that electronic submission from remote terminals meets the off-floor transmission requirement, while the system's design and matching algorithm ensure members relinquish control upon transmission, satisfying the non-participation and unaffiliated execution requirements. Additionally, the staff noted that members relying on this exemption must comply with compensation limitations for discretionary accounts, and CBOE's surveillance of priority rule modifications ensures no manipulation of the trading algorithm occurs.
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March 31, 2003
Angelo Evangelou Senior Attorney Chicago Board Options Exchange 400 South LaSalle Street Chicago, Illinois 60605
Re: CBOEdirect Screen Based Trading System
Dear Mr. Evangelou:
In your letter dated March 28, 2003, you request interpretive guidance regarding the application of Rule 11a2-2(T) under the Securities Exchange Act of 1934 ("Exchange Act") to transactions executed via the Chicago Board Options Exchange's ("CBOE") CBOEdirect Screen Based Trading System ("CBOEdirect").
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