Background

The Boston Options Exchange Group, LLC (BOX) is an all-electronic equity options market that is jointly owned by the TMX Group and seven broker dealers. BOX was established in 2002 and launched trading in February 2004 as an alternative to the then-existing market models. Since inception BOX has provided its Participants with an efficient, transparent marketplace, cutting edge technology, and best price filtering for customer order execution.

BOX offers the many distinctive features listed below. Its trading engine software provides an open API (Application Program Interface), which allows BOX Participants to interface their existing order routing and trading software to the trading engine. BOX also provides gateway protocols such as FIX and CMS for connection to its trading engine. The BOX network allows points of connection to its trading engine with hubs in Chicago and New York.

BOX Key Features

• 1,500 option classes available for trading
• Price/time priority matching
• Price Improvement Period (PIP) auction process
• All orders are tradable
• No payment for order flow
• Simple fee structure
• No order cancellation fees
• Make or take transaction fee pricing on penny classes
• Multiple competing market makers, no specialists or designated primary market makers (DPMs)
• No seats to buy or lease

Options Listed

BOX currently lists options on approximately 1,500 different securities. To view which option classes are trading on BOX, click here.

Price/Time Priority

BOX matches orders using a price/time priority algorithm except during the Trade-Through Filter Exposure Period and at the end of the Price Improvement Period (PIP) auction process. All BOX Participants are treated equally in the matching process as all orders on the BOX Central Limit Order Book are valid for their entire quantity to any Participant, including broker/dealers and specialists/market makers at other exchanges. Any BOX Participant may enter an order on any BOX traded instrument.

Price Improvement Period (PIP)

BOX was the first options market to provide private investors with the possibility of price improvement via its innovative electronic auction process known as the PIP. Price improvement is available to all customer marketable orders; while there is no guarantee for any particular order, the rate of improvement has generally averaged over one dollar ($1.00) per contract. For details on the PIP, click here.

Trading Access

Broker/dealers and customers of broker/dealers may become BOX Trading Participants (Members). No equity investment is required to become a BOX Participant, nor are there any up-front costs. Private investors and other options traders may send orders to BOX via their usual broker.

Market Data

BOX market data is furnished to the Options Price Reporting Authority (OPRA) and therefore available via the options data vendors. BOX Participants may obtain real-time data directly from BOX; the BOX Participant data feed (HSVF) is "richer" than the standard OPRA feed as it includes:

• the five best price limits for each option instrument listed
• data relating to the Price Improvement Period auction process
• "exposition" orders relating to Decentralized Linkage

Clearing

All options traded on BOX are cleared by The Options Clearing Corporation (OCC). As such, BOX traded options are fungible with those traded on other U.S. equity options exchanges. Click here to download "Characteristics and Risks of Standardized Options" relating to options trading.

Contract Specifications

As all options traded on BOX are guaranteed and cleared by the OCC, the contract specifications for BOX listed options are identical to those listed on the other options exchanges. To visit to the OCC website for contract specifications, click here.

Legal Disclaimer

Click here for BOX Legal Disclaimer.

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read the options disclosure document (ODD) "Characteristics and Risks of Standardized Options". Investors may obtain copies of the ODD with their broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606. The information on this Website is provided solely for general education and information purposes and therefore should not be considered complete, precise, or current. Many of the matters discussed are subject to detailed rules, regulations, and statutory provisions which should be referred to for additional detail and are subject to changes that may not be reflected in the Website information. No statement within the Website should be construed as a recommendation to buy or sell a security or to provide investment advice.

There is a patent pending on the BOX market model, including the PIP.