Market Model

Market making is open to all qualified BOX Participants. There are no designated specialists; rather, competing Market Makers are responsible for ensuring basic liquidity. This open competition, in the context of BOX's price/time order matching algorithm and full anonymity, encourages finer pricing and tighter spreads to the ultimate advantage of the investor. Market Maker privileges are:

• Ability to process large volumes of order updates very rapidly using the mass-quoting message format for those classes in which it holds a Market Maker assignment
• Right to compete during the Price Improvement Period on classes in which it holds a Market Maker assignment
• Reduced trade execution fees in certain cases
• Market Maker protections on the Opening
• Heartbeat functionality to protect market makers in case they become disconnected from the matching engine

The general obligations and responsibilities of BOX Market Makers are explained in greater detail in Become a Market Maker.

BOX Participants are not obliged to acquire equity in BOX or to lease trading rights from an equity holder; this is the reason they are called Participants rather than "members". Trade executions for Public Customers are not subject to a trading fee in the PIP or Penny classes, nor is the Order Flow Provider (the broker) obliged to pay an access fee.

Exchange fees are detailed in Fees.

The PIP is an innovative automated process (patent pending) which allows the BOX Participant acting as broker and willing to improve client execution to interact with his clients' orders provided he improves the clients’ price while also ensuring the ability of Market Makers to participate in these trades. The PIP auction is entirely automated and guarantees the client’s interest, over all others, during the process. Refer to Price Improvement for details regarding this process.

Trading on BOX is entirely automated providing the economies of straight-through processing to the brokerage and trading community, as well as extremely rapid response times. "Out trades" are unknown. Complete automation also reduces the cost to access the market and permits investors using automated order routing systems to access the market quickly, and cheaply, regardless of their physical location. BOX has no rules prohibiting the connection of computer-generated orders for routing to the BOX Order Book.

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

BOX broadcasts, to its membership, the five best price limits for each instrument in real-time with complete anonymity.

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