When a transaction takes place on the floor of the exchange, the member firm on the sell side of the transaction must report the trade to the clerk to be displayed on the tape. Members who execute orders transmitted to the floor of the exchange must then report the execution to the originating party. All orders sent to the floor must be sent in writing on an exchange approved form. Orders transmitted by member firms though wire or telephone must be sent though exchanged approved communication facilities. Orders received though these facilities will, in most cases, be written on exchange approved order tickets by the order clerks who receive the order (or entered on exchange approved electronic devises). At the end of each trading day, clearing members are required to report all option trades to the exchange. These reports will include orders executed for the clearing member’s own account as well as orders executed for the accounts of the clearing member’s customers (introducing broker dealers). The exchange compares all trades submitted by all clearing members at the end of the day and will notify members of any unmatched trades. Members are required to reconcile all open unmatched trades contained in the report by 9:30 AM EST on T+1 and to notify the exchange of the resolution by that time. All matched trades are reported by the exchange to the OCC on a daily basis. The OCC in turn sends a daily report to each clearing member detailing the previous day’s matched trades, net premiums owed or due to the OCC and any assignment notices. All firms who execute buy orders for their own account or for the account of its customers must pay the premium due for all purchases by 10 AM EST on T+1. Cash, certified check, a bank guarantee letter and US Government securities are all accepted as forms of deposit by the OCC.

Need Help Passing Your Series 4 Exam?

Option Order Tickets

Related Articles
  1. Trading

    Understanding order execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  2. Investing

    The Basics of Trading a Stock: Know Your Orders

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
  3. Trading

    Electronic Trading Tutorial

    Learn about the systems that run the market.
  4. Trading

    Basics of the Mechanics Behind Electronic Trading

    Once associated with shouting traders and wild hand gestures, now statistics and programmers rule.
  5. Investing

    When Using a Money Order Makes Sense

    Money orders are usually the least expensive way to send "cleared" funds to pay a bill (or traffic ticket). Here's how they work and what to watch out for.
Trading Center