The Chicago Board Option Exchange

The CBOE functions in many ways, exactly like other exchanges, except it has one major difference. The CBOE does not use a specialist system like the one used on all other exchanges. The specialist system requires that the specialist member maintain a fair and orderly market in the security in which they specialize and that they buy and sell for their own account. However, on the CBOE, the duty of maintaining a fair and orderly market is given to an exchange employee known as an order book official. The personnel trading on the options floors are:

  • An Order Book Official or Specialist
  • A Market Maker / Registered Option Trader / Local
  • Spread Broker
  • Commission House Broker
  • $2 Broker

Order Book Official / Board Broker

The Order book official on the CBOE is an employee of the exchange who maintains a fair and orderly market for the options they are assigned. The order book official also maintains a book of limit and stop orders left with them and will execute them when the order’s conditions are met. The order book official may only accept orders left with them by members for the account of public customers. Member firms may not leave orders for the official to execute for the member’s own account. The order book official may not trade for their own account or be associated with a member firm. A board broker or a floor par official is an exchange member who has been appointed to maintain a fair and orderly market in options.

OTHER OPTIONS EXHANGES

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