BOX Options Market LLC (“BOX”) is an equity options market that is jointly owned by the TMX Group and a group of 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 BOX Participants with an efficient, transparent marketplace, cutting-edge technology, and best price filtering for customer order execution.
Innovative Market Structure
BOX offers the many distinctive features listed below. Its trading engine software provides an open Application Program Interface, which allows BOX Participants to interface their existing order routing and trading software to the trading engine. BOX also provides a FIX gateway protocol for connection to its trading engine. The BOX network allows points of connection to its trading engine from New Jersey and New York.
BOX Key Features
- Over 2,000 option classes available for trading
- Priority matching
- Price/time priority matching
- Pro Rata matching
- Price Improvement Period auction process
- All orders are tradable
- No payment for order flow
- No order cancellation fees
- Multiple competing Market Makers
- No seats to buy or lease
BOX currently lists options over 3,500 different securities. To view which option classes are trading on BOX, Click Here.
BOX matches orders using a price/time priority algorithm except during the Trade-Through Filter Exposure Period and at the end of the 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 BOX Participant, including broker/dealers and Specialists/Market Makers at other exchanges. Any BOX Participant may enter an order on any BOX-traded instrument.
Pro Rata Priority
BOX may designate certain options classes to match orders using a Pro Rata priority algorithm. The BOX system will execute trading interest in price priority. Within each price level, if there are two or more quotes or orders at that price, trading interest will be executed based on the size of each Participant’s quote or order as a percentage of the total size of all orders and quotes resting at that price. BOX may apply the Priority Overlays detailed in Rule 7135(c) when the Pro Rata algorithm is in effect.
Price Improvement Period
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 Price Improvement Period (“PIP”). PIP 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.
Broker/dealers and customers of broker/dealers may become BOX Participants. 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.
BOX market data is furnished to the Options Price Reporting Authority (“OPRA”) and therefore available via the options data vendors. Anyone may obtain real-time data directly from BOX; the High Speed Vendor 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 PIP auction process
- “exposition” orders relating to Decentralized Linkage
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.
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 The OCC website for contract specifications, Click Here.
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 OCC, located at 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.