Market Makers for the CBOE SPX

Discussion in 'Options' started by stokra, Jul 28, 2010.

  1. stokra


    Who is the designated primary market maker for the SPX?
    Is there more than one?

    Which of the e-DPMS provide liquidity services on the SPX?

  2. The CBOE and the SPX market makers are keeping the SPX from joining the modern age.

    There is no DPM for the SPX. The SPX is also the only non-hybrid pit left at the CBOE, and thus there are no E-dpm's. Nor is there any pure electronic trading. A customer may post an order through an electronic interface, but those orders get posted into a book.
  3. stokra



    I am sorry but then I do not understand where do the NBBO
    contained in OPRA come from...

    I am sorry for the (surely) naive question.

  4. uptickk


    One of the reason for their ridiculously wide spreads . . . I frequently trade them but that doesnt mean I like the market makers
  5. MTE


    In case of SPX options the NBBO is composed of only CBOE quotes.
  6. Thats exactly right there is no NBBO when there is only one market.

    They've been fighting about it for years and sometime that monopoly will end too.
  7. FSU


    As was mentioned earlier there is no DPM for the SPX. Instead there are several firms that rotate on a monthly basis for supplying the "Auto Quote." There is no real incentive for them to provide a tight quote as their bids and offers can be traded instantly and electronically. They will keep them wide in order to avoid being picked off.

    If a broker is holding and order and puts up a quote and you try to hit that order, it will not be traded instantly. Instead the broker who you have placed the order through will have to yell out in the crowd to determine who is holding the order. He will then have to manually trade the order with the other broker. As you can imagine this could really slow things down for you. The broker must first see your order on his screen (he may have multiple orders that he is dealing with.)

    If and order is placed in the "book" (electronically represented by the CBOE) it can be traded instantly and electronically, just as if you were hitting an auto quote market. There is generally no way of the average customer knowing what type of order you are seeing on the screen.

    There is also a COB (complex order book) which electronically holds spread orders. A customer can place an order in the COB, but a market maker can only trade against a standing order. I have found that the market makers computers generally require very little edge to trade certain types of spreads. For instance maybe as little as .10 for a vertical.
  8. ben111


    Thanks a lot for this good informations!! Do you know when SPX options start trading at C2 exchange?
  9. wooldog


  10. FSU


    The SPX weekly options now trade on the Hybrid System. Tighter markets and if you see a bid or offer will be traded electronically. The weeklies now have PM settlement on Friday.

    Still waiting for the regular SPX options to trade on the C2 electronically. They are still saying some time in the 1st quarter.
    #10     Jan 14, 2011