SEC invites comments on C2 plans to expand types of messages that may be submitted into bulk order ports

Maria Nikolova

The proposed rule change provides users of C2 with an additional method to submit auction responses to the Exchange.

The United States Securities and Exchange Commission (SEC) solicits comments on a proposed rule change by Cboe C2 Exchange. The Exchange proposes to expand the types of messages that users may submit into bulk order ports.

A bulk order port is a dedicated logical port that provides users with the ability to submit single and bulk order messages to enter, modify, or cancel orders designated as Post Only Orders with a Time-in-Force of DAY or GTD with an expiration time on that trading day. Post Only Orders with a Time-in-Force of Day or GTD are orders that will be posted to and displayed by the Exchange, rather than removing liquidity or routing to another options exchange.

At present, C2 currently limits the use of bulk order ports to these orders to limit the use of these ports to liquidity provision. The primary purpose of bulk order ports is to encourage Users, and Market-Makers in particular, to quote on the Exchange. But the overall purpose of bulk order ports is to enable users to bundle multiple instructions in a single message and provide all users rather than just Market-Makers with an efficient way to provide liquidity on the Exchange.

The proposed rule change is set to allow users to submit auction responses into bulk order ports, in addition to Post Only Orders with a Time-in-Force of Day or GTD with an expiration time on that trading day.

The Exchange currently offers one auction mechanism, the Complex Order Auction (COA), which offers users additional execution opportunities and potential price improvement for their complex orders.When C2 initiates a COA, it disseminates a message that contains the relevant information about the auction order. The purpose of this message is to encourage users to provide liquidity against which the auctioned order may trade. Users submit this liquidity in the form of auction responses.

Like Post Only Orders with a Time-in- Force of Day or GTD with an expiration time on the applicable trading day, auction responses will not remove liquidity from the Exchange order book or route to another options exchange. Auction responses are similarly available for execution for a limited time period. Unexecuted auction responses are cancelled at the end of the auction, and thus do not last beyond the auction to which they were submitted.

Given that the goal of auction responses is to provide liquidity, which is the purpose of bulk order ports, the Exchange believes it is appropriate to allow users to submit auction responses into bulk order ports.

The Exchange says permitting users to submit auction responses through bulk order ports will encourage them to provide increased liquidity to auction mechanisms in a more cost-efficient manner. Whereas bulk order ports have a higher monthly cost, the higher order message/second rate may ultimately be more cost-efficient than a user having to obtain multiple additional non-bulk ports to accommodate the submission of auction responses. Furthermore, users that have both bulk and non-bulk order ports would be able to increase their submission of auction responses without additional monthly fees.

Users may already submit auction responses to C2 using other types of ports – the proposed rule change merely provides Users of the Exchange with an additional method to submit auction responses to the Exchange.

Comments may be submitted by the following methods:

Electronic Comments:

  • Use the Commission’s Internet comment form (; or
  • Send an e-mail to [email protected] Please include File Number SR-C2-2018-019 on the subject line.

Paper Comments:

Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-C2-2018-019.

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