FIA PTG filed a letter with the SEC today in support of a proposed rule change by CBOE regarding the responsibility for ensuring compliance with open outcry priority and allocation requirements and trade-through prohibitions. Although the SEC expressed concern that the proposal may diminish the Exchange’s ability to ensure compliance with CBOE’s Book Priority and Trade-Through Rules, the rule change, in fact, advances many principles of the Exchange Act. CBOE's proposed changes would promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and not impose any unnecessary or inappropriate burdens on competition.
"The Exchange’s current enforcement practice for Book Priority and Trade-Through violations against Market Makers is similar to giving passengers in a car speeding tickets," FIA PTG noted. "Under the Proposal, cars will continue to be pulled over if speeding, but appropriately, only the driver will receive a ticket. In fact, compliance will arguably increase due to the establishment of a clear and predictable framework for enforcing Book Priority and Trade-Through Rules – something that is currently lacking."