CBOE Exchange, Inc. (CBOE) recently filed a proposal to amend its Rule 6.49A to amend provisions related to permissible off-floor position transfers. Generally, CBOE Rule 6.49A(a) specifies limited circumstances in which CBOE Trading Permit Holders (TPHs) may transfer their positions off the floor. CBOE proposes to add four events where an off-floor transfer would be permitted to occur. Specifically, under the proposed amendments, in addition to the off-floor transfers addressed in the current version of the rule, an off-floor transfer would be permissible if the transfer:

  1. is an adjustment or transfer in connection with the correction of a bona fide error in the recording of a transaction, provided that the original trade documentation confirms the error;
  2. is a transfer of positions from one account to another account where there is no change in ownership involved (i.e., the accounts are for the same individual, partnership, joint stock company, corporation, limited liability company, trust or unincorporated organization, or governmental entity or agency), provided the accounts are not in separate aggregation units or otherwise subject to information barrier or account segregation requirements;
  3. is a consolidation of accounts where no change in ownership is involved; and
  4. is a transfer of positions through operation of law from death, bankruptcy, or otherwise.

CBOE also proposes to amend the Rule to permit off-floor transfers of existing positions in options listed on CBOE of a TPH or a non-TPH if the transfer established a net reduction of risk-weighted assets attributable to those options positions (an “RWA Transfer”).

Under the proposal, a TPH and its Clearing Trading Permit Holder would be required to submit to CBOE written notice prior to effecting an off-floor transfer other than such transfers made in connection with correcting a bona fide error and RWA transfers. Other than with respect to RWA transfers, when effecting an off-floor transfer under the proposed amendments, no position may net against another position or result in preferential margin or haircut treatment, and off-floor transfers may be used only to facilitate non-routine, non-recurring movements of positions.

The rule filing is available here.