On March 19, the Securities and Exchange Commission approved a proposed rule change filed by Cboe Exchange, Inc. (CBOE) related to permissible off-floor position transfers. Generally, CBOE requires a Trading Permit Holder (TPH) to effect transactions in listed options on an exchange. However, certain types of transfers involving TPH positions are permitted to be effected off the exchange. The approved rule change adds four types of additional off-floor transfers:
- transfers to correct a bona fide error in the recording of a transaction or the transferring of a position to another account;
- transfers between accounts where there is no change in ownership, provided that the accounts are not in separate aggregation units or otherwise subject to information barrier or account segregation requirements;
- consolidation of accounts where no change in ownership is involved; and
- transfers through operation of law from death, bankruptcy, or otherwise.
Additionally, the approved rule change also codifies prior guidance that that off-floor transfers cannot net against another position and that no position transfer may result in preferential margin or haircut treatment.
For more information on the rule change, please see the September 27, 2019 edition of Corporate & Financial Weekly Digest.
The SEC Order approving the rule change is available here.