The Chicago Board Options Exchange last week upgraded its automated price improvement mechanism, AIM, to include popular QQQQ options on the Nasdaq-100 ETF. CBOE’s AIM can price improve all options on equities, but the Qs are the first series of options on ETFs and indexes that CBOE’s AIM can price improve. The hundreds of contracts on other indexes and ETFs will be added this summer.
The additions will bring the CBOE in line with rivals International Securities Exchange and the Boston Options Exchange, which already electronically price improve options on indexes and ETFs. CBOE launched its AIM platform a year after the BOX and the ISE launched theirs.
Traders said CBOE is likely to pick up significant volume in the electronic AIM auctions once it can price improve for both mainstream, such as options on ETFs, and proprietary issues, such as licensed options on indexes. “CBOE has a lot of products that no one else lists. If they give us the opportunity to price improve [in those issues] automatically, customers will come knocking,” one market maker said.
Brokerages are required to seek price improvement for any issue they are trading (WSL, 11/7). CBOE lists the largest number of proprietary options on indexes. AIM will eventually be available for all products that trade electronically, or about 92% of CBOE’s order flow. A spokeswoman declined to set a date for the completion of the rollout.