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The CBOE's Equities Gambit Involves a Twist

Specialists are Part of the Plan

Traders Magazine, February 2007

Nina Mehta

The CBOE Stock Exchange, in a departure from the current vogue among stock exchanges, is launching in March with a specialist system. The offshoot of the Chicago Board Options Exchange recently appointed six trading houses as "designated primary market makers," or specialists, to provide liquidity to its upcoming equities marketplace. The move makes the firms the sole liquidity providers receiving the highest transaction fee advantages for the stocks in which they make markets. Each stock and exchange-traded fund is assigned to one DPM and several remote market makers(RMMs). The latter compete for order flow and have fee benefits over market participants.

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