This topic includes information and reporting requirements related to options orders.
- FAQK5. Is the ‘OPT’ handling instruction appropriate for Buy/Writes or option exercises and assignments?
In Phases 2a, 2b and 2c the ‘OPT’ handlingInstructions value is to be used in instances involving a combination trade in which the cash leg is the second leg of the transaction and the terms and conditions of the cash order are contingent upon the related option trade. In other words, the ‘OPT’ value is appropriate when the price or size of a cash order is contingent upon a related option trade. The value is not intended to be used in conjunction with option exercises or assignments, which do not constitute CAT Reportable Events.
- FAQK14. Is it appropriate to use the 'OPT' handling instruction when an equity order does not become executable until a related option trade has been executed, but is not part of a complex order such as a Buy/Write?
Orders that are not part of a complex (multi-leg) order but are contingent on the execution of another order must be reported with a handlingInstructions value of ‘CND’ populated on the New Order event. This guidance applies for contingent orders involving just equities, just options or both equities and options.
The pairedOrderID field is required on Option and Multi-leg Order Route events for orders that are routed electronically as a single message containing both the initial and contra side orders for simple or multileg options directly to an exchange for crossing and/or price improvement.
- FAQK19. Which handlingInstructions value should Industry Members populate on option events when the limit price is based on option Greeks or another formula based on market conditions?
Starting in Phase 2d, Industry Members must use the ‘PBG’ handlingInstructions value when the customer instruction is to determine the limit price for an option order based on option Greeks (e.g., Delta, Vega) or other formula based on market conditions. These events must be reported using the orderType of ‘LMT’ and price of ‘0’. The specific option Greek value or formula related to the order is not required to be reported.
- FAQK2. What Industry Member Data will be reportable to the CAT during Phase 2b of the revised implementation schedule?
During Phase 2b of the revised implementation schedule, Industry Members will be required to report to the CAT Industry Member Data related to Eligible Securities that are options and that are related to Simple Electronic Option Orders, excluding Electronic Paired Option Orders. “Simple Electronic Option Orders” mean orders to buy or sell a single option that are not related to or dependent on any other transaction for pricing or timing of execution that are either received or routed electronically by an Industry Member CAT Reporter.
On Wednesday, July 21, 2021 at 4:15 pm ET, Consolidated Audit Trail, LLC and FINRA CAT, LLC will host an industry webinar focused on the CAT reporting requirements for Multi-Leg/Complex Option orders.
Please note that FINRA CAT, LLC utilizes Zoom to conduct industry webinars. Please check your firewall to ensure your firm has the ability to view Zoom content. If you are unable to download and run Zoom, please click the “join from your browser” link. This webinar will be recorded. The presentation document and recording will be posted.Audio file
- FAQK16. How must Industry Members capture the firmDesignatedID (“FDID” or “Firm Designated ID”) on Multi-Leg events in scenarios where the equity leg and option leg are originated in and/or settled to different accounts of the same customer?
In a scenario where a customer sends a complex order, and that customer has different accounts for the options and equities activity, the Industry Member must capture the FDID on the Multi-Leg New Option Order event (“MLNO”) with the FDID of the account in which the options portion of the multi-leg order is handled.
- FAQK18. Is an electronicTimestamp required when reporting a manual Trade Event (MEOT) or manual Option Trade Event (MOOT) to CAT?
No. The electronicTimestamp field is not required when reporting manual trade events for options or equities. The timestamp for electronic capture of the trade is provided on the corresponding trade event reported by the TRF or the exchange.
The CAT NMS Plan requires the trade event to be reported with the “time of execution”. Each exchange has different rules governing open outcry trading on the exchange floors. Thus, the eventTimestamp should be the execution time as recognized per the rules of the exchange on which the trade was executed.
- FAQK6. When an Industry Member receives a simple electronic order in Listed Options and solicits interest in the execution of the order, are the solicitation and the responses to the solicitation reportable in Phase 2b?
Suppose that an Industry Member receives a simple electronic order for a Listed Option. The Industry Member then engages in a solicitation process to identify a contra party to pair the order against for execution on an exchange, and one or more market participants respond to the solicitation of interest. The Industry Member selects one or more of the responding market participants’ order(s) to execute against the original order, and sends a paired order(s) to an exchange for execution.