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Strategies & Market Trends : Canadian Options -- Ignore unavailable to you. Want to Upgrade?

To: notredame who wrote (1256)	7/13/1998 2:06:00 PM
From: Dave.S	Read Replies (1) \| Respond to of 1598

Notredame: The current options trading system at the TSE is not automated. When the MM's receive a client order it is a hand written order which is placed in the MM's order box. The MM's have to manually keep track of all of the orders and make sure that none are missed. Everything is manually done. The handling of an options trade goes like this: 1) Receipt of the order over the phone or terminal and time stamped 2) Order taken by a trader to the square where the option is traded 3) Trade executed 4) Trades written up by both sides on trade tickets 5) Tickets given to input clerk who enters both sides of the trade to be reported to the Cdn Derivatives Clearing Corp. 6) Trades reported back to the firm 7) Limit orders booked by filling out a day order slip or a GTC slip 8) Day or GTC orders placed in the "book" by market makers - the book is actually a filing box or slot in the trading post 9) Market makers continually arranging limit orders to stay current so they don't trade through an order 10) Runners taking the second part of trades to the firms who placed the limit orders 11) Trades reported back to the firm This seems to work when the market is steady and there are few orders coming through. But when the market is moving quickly or there are hundreds of orders to be processed, the system can break down. The worst case was the day after the Quebec referendum. Thousands of positions had been established in the weeks leading up to the vote and of course everyone wanted to unwind them that morning. The MM's were swamped and couldn't open the market until the afternoon. The market of course had completely changed by that time. We lost many TXO clients that day and most never traded the TXO again. Could this happen again? Of course! The answer is an automated order entry system but all systems development at the TSE has been put on hold to resolve the Y2K problems with the current Equity CATS trading system. Dave