Correcting a Trade Through the Clearing Editor

A correction facility is not an approval. An improper change is processed and given effect, and it is a disciplinary matter rather than a rejected entry.

What Is the Clearing Editor?

The Clearing Editor allows Trading Permit Holders to update executed trades on their trading date and revise them for clearing. It may be used to update certain information entered under the Cboe transaction reporting rule, or to correct certain bona fide errors.

Exam Tip: Gotchas

• The window is the trade's own trading date. The editor updates executed trades on their trading date and revises them for clearing, so it is not a general-purpose amendment tool for an older trade.

What Values May a Firm Use When It Does Not Know?

If a Trading Permit Holder has no knowledge of the account Capacity, opening or closing status, or time-in-force of an order when it systematizes the order through an exchange-approved device or reports the trade, it may use three stated values.

• Either open or close, in the Trading Permit Holder's discretion, for opening or closing status.
• A broker-dealer Capacity code of (B).
• Day, for time-in-force.

The Trading Permit Holder may change any of those initial values via the Clearing Editor, and must maintain records of any changes.

Exam Tip: Gotchas

• A default value is a permission, not a cure. It is available only where the firm has no knowledge of the real value at the time it systematizes the order or reports the trade.
• Using a default creates a record duty. The firm must maintain records of any changes it later makes to those initial values.

Does an Accepted Change Mean the Trade Was Compliant?

Three qualifications close the facility off as an excuse.

• It remains the responsibility of the Trading Permit Holder to provide accurate trade information necessary for the reporting of a trade to time and sales reports or to allow the exchange to properly match and clear trades.
• Any actions the exchange takes on those default values do not constitute a determination by the exchange that an order was systematized or a trade was effected in conformity with the requirements of the rules. Actions under the Clearing Editor rule likewise do not constitute a determination that a transaction was effected in conformity with the rules.
• Any improper change a Trading Permit Holder makes through the Clearing Editor will be processed and given effect, but would be subject to appropriate disciplinary action in accordance with the rules.

Nothing in either rule is intended to define or limit the exchange's ability to sanction or take other remedial action against a Trading Permit Holder under other rules, for rule violations or other activity for which the exchange may impose remedial measures.

Exam Tip: Gotchas

• An improper change still goes through. The exchange processes it and gives it effect, then treats it as a disciplinary matter, so a successful edit is not evidence of compliance.
• Exchange action is not a compliance finding. Accepting a default value or a Clearing Editor change is expressly not a determination that the order was systematized or the trade effected in conformity with the rules.

What Should You Check on Exam Day?

• Confirm the change is being made on the trade's own trading date, which is the window the Clearing Editor covers.
• Treat a default value as available only where the firm had no knowledge of the real Capacity, opening or closing status, or time-in-force.
• Remember the firm still owes accurate trade information for time and sales and for matching and clearing.
• Do not read a processed change as a clean bill of health; an improper change is given effect and then disciplined.