After the Opening Rotation

The rotation itself is one step in a longer sequence. What the system does with leftover interest, how a halted class reopens, when the exchange may depart from the standard process, and how a volatility state in the underlying is handled all sit in the same rule.

Where Do Unexecuted Orders Go After the Rotation?

Following the conclusion of the opening rotation, the system enters any unexecuted orders and quotes, or remaining portions, from the queuing book into the book in time sequence, subject to a user's instructions, where they may be processed under the Cboe book priority and allocation rule.

It cancels any unexecuted at-the-open orders, or remaining portions, because such an order may participate only in the opening process.

On a forced opening, or on an opening the exchange compels under its power to deviate, the system enters all of a user's orders in that series in the queuing book into the book in the same manner, unless the user instructs the system to cancel its market orders or all of its orders, in which case only the non-cancelled orders are entered.

Exam Tip: Gotchas

• The at-the-open order is cancelled rather than carried forward. It has one chance, and the rotation is it.
• The cancellation instruction on a forced opening is a choice between two scopes. It can cancel market orders only, or all of that user's orders, and anything not cancelled still enters the book.

How Does a Rotation Work After a Trading Halt?

The exchange opens series using the same opening auction process following a trading halt in the class that the exchange declares, with three differences.

1. The queuing period begins immediately when the exchange halts trading in the class.
2. Orders and quotes a user has resting on the book at the time of the halt are queued in the queuing book for the rotation, unless the user entered instructions to cancel its resting orders and quotes.
3. The system initiates the opening rotation upon the exchange's determination to resume trading.

Exam Tip: Gotchas

• Resting orders survive a halt by default. They are queued unless the user had already instructed the system to cancel them.
• The reopening clock starts with the halt, not with the resumption. Queuing begins immediately at the halt; only the rotation itself waits for the decision to resume.

When May the Exchange Deviate From the Standard Process?

The exchange may deviate from the standard manner of the opening auction process when it believes doing so is necessary in the interests of a fair and orderly market. That includes adjusting the timing of the opening rotation in any option class, modifying any time period the rule describes, and delaying or compelling the opening of a series if the opening width is wider than the maximum composite width.

The exchange makes and maintains records documenting all determinations to deviate, and periodically reviews those determinations for consistency with the interests of a fair and orderly market.

Exam Tip: Gotchas

• The deviation power carries a recordkeeping duty and a review duty. Both sit in the same paragraph as the power itself.
• Delaying an opening and compelling one come from the same authority. An exchange opening a wide series early is exercising the identical power as one that holds it back.

What Happens if the Underlying Is in a Limit Up-Limit Down State?

Timing decides the answer, and the two outcomes are opposites.

• If the underlying security for a class is in a limit up-limit down (LULD) state when the opening rotation begins for that class, the system cancels or rejects all market orders.
• If the opening rotation has already begun for a class when a limit up-limit down state initiates for the underlying security of that class, market and limit orders continue through the end of the opening rotation.

Exam Tip: Gotchas

• Only market orders are cancelled or rejected in the first case. Limit orders are untouched by that sentence.
• A limit up-limit down state that starts mid-rotation changes nothing. Market and limit orders both run to the end of the rotation.

What Should You Check on Exam Day?

• Confirm an at-the-open order is cancelled after the rotation rather than resting on the book.
• Check the direction of the limit up-limit down timing, because market orders die at the start and survive when the state begins mid-rotation.
• On a post-halt reopening, start the queuing period at the halt, not at the decision to resume trading.
• Confirm resting orders are queued for the reopening unless the user had already instructed the system to cancel them.
• Check that a deviation from the standard process carries the documentation and periodic review the rule attaches to it.