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LEADâ„  Market Makers (LMMs)1

How to Become an LMM

To be an LMM you must be:

  • A registered broker-dealer.
  • A CHX Participant.
  • A registered CHX Market Maker under Article 16 of CHX Rules.
  • Certified by CHX as having electronic access to CHX.

There are no additional fees for a CHX Participant to become a registered CHX Market Maker or an LMM. There are no additional fees associated with assignment as a CHX Market Maker or LMM to one or more securities.

Upon approval as a registered CHX Market Maker, CHX will open two trading accounts for the CHX Participant:

  • An LMM trading account for use with any LMM activity in assigned LMM securities.
  • A regular Market Maker trading account for use with any Market Maker activity in securities for which the Participant is not an assigned LMM.

For more information, contact:

Michael Cardin
Director — Member Regulation
312.663.2204

or

Kevin Curtin
Manager — Member Regulation
312.663.2252

How to Request an LMM Issue Assignment

Initially, CHX intends to limit the number of LMMs assigned to a given security. With possible exceptions, CHX will initially assign no more than three (3) LMMs to a security. Any exceptions to this will be published here. Here you can find a table showing each security traded on CHX, including:

  • Any applicable cap on the number of LMM issue assignments in effect.
  • The number of LMM issue assignments to that security.
  • The number of available LMM issue assignments available for that security.
  • The first date on which the security was available for LMM activity.

This data will be updated overnight to reflect any changes made during the prior day.

For more information, contact:

Michael Cardin
Director — Member Regulation
312.663.2204

or

Kevin Curtin
Manager — Member Regulation
312.663.2252

Post SEC Approval Process

Initially, CHX will typically limit LMM issue assignments to no more than 500 securities for any registered CHX Market Maker. Exceptions may be requested by a Participant who can demonstrate experience as a registered Market Maker on another national securities exchange assigned to more than 500 securities.

To afford a reasonable opportunity for registered CHX Market Makers to receive an initial LMM issue assignment to the securities of their choice, CHX will implement the following procedure:

+-
First Initial Assignment Request Window
  • CHX will accept initial Request for LMM Issue Assignment Forms by email sent to kcurtin@chx.com and received between 8:00 AM and 10:00 AM the third business day after the SEC lifts the stay on LEAD / LMM implementation.
  • Only requests sent by CHX Participants who have been approved as a registered Market Maker and have been certified as having electronic access to CHX will be eligible for consideration. Applications submitted by parties who do not meet all requirements will be rejected and will have no future standing.
  • Each Request for LMM Issue Assignment Form will be submitted as follows:
     
    • The securities for which an LMM issue assignment is requested shall be entered on an Excel spreadsheet with security ticker symbols entered only in column A of the first tab of the spreadsheet beginning on the first row of the spreadsheet. Applicants should use CHX’s symbol for each security which can be found here or here.
       

       

      A

      B

      C

      1

      AA

       

       

      2

      IBM

       

       

      3

      F

       

       

      4

      GM

       

       

      5

      AAPL

       

       

      6

      WMT

       

       

      ...

       

       

       

       
    • CHX will only consider assigning issues shown in the first 500 rows of the Excel spreadsheet unless the Participant has previously requested and been granted permission to apply for LMM issue assignment to more than 500 securities by demonstrating experience as a registered market maker on another national securities exchange assigned to more than 500 securities.
    • The Excel spreadsheet shall be attached to the email described above.
+-
Handling Initial Assignment Requests
  • In processing Requests for LMM Issue Assignment Forms received between 8:00 AM and 10:00 AM on Monday, December 11, CHX has developed the following procedure to determine how LMM issue assignments will be granted:
     
    • Only the first 500 securities requested will be eligible for consideration unless the CHX Participant has received prior approval to be eligible for a larger number of securities.
    • If granting all eligible Requests for LMM Issue Assignment Forms would result in a given security exceeding the cap on LMM assignments for that security, then CHX shall use a random allocation method to determine which CHX Participants are assigned as LMMs in that security.
    • If granting all eligible Requests for LMM Issue Assignment Forms would not result in a given security exceeding the cap on LMM assignments for that security, CHX shall grant all Requests for LMM Issue Assignment for that security.
  • The LEAD intentional delay will become effective in all securities traded at CHX at the same time.€ However, CHX plans to use a phased approach to activate LMM issue assignments by security. The scheduled rollout dates for activation of LMM issue assignments for each security will be posted here after initial LMM issue assignments have been determined and at least one week before the LEAD intentional delay goes into effect. The purpose of the phased rollout is to assure that CHX has adequate capacity to handle anticipated increases in activity resulting from LEAD implementation.
  • If a CHX Participant is unwilling, unable, or fails to meet LMM quoting and trading requirements for a given security on the first day on which an LMM issue assignment is activated for that security, then that LMM issue assignment for that security may be involuntarily terminated by CHX. Should this occur, the LMM issue assignment for that security will not be reinstated unless the registered Market Maker submits a new Request for LMM Issue Assignment Form. There may be additional regulatory consequences for a CHX Participant that is unwilling, unable, or fails to meet LMM quoting and trading requirements in a given security when LMM issue assignments are activated for that security.
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Ongoing Assignment Request Window
  • An Open Request Window will begin immediately after the Initial LMM Issue Assignment Request Window is closed at 10:00 AM on December 11, 2017.
  • CHX will continue to receive Request for LMM Issue Assignment Forms by email. Each email will be processed in the sequence in which it is received.
  • In processing a Request for LMM Issue Assignment Form received, CHX has developed the following procedure to determine how LMM issue assignments will be granted:
     
    • The maximum number of securities that will be considered on a Request for LMM Issue Assignment Form will be the number of securities for which the CHX Participant is eligible for LMM issue assignment minus the number of securities for which the CHX Participant has already been assigned as an LMM. If granting a Request for LMM Issue Assignment Form regarding a given security would result in exceeding the cap on LMM issue assignments for that security or would result in the LMM having more than 500 LMM issue assignments (or a larger number already approved by CHX), then CHX shall limit consideration of the Request for LMM Issue Assignment Form to the top number of lines based on the difference between the CHX Participant’s number of eligible securities for LMM issue assignment and the number already assigned.
    • If assigning a security would not exceed the cap number of LMMs assigned to the security, then CHX shall grant the request for LMM issue assignment. Otherwise, assignment to that security will be rejected.
  • All LMM issue assignments made under these procedures shall go into effect starting on the later of (1) the initial date for which all approved LMM issue assignments to that security are activated, or (2) two business days after the request is approved if the security is already available for LMM issue assignment.
  • If a CHX Participant is unwilling, unable, or fails to meet LMM quoting and trading requirements for a given security on the first day on which an LMM issue assignment is activated for that security, then that LMM issue assignment for that security may be involuntarily terminated by CHX. Should this occur, the LMM issue assignment for that security will not be reinstated unless the registered Market Maker submits a new Request for LMM Issue Assignment Form. There may be additional regulatory consequences for a CHX Participant that is unwilling, unable, or fails to meet LMM quoting and trading requirements in a given security when LMM issue assignments are activated for a security.
  • As new securities become eligible for trading at CHX, this procedure will be used for LMM issue assignment to those new securities.

For more information, contact:

Michael Cardin
Director — Member Regulation
312.663.2204

or

Kevin Curtin
Manager — Member Regulation
312.663.2252

1. The information presented on this website is for promotional purposes only.€ Please read all applicable CHX Rules and official information prior to using this product.