BOX Options Exchange

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BOX Options Exchange
BOX logo color white.JPG
Founded Feb. 6, 2004
Headquarters Chicago, Illinois;
Boston, Massachusetts
Key People Ed Boyle, CEO
Products options products

The BOX Options Exchange (BOX) was launched on Feb. 6, 2004 [1] by Boston Stock Exchange, Inc. (BSE), Montreal Exchange and Interactive Brokers Group LLC, as an all-electronic equity derivatives market and an alternative to the existing market models. BOX was the first options market to offer the possibility of price improvement to investors via an electronic auction process known as the "PIP."

BOX, aka the Boston Options Exchange, was ranked as the world's 22nd-largest derivatives exchange by volume in 2010, falling from the 17th-largest in 2009. The exchange's volumes were down 33.4 percent on 2009's volume figure, according to the Futures Industry Association's latest volume rankings for 2010.[2] The FIA report, published in early April 2010, notes that the BOX's total volume in 2010 fell to about 91.75 million contracts, compared to 137.78 million in 2009.

BOX won approval from the SEC in April of 2012 to act as its own self-regulatory organization. It had previously been regulated by Nasdaq OMX, a rival exchange operator. [3] As part of this restructuring, TMX Group (owner of the Montreal Exchange) took a 40 percent economic interest and a 20 percent voting interest in the new SRO. TMX maintains its ownership through its 53.8 percent stake in BOX Holdings Group LLC, which owns and operates the options trading platform.

Key People

Edward Boyle, Chief Executive Officer
Lisa J. Fall, President and Chief Legal Officer
Peter Layton, Chairman
William Easley, Vice Chairman
John Goode, Chief Information Officer
Patrick Zielinski, Senior Vice President, Trading Operations
Vito Gendusa, Vice President, Finance & Administration
Patty Kevin-Schuler, Vice President, Sales & Marketing


Before BOX won approval for its own exchange license from the SEC in April of 2012, it had been regulated by Nasdaq OMX, a rival exchange operator. [4]

BOX had been operating as a unit of the Boston Stock Exchange, which agreed in 2007 to be acquired by Nasdaq OMX Group Inc. Under the terms of the deal, Nasdaq would be responsible for regulating BOX, which handles about 4.8 percent of U.S. equity options trading. Nasdaq is a direct competitor to BOX, so to avoid being regulated by a competitor, BOX applied for status as a separate exchange.[5]

In July 2006, the Boston Options Exchange completed migration to its new trading engine platform, SOLA, which is licensed from the Montreal Exchange. BOX has no designated specialists; competing market makers are responsible for ensuring liquidity. BOX uses a maker-taker model for most penny classes, in which the exchange pays a rebate to suppliers of liquidity and charges liquidity takers a fee.[6] BOX uses a price/time order matching algorithm. Traders can connect with BOX through a number of ISVs that offer front-end applications for BOX participants.[7]

BOX provides two types of gateways to its trading engine [8]: a) bi-directional order and quote related gateways and b) outbound feed of market data from the BOX trading engine to the user. BOX provides a FIX interface which allows BOX participants, who are already using the FIX protocol for order routing and management to other options markets, to connect to the BOX trading engine with a minimum of effort. The FIX interface provides a subset of the BOX trading engine functions and is therefore better suited to the "non-market maker" category of participants.[9]

On Aug. 29, 2008 the Montreal Exchange (MX), a founding partner and the technical operator of BOX, increased its ownership position to the maximum 53.2 percent from its previous 31.4 percent. The MX acquired a 21.9 percent ownership position from another senior BOX partner, the Boston Stock Exchange, Inc., as agreed in December of 2007.[10]

In May of 2010, BOX switched the location of its matching engine and revamped its underlying architecture as an additional enticement to the high frequency trading crowd. On May 10 of that year, BOX moved its matching engine into the Equinix NY4 data center in Secaucus, N.J. That was home to the International Securities Exchange's matching engine as well as a number of high-frequency traders. Proximity to the BOX's matching engine was intended to reduce turnaround time for high-frequency traders.[11]

In May of 2013, BOX was approved by the U.S. Securities Exchange Commission to trade a jumbo version of the SPDR S&P 500 Exchange Trade Fund ("Jumbo SPY Options").


As of May 12, 2008, BOX listed nearly 1500 classes for trading.

On February 10, 2015 BOX Options Exchange and The VolX Group announced an exclusive licensing agreement in which BOX will list RealVol SPY Options (VOLS) for trading, pending SEC approval. VOLS will be the first exchange-traded options based on the realized volatility of the broad U.S. equity market. VOLS offer direct exposure to the realized daily volatility exhibited by the SPDR S&P 500 ETF (symbol SPY). Currently, the majority of market participants are not able to trade, or hedge against, actual price risk of realized volatility directly. This type of risk-control tool has been offered only to large institutions in the over-the-counter volatility swaps marketplace.[12]


A key feature of the BOX market is the Price Improvement Period (PIP) auction, a patented automated trading mechanism which permits brokers to seek to improve executable client orders. BOX Participants executing agency orders as order flow providers (OFPs) and wishing to improve the client's price by taking the other side as principal signal this intent to the BOX market-place via a special order message submitted to the BOX trading engine; market makers on the class as well as other BOX trading participants can then compete for this order by bettering the price. At the end of a very short period, the client side of the trade is matched with the best prices available.[13]

On May 8, 2014, BOX announced it had achieved half a billion dollars in savings for investors through its price improvement period. In April 2014 price improved contracts on BOX averaged 300,510 per day, representing a 38% increase over the same period the previous year.

Annual Volumes

Year Total Annual Volume* Percent Change
2014 98,486,620 10.0%
2013 89,546,651 (-)38.2%
2012 144,987,873 3.8%
2011 139,679,281 52.2%
2010 91,754,121 (-)33.4%
2009 137,784,626 (-)22.9 %
2008 178,650,541 37.6%
2007 129,797,339 --


  1. BOX Celebrates Five-Year Anniversary. Boston Options Exchange.
  2. 2010 Annual Volume Survey. Futures
  3. BOX Options Exchange gets approval to self regulate. Reuters.
  4. BOX Options Exchange gets approval to self regulate. Reuters.
  5. "Boston Options Market Will Seek Official SEC Exchange Status". Bloomberg.
  6. Options Maker-Taker Markets Gain Steam. Traders Magazine.
  7. ISVs That Connect to BOX. Boston Options Exchange.
  8. Fast Technology Drives BOX's Quick Growth. Securities Industry News.
  9. Trading at BOX. BOX.
  10. "Montreal Exchange Completes Acquisition of Majority Ownership Interest in Boston Options Exchange". Montreal Exchange.
  11. BOX Courts High-Frequency Traders. Traders Magazine.
  12. Box to Launch Realized Volatility Options on VolX Patented Concept. VolX.
  13. "BOX Achieves Record Market Gains in 2008”. BOX.