The Securities and Exchange Commission (SEC) approved a proposed rule change by the Cboe Exchange, Inc., which was amended twice. The rule change allows Cboe to impose a maximum size requirement of ten contracts for agency orders in SPX options during Regular Trading Hours (RTH) on its Automated Price Improvement Mechanisms (AIM and C-AIM). The decision was made based on data showing that smaller orders, between one to ten contracts, benefited most from these electronic auctions in terms of price improvements, compared to larger orders. This measure is expected to enhance retail customer participation and provide better execution opportunities for these smaller orders.
Simple Explanation
The Cboe Exchange got approval to change a rule so that during regular trading, people can only make orders of up to ten parts in a special kind of auction for trading. This is because they found that smaller orders usually get better deals than bigger ones in this auction.