Flash Trading: The Simple Economics
Flash Trading Background:
- CBOE's flash process was designed to get the best price available in the market for marketable orders. CBOE flashes marketable options orders when the national best bid/offer (NBBO) is at another exchange.
- Instead of automatically routing the order to the competing exchange posting the NBBO, which also charges the customer a "taker" fee, CBOE's flash mechanism briefly enables market participants to match (or better) the NBBO and execute the order at CBOE, where public customers are not charged transaction fees.