390 Professional Orders Rule (“390 Rule”)

What is the 390 Professional Orders Rule ("390 Rule")?

What do the number 390 and a regular trading day have in common? Oddly enough, a lot. It is the number of minutes in an ordinary trading day (8:30 am to 3:00 pm central time). What does this magic number have to do with trading? If you are a trader who averages 390 option orders a day in a calendar month, you could classify as a professional trader. Effectively, placing a new order each minute of the trading day, hence the 390 in the rule's title.

As a result, orders from professional traders that fall under this rule require special handling from broker-dealers. Since public (non-professional) orders get priority in order execution over professional traders, falling under this classification due to the "390 Rule" requires special handling from the broker-dealer (tastytrade). That said, tastytrade currently does not support professional traders that fall under the "390 Rule."

You are probably asking yourself, "Why does this rule even exist?" Simply put, this rule prevents customers who are non-professional to act as market makers since public orders get priority over professional orders. 

At tastytrade, we strive to empower individual investors with awesome technology to route trades, but no one likes it when people cut in line, which is why this rule pretty much exists.

The CBOE and ISE implemented this rule in 2009 to address customers with access to information and technology, such as our awesome platform, that would, effectively, empower individuals to trade in the same manner as a market maker or broker-dealer. Although the CBOE and ISE initially implemented this rule, other U.S. options exchanges have followed suit with similar rules in this manner.

The "390 Rule" does NOT apply to equities, futures, options on futures, or crypto orders

Placing 390 orders per trading day on average during a calendar month, generally speaking, will not affect most customers. However, if you are curious how orders are counted, a good rule of thumb is to see whether a new unique order number generates. Each time a unique order number is created, then it equals one order. You can get an idea of how many orders you've sent by visiting the Activity tab of the desktop trading platform, as illustrated below. Orders that are canceled and replaced will generate a new order number and count towards the 390 rule. 

To read the circulars published by the CBOE and ISE in regards to the 390 Rule, please refer to the links below:

CBOE: Regulatory Circular RG16-064