What does 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 then? If you are a trader that averages 390 options orders a day in a calendar month, then you could be classified as a professional trader. Effectively, placing a new options 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 (tastyworks). That said, tastyworks 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 tastyworks, 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.
This rule was implemented by the CBOE and ISE in 2009 to address customers that have 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.
*Please Note: This rule does not apply to futures or options on futures orders.
Placing 390 orders per trading day on average during a calendar month. Generally speaking, it will not affect most customers, but if you are curious about how orders are counted, then 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. Order numbers are located on the Activity tab or Orders window. 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, then please refer to the links below: