The Securities and Exchange Commission has made the linkage mandatory in a bid to improve the option industry’s efficiency while helping ensure that all orders are executed at the best possible price regardless of the exchange to which they are routed.
The technical infrastructure for Interim Linkage and access to the PHLX’s automated options market system is available to broker/dealers who wish to interface with the exchange, provided that they are members of the exchanges where an option class trades.
Specialists using Interim Linkage will be subject to any fees and commissions charged by the broker/dealer and the receiving exchange. However, the use of Interim Linkage is voluntary.
Under the linkage plan, brokerage firms will still be able to route orders to their exchange of choice.
If the order is due execution at the national best bid and offer and the exchange of choice does not match it, specialists can fill the order by stepping up to the price, or send it to another exchange that is displaying the national best bid and offer.
The Interim Linkage plan is an intermediate measure in use until full linkage is instituted.