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SEC approves Box Options' plan for open-outcry trading floor

The Securities and Exchange Commission has approved Box Options Exchange LLC's plan for an open-outcry trading floor in Chicago.

The company plans to open the trading floor later in August, and expects the floor to allow better execution quality of large transactions than electronic-only markets, the company said in a statement.

"This venue will enhance the customer experience at BOX, enabling them to trade large and complex orders more efficiently," BOX Market LLC CEO Ed Boyle said in a statement.

The new open outcry trading floor comes after about three decades of equity and option trading migrating toward electronic systems, leading to the shuttering of trading floors across the country. While pit trading equities is long gone, trading options on a trading floor still exists at the likes of CBOE Holdings Inc. Open outcry trading accounts for about 13% of U.S. options trading, The Wall Street Journal reported July 9, citing Burton-Taylor International Consulting.

The plan received a flurry of criticism from exchange operators such as CBOE, Intercontinental Exchange Inc.-owned New York Stock Exchange and Nasdaq Inc., with some arguing that another trading venue would further fragment trading and markets.

In its second comment letter to the SEC, CBOE argued that Box "cannot reasonably assume a bona fide auction process — with robust liquidity and price competition — will be available on its trading floor."

But the company in its statement said it believes another options trading floor will "spur further modernization of open outcry trading."