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On December 31, 1985, Mr. Gordon purchased a seat on and
became a member of the AMEX by purchasing an option-trading
permit from Moore. Thereafter, during 1986 Mr. Gordon, who was
registered with the SEC as a broker/dealer, registered with and
operated on the AMEX as a market maker in stock options (i.e.,
options in which the underlying interest is stock) and index
options (i.e., options in which the underlying interest is an
index that is the measure of the value of a group of stocks or
other securities).6 All of those options were listed and traded
on the AMEX and subject to the respective rules and regulations
of that exchange and the SEC.
As an options market maker, during 1986 Mr. Gordon (1) was
obligated to comply with the respective rules and regulations
prescribed by the SEC and the AMEX, (2) was required to provide
liquidity for customer orders to be filled on the AMEX, (3) was
obligated to create a market in options by offering simulta-
neously to buy and sell options at a particular price for certain
stock, and (4) was required to make bids and offers in all option
classes consistent with a fair and orderly market. As an options
6 In the "Stipulation of Facts as to Ronald Gordon", Mr. Gordon
and respondent interchangeably referred to Mr. Gordon's activi-
ties during 1986 on the AMEX as a market maker in stock options
and index options for his own account as his activities as (1) a
"market maker", (2) an "option market maker", (3) "a dealer in
equity options", and (4) a "listed equity options market maker".
We shall refer to Mr. Gordon's activities during 1986 on the AMEX
as a market maker in stock options and index options for his own
account as his activities as an options market maker.
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