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Cboe Global (CBOE) to Launch U.S. Periodic Auctions on Cboe BYX

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Cboe Global Markets, Inc. CBOE received approval from the U.S. Securities and Exchange Commission (SEC) to launch periodic auctions on Cboe BYX Equities Exchange. The stock exchange operator projects to launch U.S. periodic auctions in the third quarter of 2021.

U.S. periodic auctions are an innovative mechanism based on a model it first launched in Europe on Oct 19, 2015. The Cboe Europe Periodic Auctions book is a lit order book that independently operates frequent intra-day auctions throughout the day. It boasts the largest European periodic auction, accounting for more than 80% of all periodic auction activity, or approximately 3% of notional value traded on European equities exchanges with an average daily traded notional value of €1 billion in 2020.

Cboe's new periodic auction, the first of its kind in the United States, is intended to aid market participants to access frequent, price-forming auctions throughout the course of the trading day, thereby authorising them to find liquidity in a brief time period with low market impact, while prioritizing size and price. The mechanism also includes a unique feature which randomizes the message identifying when an auction is available. This will facilitate the mitigation of any potential adverse selection.

CBOE expects to widen its offerings with the introduction of the new U.S. model, following the success of Cboe Europe Periodic Auctions.

U.S. periodic auctions is expected to furnish the market participants with an on-exchange alternative to off-exchange electronic block trading by enabling them to trade in size, while reducing market impact. Further, U.S. periodic auctions are likely to facilitate price discovery and enhance liquidity and market quality in all equity securities, particularly thinly-traded securities trading on Cboe BYX Equities Exchange.

U.S. Equities is one of the five business segments of Cboe Global, presently known as North American Equities. This segment includes listed equities and ETP transaction services that occur on BYX among others. Increased market volumes in the U.S. Equities contribute to the total revenues of the company. This new launch of U.S. periodic auctions is expected to boost the North American Equities segment by furnishing it with a new, innovative intraday auction mechanism.

Shares of this Zacks Rank #3 (Hold) stock exchange operator have underperformed the industry in the past year. The stock has gained 11.1% compared with the industry’s increase of 34.4%. Nevertheless, its diversified product portfolio and strong liquidity position is likely to drive the stock going forward.

Stocks to Consider

Some better-ranked stocks from the finance sector are OTC Markets Group Inc. OTCM, Diebold Nixdorf, Incorporated DBD and Repay Holdings Corporation RPAY, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings of OTC Markets surpassed estimates in three of the last four quarters and missed in the other one. It has a trailing four-quarter earnings surprise of 11.96%, on average.

Diebold Nixdorf surpassed estimates in three of the last four quarters and missed in the other one. It has a trailing four-quarter earnings surprise of 261.88%, on average.

Repay Holdings’ earnings surpassed estimates in each of the last four quarters. It has a trailing four-quarter earnings surprise of 50.35%, on average.

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