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Builds on success of Cboe Europe Periodic Auctions, the largest periodic auction platform in Europe
First auction mechanism of its kind in the U.S. aims to enhance intraday liquidity in the public equity markets
Designed to meet customer need to trade in size, or access liquidity in thinly traded securities
CHICAGO, July 29, 2020 /PRNewswire/ -- Cboe Global Markets, Inc. (Cboe: CBOE), one of the world's largest exchange holding companies, today announced plans to introduce periodic auctions – an innovative mechanism based on a model it first launched in Europe – for the trading of U.S. equities, subject to regulatory approval. With the planned launch of U.S. periodic auctions, Cboe aims to build on the success of its European offering and bring to the U.S. equity markets a new, intraday auction mechanism that delivers beneficial execution outcomes for all market participants.
Cboe's new periodic auction, the first of its kind in the U.S., is designed to allow market participants to access frequent, price-forming auctions throughout the course of the trading day, thereby helping enable them to find liquidity in a short time-frame 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, helping to mitigate any potential adverse selection. Cboe intends to introduce periodic auctions on its Cboe BYX Equities Exchange.
Cboe expects its planned U.S. offering to improve execution quality for market participants sourcing intraday liquidity in the public markets, and in particular, for those that are seeking to trade in size, including block-like executions, or to access liquidity in thinly traded securities. As market participants increasingly turn to off-exchange venues to meet their various liquidity needs without displaying their orders, Cboe's U.S. periodic auction is designed to provide a competitive, on-exchange alternative for participants to execute order flow with reduced market impact.
Cboe's European offering – a lit order book that independently operates frequent auctions throughout the day – was the first of its kind when it launched in 2015 and continues to be the leading European periodic auction, accounting for over 70 percent of all periodic auction activity, or approximately 2.4 percent of notional value traded on European equities exchanges, with an average daily traded notional value of more than €1 billion during the first half of 2020.
Adam Inzirillo, Head of U.S. Equities at Cboe Global Markets, said: "We believe periodic auctions could be the next market structure innovation that further enhances the U.S. equity markets, and serves to meet customer demand for additional choice in where they source liquidity, or trade with minimum market impact. Additionally, as block-sized liquidity continues to increase off-exchange with the use of conditional orders, our offering provides an attractive alternative for on-screen liquidity. Based on the sizable success of our European offering, we are excited to bring this innovation to the U.S. market."
David Howson, President of Cboe Europe, said: "As the first European exchange operator to launch a periodic auction book, we are pleased to further extend our leadership in this arena, and build a global franchise with the addition of a U.S. periodic auction offering. The planned creation of periodic auctions for the U.S. equity markets is a great example of our strengths as a truly global enterprise, enabling us to leverage and deploy our vast technology and product innovation expertise across asset classes and regions, to better serve our customers."
About Cboe Global Markets, Inc.
Cboe Global Markets (Cboe: CBOE) is one of the world's largest exchange holding companies, offering cutting-edge trading and investment solutions to investors around the world. The company is committed to defining markets to benefit its participants and drive the global marketplace forward through product innovation, leading edge technology and seamless trading solutions.
The company offers trading across a diverse range of products in multiple asset classes and geographies, including options, futures, U.S. and European equities, exchange-traded products (ETPs), global foreign exchange (FX) and volatility products based on the Cboe Volatility Index (VIX Index), recognized as the world's premier gauge of U.S. equity market volatility.
Cboe's subsidiaries include the largest options exchange and the third largest stock exchange operator in the U.S. In addition, the company operates one of the largest stock exchanges by value traded in Europe and is a leading market globally for ETP listings and trading.
The company is headquartered in Chicago with a network of domestic and global offices across the Americas, Europe and Asia, including main hubs in New York, London, Kansas City and Amsterdam. For more information, visit www.cboe.com.
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SOURCE Cboe Global Markets, Inc.