CHICAGO, June 10, 2019 /PRNewswire/ -- Cboe Global
Markets, Inc. (Cboe: CBOE), one of the world's largest exchange
holding companies, today announced it plans to introduce a new
Liquidity Provider Protection feature ("LP2") on its
Cboe EDGA Equities Exchange ("EDGA") that is designed to enhance
liquidity and enable market makers to make better markets in stocks
traded on the exchange.
In its filing with the U.S. Securities and Exchange Commission
(SEC), Cboe outlined the protection tool, which will be introduced
subject to regulatory approval. The proposal reflects Cboe's
ongoing commitment to evolve its equity trading platforms to meet
evolving customer needs and strengthen the U.S. equities
markets.
As currently proposed, and open to continued industry feedback,
once a liquidity-taking order reaches EDGA it would wait four
milliseconds before trading with resting orders on the order book.
The goal of this new feature is to enable liquidity providers to
take more risk and quote tighter spreads with greater size by
giving them sufficient time to re-price their resting orders before
opportunistic traders can trade with them at stale prices.
LP2 would be the first-ever delay mechanism in the
U.S. equities market to enhance market quality by promoting price
forming, displayed liquidity.
"As a leading U.S. securities exchange operator, Cboe is
committed to bringing forth new ideas that add value to our
ever-evolving markets," said Bryan
Harkins, Executive Vice President, Co-Head of Markets
Division at Cboe. "Our proposed LP2 initiative is
the result of vital and ongoing consultation with customers and
investors, and we will continue to actively seek out ways to
deliver innovative and flexible solutions that best meet their
needs."
Today, existing delay mechanisms applied by other U.S. equities
exchanges do not provide any protection to market makers and other
participants that primarily post displayed, two-sided markets,
despite the critical function these participants play in price
discovery. The new feature on EDGA is uniquely designed to reduce
cross-market latency arbitrage to enable liquidity providers to
enhance market quality by maintaining tighter
spreads, increasing inside quote durations, and posting larger
size.
"LP2 would enhance the ability of market makers
to provide liquidity to investors by deemphasizing speed, measured
in microseconds and nanoseconds, as a key to trading success.
We believe this should provide a market structure with improved
market quality, optimize price discovery, and benefit all market
participants who choose to trade on Cboe EDGA," said Harkins. "We
welcome the industry's feedback on our proposal, and look forward
to continuing our ongoing dialogue with regulators, legislators and
our customers to define markets that best serve all investors."
About Cboe Global Markets, Inc.
Cboe Global Markets, Inc. (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 relentless innovation, connecting global markets
with world-class technology and providing seamless solutions that
enhance the customer experience.
Cboe 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 multi-asset volatility products based on
the Cboe Volatility Index (VIX Index), the world's barometer for
equity market volatility.
Cboe's trading venues include the largest options exchange in
the U.S. and the largest stock exchange by value traded in
Europe. In addition, the company is one of the largest stock
exchange operators in the U.S. and is a leading market globally for
ETP trading.
The company is headquartered in Chicago with offices in Kansas City, New
York, London, Amsterdam, San
Francisco, Singapore,
Hong Kong and Quito, Ecuador. For more information,
visit www.cboe.com.
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Angela
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Stacie
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atu@cboe.com
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SOURCE Cboe Global Markets, Inc.