CHICAGO, June 8, 2020 /PRNewswire/ -- Cboe Global Markets,
Inc. (Cboe: CBOE), one of the world's largest exchange holding
companies, today announced it will introduce enhancements –
including a new Quote Depletion Protection ("QDP") feature – that
would offer new protective capabilities and increase the efficacy
of its Midpoint Discretionary Order ("MDO").
Pioneered by Cboe in 20121, the MDO is an innovative
order type that is designed to enable participants to trade more
often with maximum price improvement. MDOs allow participants to
post displayed or non-displayed liquidity at the National Best Bid
or Offer ("NBBO") with discretion to execute up to and including
the midpoint of the NBBO.
Market participants will have the choice to deploy QDP on MDOs
entered on either the Cboe EDGX or EDGA Equities Exchange. When
activated, QDP would disable discretion for a limited period to
help prevent participants from exercising discretion in undesirable
circumstances – i.e., buying right before a price declines, or
selling right before a price rises.2 In today's trading
environment, aggressive sweeping orders and oversized orders may
result in market impact risks and adverse price movements after
executing a trade. QDP would equip fundamental investors with an
additional trading tool to help protect against such adverse
selection risk and enhance trading outcomes when using MDOs.
As designed, QDP would track significant executions of orders
that constitute the best bid or offer on the EDGX or EDGA Book. The
mechanism would be activated if the best bid or offer displayed on
EDGX or EDGA is executed below one round lot. During a QDP Active
Period, an MDO would not exercise discretion for a specified period
of time. If participants choose to not use QDP, an MDO operates and
functions as originally designed.
In addition to QDP, market participants will be able to enter
MDOs with an offset instruction to the NBBO. This is designed to
enable participants to specify more3 or less aggressive
pegged prices for MDOs resting on the order book, thereby
increasing flexibility when using this order type. MDOs with
QDP will default to a less aggressive offset of 1 Minimum Price
Variation, but can be increased to a greater amount if a larger
discretionary range is desired. Member firms will have the
flexibility of choosing an offset that is consistent with the
urgency and/or client's order handling instructions.
Adam Inzirillo, Senior Vice
President and Head of U.S. Equities at Cboe Global Markets, said:
"Cboe's Midpoint Discretionary Order was created to provide market
participants with a greater selection of trading tools that may
result in efficient executions and price improvement. We are
pleased to enhance upon this innovation further with the Quote
Depletion Protection feature. Developed in close consultation with
our customers, we believe QDP will offer enhanced functionality,
which broker-dealers may be free to incorporate into their
strategies, to mitigate against potential adverse selection
risks."
To learn more about Cboe's Midpoint Discretionary Order, visit
the website.
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.
Media
Contacts
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Analyst
Contact
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Angela
Tu
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Stacie
Fleming
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Debbie
Koopman
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+1-646-856-8734
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+44-20-7012-8950
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+1-312-786-7136
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atu@cboe.com
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sfleming@cboe.com
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dkoopman@cboe.com
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CBOE-E
CBOE-OE
Cboe® Cboe Volatility Index®, VIX®, and Cboe Global Markets®
are registered trademarks of Cboe Exchange, Inc. All other
trademarks and service marks are the property of their respective
owners.
1 Pioneered by Direct Edge, a Bats Global
Markets, Inc. subsidiary. Bats was acquired by Cboe Global Markets,
Inc. in 2017.
https://cdn.cboe.com/resources/regulation/rule_filings/approved/2012/SR-EDGA-2012-22-Final.pdf
2 MDOs would still be eligible to trade
at their pegged prices when QDP is enabled.
3 Hidden only.
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SOURCE Cboe Global Markets, Inc.