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Cboe to Launch Order Book Priority for Retail Investors on EDGX Exchange

Traders Magazine Online News, October 3, 2019

John D’Antona Jr.

Cboe Global Markets announced Wednesday it has received approval from the U.S. Securities and Exchange Commission (SEC) to launch its new Retail Priority program on the Cboe EDGX Exchange. Designed to enhance execution quality for individual investors who trade U.S. equities, the mechanism will introduce enhanced order book priority for orders submitted on behalf of retail investors, thereby increasing the probability of execution for their orders.

Cboe expects to launch Retail Priority in November.

Retail Priority offers a distinct allocation model, which differs from the traditional time-based allocation model used by most U.S. equities market centers that allocate trades to orders that arrive first in time at each price point. The Retail Priority model focuses on improving execution quality for individual investors by reducing their time to execution. Under the mechanism, individual investors’ displayed limit orders will post at the front of the order queue for same-priced orders submitted on Cboe EDGX.

“As a leading U.S. securities exchange operator, Cboe continues to be at the forefront of industry advocacy with initiatives to promote fair, efficient and transparent equity markets. Retail Priority is our latest innovation intended to deliver a unique value to individual investors in particular,” said Bryan Harkins, Executive Vice President and Head of Markets Division at Cboe. “With our new Retail Priority program, we expect to improve the trading experience for investors, and the firms facilitating their orders, by encouraging more retail order flow to be entered into the displayed market. We believe a robust retail market benefits all market participants by increasing order interaction and contributing to enhanced price formation, and we are pleased that Cboe EDGX is introducing a product for retail trading in the public markets.”

Cboe continues to expand its competitive positioning and market leadership in serving the retail investor community. The company recently introduced a new program to allow small retail brokers to use and distribute Cboe’s real-time U.S. equities exchange data at reduced rates, and in turn, help broaden access to valuable market information for individual investors.

Cboe Global Markets operates four U.S. equities exchanges – the Cboe BZX Exchange, Cboe BYX Exchange, Cboe EDGA Exchange and Cboe EDGX Exchange – to serve a diverse range of market participants. It is currently the third largest U.S. equities market operator by volume traded.

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