Cboe Announces Order Book Priority for Retail Investors on EDGX Exchange

Ricardo Esteves

Ricardo Esteves has seen business and economics through many lenses. He joined the Financial Services Industry in 2009, and has been a financial journalist since 2011. He holds a degree in Business Administration and has experience producing real-time news, from both buy-side and sell-side, as well as for retail traders, brokers and service providers. Esteves' work has appeared in a variety of online publications including FX Street and FinanceFeeds.

Cboe

Cboe Announces Order Book Priority for Retail Investors on EDGX Exchange

October 4, 2019

 EDGX ExchangeIn an effort to promote fair, efficient and transparent markets for diverse market participants, Cboe announced that the exchange will give order book priority for retail investors on the EDGX exchange, starting November 2019.

By prioritizing retail investors, Cboe seeks to enhance execution quality for individual investors by introducing order book priority for their orders, enabling them to secure timely executions and better trading outcomes.

The U.S. Securities and Exchange Commission (SEC) already gave its approval for the launch of Cboe’s Retail Priority program on the Cboe EDGX Exchange. The mechanism will introduce enhanced order book priority for orders submitted on behalf of retail investors. The distinct allocation model 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 as their limit orders will post at the front of the order queue for
same-priced orders submitted on Cboe EDGX.Bryan Harkins, Executive Vice President and Head of Markets Division at Cboe, commented: “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 unique value to individual investors in particular. 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 also introduced a 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. The program, effective August 2019, targeted small broker-dealers that support up to 5,000 individual investors. The discounted rates allowed small brokers to distribute Cboe’s real-time top of book data feeds – including the Cboe One Summary Feed – for use throughout their websites and platforms with greater cost efficiency.

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