CBOE Stock Exchange (CBSX)
|CBOE Stock Exchange (CBSX)|
|Key People||David Harris, CEO and president|
|Products||Fully electronic equities exchange|
In early 2007, the CBOE Stock Exchange (CBSX) was created by the Chicago Board Options Exchange and four market-maker partners as a fully electronic market with a strict price-time priority matching algorithm and high-liquidity rebates for dedicated liquidity providers.
With a new strategic initiative, on July 1, 2011, CBSX moved its trading operations to the East Coast from Chicago and began trading from the Equinix NY4 Internet Business Exchange datacenter in Secaucus, NJ. CBSX's move to the NY4 facility was intended to increase execution speed for the majority of CBSX's customers, which are located on the East Coast.
As part of that initiative, one month prior to the move to New Jersey, on June 1, 2011, CBSX instituted a simplified pricing model with identical fees for both liquidity "makers" and liquidity "takers" trading on CBSX, making CBSX the only U.S. exchange to use identical pricing for both makers and takers of market liquidity. The new CBSX pricing model is also one of the most economical fees structures currently available in the securities industry.
In the new CBSX pricing model, the fee for stocks trading above $1.00 is $0.0002 per share, and for stocks below $1.00, the fee is 0.02 percent of the dollar value of the transaction. In standard maker-taker market models, fees are generally different for those who make market liquidity and for those who take liquidity from the market.
As of July 2011, about 7,600 stocks were listed.
CBSX Market Model
- Reg-NMS Compliant
---Automated Trading Center with protected quotes
---Automatic sweep functionality to ensure NBBO executions
---Fully electronic order entry and immediate execution
- Matching Algorithm
---Level playing field
- Liquidity Providers
---Assigned Designated Primary Market Makers (DPMs)in each stock
---Remote Market Maker (RMM) program allows liquidity providers to participate remotely
---Economic incentive to liquidity providers to provide the best markets
--Each security traded on CBSX has an assigned designated primary market maker (DPM) obligated to quote continuous, two-sided markets. Unlike traditional specialist roles, CBSX DPMs do not act as agents on behalf of orders. In addition, CBSX offers a Remote Market Maker (RMM) program, allowing approved applicants to participate remotely, adding to the liquidity pool. CBSX DPMs include: Equitec Specialists, LLC, LaBranche Structured Products, LLC, Susquehanna Investment Group, Timber Hill/Interactive Brokers Group, VDM Structured Products, LLC, and Wolverine Trading LLC.
On March 5, 2007, CBSX was created by CBOE in partnership with four liquidity-providing firms: Interactive Brokers Group, LLC; LaBranche & Co Inc.; Susquehanna International Group, LLP; and VDM Specialists, LLC. All are dominant NYSE specialists. CBSX established a nine-person board, with members of these firms serving as part of the board constituency.
On opening day, CBSX launched an initial roster of 12 stocks, with plans to list 2,800 of the most actively traded New York Stock Exchange, NASDAQ Stock Market, and American Stock Exchange listed securities, exchange traded funds (ETFs), and other listed securities. By summer's end 2007, that goal was achieved, with roughly 2,900 listings on the exchange and climbing. (See CBSX stock listings and rollout schedule)
On January 8, 2008, CBSX and Lime Brokerage, a NY-based firm catering to a diverse, sophisticated customer base, announced that Lime has acquired a minority interest in the CBOE Stock Exchange, LLC.
Volume at CBSX
2009: More than 3.93 billion shares were traded (ADV of 15.6 million shares), up 9.1 percent from 2008 volume of 3.60 billion shares.
2008: First full year of trading: CBSX posted more than three billion shares traded at the Exchange during 2008, its first full year of trading. The 3,604,649,431 shares traded during the 12 months of 2008 was an increase of 236 percent over the 1,072,401,400 shares traded during the Exchange's first ten months of operation in 2007. Monthly trading volume in 2008 posted year-over-year gains versus each month of 2007.CBSX achieved record monthly volume of nearly 500 million shares in October 2008. Average daily volume during 2008 was 14.4 million shares per day, compared to the 4.3 shares per day in 2007. 
Listings and Updates
As of Nov. 2, 2009, CBSX trading hours are 8 a.m. to 3 p.m.
- marketmodel. cboe.com.
- "LIME BROKERAGE TO ACQUIRE MINORITY INTEREST IN CBOE STOCK EXCHANGE, LLC”. CBSX/Lime Brokerage.
- CBOE STOCK EXCHANGE (CBSX) VOLUME TOPS 3 BILLION SHARES TRADED DURING 2008 Growth in Volume, Listings and Participation; 2008 Highlights Include Lime Brokerage Investment, Functionality to Facilitate Automated Stock and Options Orders. CBSX.