CBOE Stock Exchange (CBSX)

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CBOE Stock Exchange (CBSX)
CBSX.gif
Founded March 2007
Headquarters Chicago, IL
Key People David Harris, CEO and president
Products Fully electronic equities exchange
Website http://www.cbsx.com

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. In January 2008, Lime Brokerage acquired a minority interest in CBSX.

The CBSX multi-asset trading model was designed to increase the efficiency of trading combined stock and options orders, while reducing execution costs for market participants. CBSX enables options traders to either cross or interact with multiple equity traders at substantially increased speed, thereby reducing transaction costs and increasing performance and profitability. CBSX provides this capability using traditional and unique order types, delivered electronically over one platform.

CBSX is predicated on including at least six Designated Primary Market Makers (DPMs) and multiple, competing Remote Market Makers (RMMs), to assure tight, two-sided liquidity in all stocks. As of February 2009, about 6,300 stocks were listed.

CBSX Market Model

Template:CBOE Ad 1R
  • Reg-NMS Compliant[1]

---Automated Trading Center with protected quotes
---Automatic sweep functionality to ensure NBBO executions
---Fully electronic order entry and immediate execution

  • Matching Algorithm

---Strict Price-Time
---Anonymous
---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, 2-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.

  • Maker-Taker Pricing Structure: Rebate program [2]
  • Market Data Revenue Rebates [3]


History

On March 5, 2007, CBSX was created by CBOE in partnership with four leading 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)[1]

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.[4]


Volume at CBSX

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.[5]

Trade Engine

CBSX uses the CBOEdirect trade engine, the same platform that underlies electronic trading on CBOE and the CBOE Futures Exchange (CFE).

Listings and Updates

CBSX lists an entire staff who can answer questions on the Exchange [2], as well as "Trader News e-mails" to update participants on new listings, and information regarding enhancements. [3].

Sources

CBSX Retrieved from "http://www.marketswiki.com/mwiki/index.php?title=Chicago_Board_Options_Exchange"

References

  1. marketmodel. cboe.com.
  2. Rebates. cboe.com.
  3. Market Data rebates. cboe.com.
  4. "LIME BROKERAGE TO ACQUIRE MINORITY INTEREST IN CBOE STOCK EXCHANGE, LLC”. CBSX/Lime Brokerage.
  5. [http://www.cbsx.com/media/ShowDocument.aspx?DIR=ACNews&FILE=cboe_cbsx_20090115.doc&CreateDate=15.01.2009 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.