Cboe Lead Market Maker Incentives for MSCI EAFE, Emerging Markings, VIX/VIXW, SPX/SPXW

July 27th | 2020

Cboe recently filed to amend its fee schedule with respect to expiring fee waivers and incentive programs. In particular, Cboe is proposing to make permanent the MSCI EAFE Index (“MXEA”) options and MSCI Emerging Markets Index (“MXEF”) options Lead Market Maker (“LMM”) Incentive Program, amend the Global Trading Hours (“GTH”) Cboe Volatility Index (“VIX”) options and VIX Weekly (“VIXW”) options LMM Incentive Program, and amend the S&P 500 Index (SPX) options and SPX Weekly (“SPXW”) options LMM Incentive Program.

All three programs follow a similar structure that require LMMs to quote within designated widths based on, for example, expiration, and to quote a percentage of the available series (i.e. 99%) for a requisite amount of time in a given month. If a LMM in MXEA and MXEF, for example, provides continuous electronic quotes during regular trading hours that meet or exceed the applicable quoting standards in 90% of the MXEA and MXEF series 80% of the time in a given month, the LMM will receive a payment for that month in the amount of $20,000 per class, per month. Similarly, a GTH LMM in VIX, must meet or exceed the quoting standards set forth in the filing in 99% of series 90% of the time in a month in order to receive a $15,000 rebate. Lastly, for SPX and SPXW, an LMM must meet the applicable standards in 85% of the series 90% of the time for a $10,000 rebate.

Cboe believes these changes will facilitate tighter spreads, increased trading opportunities, and overall enhanced market quality to the benefit of all market participants.

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