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Cboe’s BYX Proposes Periodic Auctions for U.S. Equities

August 3rd | 2020

Cboe Global Markets Inc. is seeking approval to introduce periodic auctions to its BYX equities exchange. These auctions would last 100 milliseconds, during which buy and sell orders are aggregated into batches and executed at discrete intervals, rather than continuously throughout the day. These periodic auctions, however, will compliment trading in the continuous market without interrupting it. Periodic auction orders will be executed at the price level that maximizes the total number of shares in both the auction book and the continuous market that are executed in the auction.


Cboe is already the leading provider of periodic auctions in Europe and its plans for BYX are based on that European model with targeted changes to adapt it to the U.S. equities market. Cboe anticipates that its periodic auction model help investors source liquidity in thinly traded securities, in larger sizes than would ordinarily be available in continuous trading, and at times other than the opening and closing auctions where most of the day’s liquidity is currently concentrated. Periodic auctions are one of a few ideas Cboe put forth in its comment on the SEC’s Statement on Market Structure Innovation for Thinly Traded Securities. As mentioned in that comment letter, Cboe believes that innovation, rather than regulatory changes that confer an advantage to only some participants, are ultimately the best way to improve market quality for all investors.

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