CBOE Stock Exchange (CBSX)

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CBOE Stock Exchange (CBSX)
CBSX Logo.jpg
Founded March 2007
Headquarters Chicago
Key People David Harris, President & CEO
Products Fully electronic equities exchange
Website www.cbsx.com

The CBOE Stock Exchange (CBSX) was created in early 2007 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.

The CBOE shut down CBSX operations in early 2014, saying that the small exchange no longer fit into its business strategy. CBSX accounted for about 0.4% of U.S. equity market trading volume, according to data from BATS Global Markets quoted in the Wall Street Journal.[1]

CBSX operated as a facility of Chicago Board Options Exchange (CBOE) and used CBOE's technology platform, CBOE Command. CBSX was owned by CBOE and a consortium of financial entities. The CBSX multi-asset trading model was originally designed to increase the efficiency of trading combined stock and options orders, while reducing execution costs for market participants. In July 2011, CBSX launched a new strategic initiative to increase execution speed for the majority of CBSX's customers, who are located on the East Coast. CBSX moved its trading operations from Chicago to New York and began trading from the Equinix NY4 in New Jersey.

As of January 1, 2014, about 7,200 stocks stocks and ETFs were listed for trading.

CBSX Market Model

  • Reg-NMS Compliant[2]

---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

  • Maker-Taker Pricing Structure

---Rich rebate program

  • Trade Engine

---CBOEdirect

--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.

History

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 the end of the summer in 2007, that goal was achieved, with roughly 2,900 listings on the exchange. (See [CBSX stock listings and rollout schedule http://www.cbsx.com/aboutcbsx/cbsxstockdirectory.aspx])

On Sept. 29, 2011, CBSX announced its acquirement of the National Stock Exchange, Inc. (NSX). The two exchanges plan to remain separate, only consolidating data systems and business operations.[3]

On Jan. 5, 2012, the U.S. Securities and Exchange Commission (SEC) approved the CBSX buyout of NSX.[4]

Volume at CBSX

2012: Average daily volume of 23.77 million shares

2011: Average daily volume of 10.16 million shares

2010: 5.7 billion shares were traded in 2010, up 43 percent from 2009's annual volume.[5]

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 2008 was an increase of 236 percent over the 1,072,401,400 shares traded during the exchange's first 10 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. [6]

Trading Hours

CBSX trading hours are 7:30 a.m. to 3:45 p.m. (CT)

Key People

References

  1. CBOE to Shut Stock Trading Venue. The Wall Street Journal.
  2. Market Model. CBOE.
  3. CBOE Stock Exchange to Acquire National Stock Exchange. CBSX.
  4. SEC Blesses CBOE Stock Exchange Deal. WSJ.
  5. 2010 Annual Report. CBOE Holdings Inc..
  6. CBOE STOCK EXCHANGE (CBSX) VOLUME TOPS 3 BILLION SHARES TRADED DURING 2008 Growth in Volume, Listings and Participation. CBSX.