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Cboe Europe, a division of Cboe Global Markets, Inc., has announced plans to launch a new trading service called Cboe BIDS VWAP-X. The service, which will allow participants to source and match liquidity at a forward benchmark price, is expected to launch in early Q4 2024, pending regulatory approvals.
The service is described as an exchange-operated trajectory crossing service for European equities and will be provided through Cboe BIDS Europe, the region's block trading platform. Cboe BIDS VWAP-X aims to utilize BIDS' conditional trade negotiation and execution workflow to match orders based on a standard, exchange-regulated volume-weighted average price (VWAP) methodology.
Natan Tiefenbrun, President of North American and European Equities at Cboe Global Markets, stated: "As with all our trading innovations, this new service is being driven by industry demand with the aim of allowing end investors to achieve better execution outcomes. We believe the secular growth in systematic and passive investing has led to an increase in participative trading strategies which typically seek to achieve an average price over a defined time period. This new service enables natural buyers and sellers to cross their participative order flow at a VWAP price without incurring spread costs. A complement to our existing range of order book offerings, Cboe BIDS VWAP-X provides users with a venue-based solution for matching scheduled volume based on an exchange-regulated VWAP methodology."
Stephen Berte, President of BIDS Trading, added: "Cboe BIDS VWAP-X demonstrates our commitment to innovation and developing new products that meet the evolving needs of our clients and the equities marketplace. We are excited for this new service to help make BIDS an even more integral part of clients' toolkits for accessing the widest possible range of liquidity in Europe."
The service will allow market participants to submit conditional VWAP indications of interest (IOIs). When a potential match is found, firms will be invited to confirm their IOIs, followed by a standard matching cycle to calculate the interval-VWAP trade price. Trades will be reported as off-book, on-exchange executions in real-time and will be centrally cleared through Cboe Europe's interoperable clearing model.
Cboe BIDS VWAP-X will incorporate BIDS' existing protections against information leakage surrounding IOIs, including customizable disclosure controls and counterparty filtering based on past trading behaviour.
Initially, the service will be accessible by sell-side participants through FIX connectivity. Customer testing is scheduled to begin in Q3 2024, with the launch planned for early Q4 2024, subject to regulatory approvals.
The company states that Cboe BIDS VWAP-X will have a competitive and transparent pricing model, with details to be shared closer to the launch date.
