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November 04, 2021 - Cboe Global Markets, Inc. has announced plans to introduce a new dealer-to-dealer electronic trading platform for On-The-Run U.S. Treasuries. The platform, "Cboe Fixed Income", will be Cboe's first cash U.S. Fixed Income product offering, further diversifying and expanding its products, services and technology offerings into new markets and geographies around the world. Cboe Fixed Income is planned for launch in the second quarter of 2022, subject to regulatory approvals.
The new trading platform is designed to better enable dealers in U.S. Treasuries to efficiently source liquidity and trade in size, while reducing market impact. This new platform will leverage the expertise and proven track record of Cboe FX, a global leader in electronic trading for 20 years with a reputation for world-class technology, cutting-edge liquidity solutions, product innovation and trading reliability and efficiency.
"We are excited to bring the best of what we do in the global FX market to the U.S. Treasuries space," said Jonathan Weinberg, Senior Vice President and Head of FX and U.S. Treasuries at Cboe Global Markets. "Cboe Fixed Income is designed to address some of the biggest challenges that dealers face today, including flow segmentation, information leakage and high hedging costs. We believe the new trading platform will provide a unique solution that enables liquidity providers to interact directly with high-quality order flow, reduce market impact and receive opportunities for price improvement."
Cboe Fixed Income will bring Cboe's Full Amount technology – which enables large order risk transfer with low impact – together with its liquidity curation and analytics capabilities to further enhance trading in U.S. Treasuries. The powerful combination of these capabilities is expected to create a high-value offering that differs from other interdealer trading models in the marketplace.
Through the Full Amount matching protocol, liquidity consumers will be able to transact against the best quote from a single liquidity provider, while satisfying the full amount of the order to help minimise information leakage and slippage. Trades also will print in single executions, reducing ticket costs.
In addition, Cboe Fixed Income will provide customised liquidity curation services to help participants effectively manage liquidity segmentation. Cboe expects to actively engage with customers to analyse flows, provide valuable insights to make better-informed trading decisions, and continuously optimise the trading experience for liquidity consumers and providers.
"With our footprint covering the world's largest and most liquid marketplaces, we are excited to enter the U.S. Treasuries market and further broaden Cboe's market operations on a global scale," said Ed Tilly, Chairman, President and Chief Executive Officer of Cboe Global Markets. "Fixed Income represents an untapped market for Cboe with many exciting product possibilities, and we look forward to extending our innovative technology and trading solutions to this asset class to serve an even broader base of market participants."
Cboe Fixed Income is in the process of registering with the Securities and Exchange Commission (SEC) as a government securities broker-dealer and becoming a member firm of the Financial Industry Regulatory Authority (FINRA). Participants can code to the Cboe Fixed Income technology specifications, and access to the platform is also expected to be made available through key vendors in the marketplace.
