Cboe Europe, a division of Cboe Global Markets, Inc, announced today that it plans to launch Cboe BIDS VWAP-X, a new trading service that allows participants to source and match liquidity to a future reference price.
This service is scheduled to launch in early Q4 2024, subject to regulatory approvals.
This exchange-operated traversal service for European equities will be provided as a service of Cboe BIDS Europe. Cboe BIDS VWAP-X is designed to use BIDS’ proven trading and execution workflow to match orders based on a standard exchange-adjusted volume weighted average price (VWAP) methodology.
Natan Tiefenbrun, President, North American and European Equities, Cboe Global Markets, said:
“As with all our trading innovations, this new service is driven by industry demand with the aim of enabling end investors to achieve better execution results. We believe that the secular growth in systematic and passive investing has led to an increase in strategic equity trading that typically seeks to achieve an average price over a set period of time.
This new service enables physical buyers and sellers to cross their participatory order flow at a VWAP price without incurring margin costs. Complementing the existing suite of order book offerings, Cboe BIDS VWAP-X provides users with a venue-based solution for matching planned volume based on an Exchange-regulated VWAP methodology.”
Stephen Berte, President, BIDS Trading, said:
“Cboe BIDS VWAP-X demonstrates our commitment to innovation and developing new products that meet the evolving needs of our clients and the equity market. We are excited that this new service will help make BIDS an even more integral part of clients’ toolkit for accessing the widest possible range of liquidity in Europe.”
Cboe BIDS VWAP-X will allow market participants to submit conditional VWAP indications of interest (IOI) to the service. Once a potential match is found, companies will be asked to confirm their IOIs and once the eligible order quantities are matched a standard matching cycle will take place to calculate the VWAP interval trade price. Trades will be reported as off-the-shelf executions on the exchange in real time, allowing them to be cleared centrally through Cboe Europe’s interoperable clearing model.
The service will benefit from BIDS’ established protections against information leakage surrounding IOIs, including disclosure and interactions controlled by customizable tools and counterparty scoring and filtering based on past trading behavior.
At launch, the service will be accessible to sale participants via FIX connectivity. Customer trials will begin in Q3 2024, ahead of launch in early Q4 2024, subject to regulatory approvals.