Cboe Europe has announced the support of a range of participants for its new trading service Cboe BIDS VWAP-X.
Natan Tiefenbrun
The new offering will allow users to source and match liquidity at a forward benchmark price and is scheduled to launch on 21 October, subject to regulatory approvals.
Early adopters of the new trading service include Bernstein, BNP Paribas, BMO Capital Markets, Instinet Europe, Jefferies KCx and Virtu Financial.
“Jefferies welcome this innovation enabling us to provide incremental liquidity opportunities to our client base,” said Ben Springett, head of electronic and program trading, EMEA at Jefferies.
“VWAP crossing mechanisms can unlock liquidity that otherwise wouldn’t necessarily meet on a multilateral venue, utilising a mechanism that we have seen prove beneficial for algo performance on a range of benchmarks.”
Salvador Rodriguez, EMEA head of global execution services at Instinet Europe Limited, added: “Benchmark Crossing offers an encouraging innovation in equity market structure in EMEA that should improve the ability for algos to find high quality counterpart liquidity. The approach and implementation should allow for agency algos to trade versus multiple benchmarks at a fair price with a good balance of simplicity, as well as allowing more complex control features based on differing client interaction requirements.”
Cboe BIDS VWAP-X is being provided as a service of Cboe BIDS Europe, and will utilise BIDS’ conditional trade negotiation and execution workflow to match orders based on a standard, exchange-regulated volume weighted average price (VWAP) methodology.
Market participants will be able to submit conditional VWAP indications of interest (IOIs) into the service.
Following a potential match, users will be invited to firm-up their IOIs, and after eligible order quantities are matched a standard matching cycle will take place to calculate the interval-VWAP trade price, the firm explained.
Trades will be reported as off-book, on-exchange executions in real-time, which will then be able to be centrally cleared through Cboe Europe’s interoperable clearing model. The service will be accessible to the sell-side through FIX connectivity at launch.
“We are delighted to have secured such a strong group of initial participants to support Cboe BIDS VWAP-X and are in active discussions with numerous others who are looking to utilise this service at the earliest opportunity,” said Natan Tiefenbrun, president, North American and European equities at Cboe Global Markets.
“This demonstrates that we’ve listened to our participants to meet their needs for an exchange-regulated crossing platform to execute participative volume at an interval-based price. We’re excited to be bringing this first-of-its-kind service to the European equities market and help enhance execution outcomes for end investors.”
Chris McConville, global head of execution services and trading at KCx, added: “KCx welcomes this innovation to the European market. We believe trajectory crossing is a positive disruption to the marketplace and could provide incremental liquidity to our client base.”