The Cboe Global Markets network provides significant choice for its diverse trading clientele by operating four distinct U.S.-listed cash equity options exchanges. This includes the largest options marketplace in the United States, the Cboe Options Exchange.
The Four Cboe Options Exchanges
Each exchange under the Cboe umbrella operates with a unique market model tailored to different trading styles and participant needs.
Cboe Options Exchange (C1)
- Market Model: Hybrid, Classic Model
- Trading Format: Combines open outcry trading floors with electronic execution
- This is the legal entity named Cboe Exchange, Inc., often referred to as Cboe Options or Cboe Options Exchange for marketing purposes.
Cboe C2 Options Exchange
- Market Model: Pro-Rata, Maker-Taker Model
- Trading Format: Fully electronic exchange
Cboe BZX Options Exchange
- Market Model: Price-Time, Maker-Taker Model
- Trading Format: Fully electronic exchange
Cboe EDGX Options Exchange
- Market Model: Classic Pro-Rata/Customer Priority/Designated Primary Market Maker (DMM) Model
- Trading Format: Fully electronic exchange
This multi-exchange structure allows traders and institutional firms to select a venue that best aligns with their specific strategies, whether they prioritize price discovery, speed, or specific order allocation methods.
Key Features and Market Structure
The existence of multiple exchanges under one parent company fosters a competitive environment that encourages innovation and efficiency. The hybrid model of the flagship Cboe Options Exchange offers a unique combination of electronic speed and the liquidity provided by open outcry trading, which some participants value for complex orders or large block trades.
The all-electronic exchanges—C2, BZX, and EDGX—cater to the modern, high-frequency trading ecosystem. Their differing models (Pro-Rata vs. Price-Time) provide alternatives for how orders are matched and how liquidity providers are incentivized through maker-taker fee schedules. For a deeper look into how different trading models can impact your strategy, you can 👉 explore advanced exchange models.
Recent Market Developments
Staying informed about exchange announcements and regulatory updates is crucial for active participants. Recent notices often involve changes to market maker appointments, new product listings, and updates to trading technology.
For instance, recent updates have included the re-allocation of Designated Primary Market Maker (DPM) appointments between major financial institutions and the introduction of new quoting capabilities for complex orders. The exchanges also regularly update their "Penny Program," which expands the list of options classes that trade in penny increments, improving granularity and potentially reducing costs for traders.
These continuous developments highlight the dynamic nature of the options marketplace and the importance of having access to reliable information. 👉 Access real-time market updates.
Frequently Asked Questions
What is the difference between the four Cboe options exchanges?
The primary differences lie in their market structure and order matching models. Cboe Options (C1) uses a hybrid classic model with a trading floor. C2 employs a pro-rata maker-taker model, BZX uses a price-time maker-taker model, and EDGX uses a classic pro-rata model with customer priority. All except C1 are fully electronic.
Why does Cboe operate multiple options exchanges?
Operating multiple exchanges allows Cboe to cater to a wider range of trading strategies and client preferences. It provides competition within its own ecosystem, encourages innovation, and offers traders choice in execution venue, which can lead to better overall prices and liquidity.
What is a Designated Primary Market Maker (DPM)?
A DPM is a market maker with significant obligations to provide liquidity in a specific set of option classes. They are responsible for maintaining fair and orderly markets by quoting continuous bids and asks, which helps ensure liquidity is available for traders.
How do I find fee schedules and rulebooks for these exchanges?
All official fee schedules, rulebooks, technical specifications, and holiday calendars are published directly by Cboe Global Markets. It is essential to consult the most recent versions directly from the source to ensure accuracy for trading and compliance.
What are 'Weeklys' options?
'Weeklys' are short-term options contracts that expire on a weekly basis, as opposed to the standard monthly expiration. They offer traders more flexibility to take positions based on near-term market events or earnings announcements. The list of available Weeklys is updated regularly by the exchange.
Where can I find the most active options or market volume data?
Cboe and various financial data vendors provide real-time and historical data on market volume, including lists of the most actively traded options contracts. This data is vital for gauging market sentiment and liquidity.