Cboe Europe is set to launch Cboe BIDS VWAP-X. The trading service, which allows users to source and match liquidity at a forward benchmark price, is expected to be released in early Q4 2024.
Cboe BIDS VWAP-X will be part of Cboe’s block trading platform Cboe BIDS Europe, taking the service’s conditional trade negotiation and execution workflow to match orders using an exchange-regulated volume weighted average price (VWAP) methodology.
Clients will be able to submit conditional VWAP indications of interest (IOIs) to the service, with BIDS providing protection against information leakage. These IOIs can then be ‘firmed up’ once a potential match is found, and after eligible order quantities are matched, the interval-VWAP trade price will be calculated on a standard matching cycle.
Trades completed will be recorded as off-book, on-exchange executions in real-time. This will allow them to be centrally cleared through Cboe Europe’s interoperable clearing model.
Initially available to sell-side participants through FIX connectivity, Cboe plans to launch the service in Q4 2024, subject to regulatory approvals. Customer testing will begin in Q3, 2024.
Commenting on the announcement, Natan Tiefenbrun, president of North American and European equities at Cboe Global Markets, said: “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’ toolkit for accessing the widest possible range of liquidity in Europe.”
©Markets Media Europe 2024
