Cboe Submits Retail Priority Filing03.21.2019 By John D'Antona Editor, Traders Magazine
Score one for John Q Public.
In a bid to provide greater transparency into the equities market for individual investors and hopefully grab some of their orders, the Cboe has submitted a rule filing related to retail priority.
In a filing to the Securities and Exchange Commission, Bryan Harkins, shared with Traders Magazine the filing and told editor John D’Antona Jr. that the proposal will serve to benefit millions of individual investors by introducing enhanced order book priority for their orders.
“Today, approximately 43 million U.S. households hold a retirement or brokerage account and these individual investors rely on our nation’s equities markets to fund important life goals. It is therefore critical that our U.S. equities markets continue to evolve to serve this vital need of the investing public,” Harkins said. “Our proposal would provide execution priority to retail limit orders on the Cboe EDGX Exchange (EDGX), meaning that the priority for orders on EDGX would be price/display/retail/time.”
This change is designed to encourage markets that benefit individual investors, while facilitating order interaction and price discovery, consistent with the SEC’s goals of facilitating the long-term interest of individual investors, he added.
Retail priority is expected to benefit retail as follows:
– Provide superior execution quality to retail investors by increasing both the likelihood and speed with which retail investors’ non-marketable orders are executed;
– Encourage retail brokers, and/or those handling retail-attested orders, to route additional non-marketable retail order flow to EDGX, which may broaden execution opportunities for other market participants;
– Diversify the order flow market participants can interact with on EDGX, increasing order participation and contributing to more robust price formation.
“One of our top priorities at Cboe is bringing forth new ideas that add value to this ever-evolving market, like this retail priority proposal, and to help define markets that will serve all investors,” Harkins said.
As ‘Mom & Pop’ trading surges, institutions assess how to interact with the order flow.
The fund manager's strategy is to deploy its capabilities and resources through retail networks in Europe.
KBW's Kyle Voigt says a deal would be a obvious scale transaction.
The expansion grows its free offerings to almost 150 ETFs from 11 issuers.
Following Vanguard, TD waives fees on select ETFs starting June 1.