Cboe to introduce new incentive program for ETP lead market makers

Cboe Global Markets, Inc. (Cboe), a market operator and global trading solutions provider, announced its plans to introduce a new incentive program that aims to help further enhance market quality for primarily listed exchange-traded products (ETPs) on Cboe BZX Exchange, beginning Monday, February 1, subject to regulatory review.

Under the new incentive program, Cboe plans to allow LMMs on its BZX Exchange, the 2nd largest primary listings exchange for ETPs in the U.S., to select between two incentive models on a symbol by symbol basis each month. LMMs are expected to be able to opt-in to an outsized rebate per share from the default current flat dollar stipend for ETPs that have a consolidated average daily volume of 1,000,000 shares or greater.

Laura Morrison, Senior Vice President and Global Head of Listings at Cboe, said: "We have received extremely positive industry feedback on our LMM incentive offerings, and based on further dialogue with our family of issuers and market makers, we are pleased to enhance our incentive program in an effort to help provide deeper liquidity for listed ETPs. Designed to benefit all market participants, our new incentive program will offer LMMs greater choice and flexibility to support trading in issuers' ETPs, which we believe will result in better market quality for investors."

Cboe BZX Exchange offers some of the most stringent LMM quoting obligations and competitive incentives available on the market, designed to narrow spreads and bolster liquidity across the ETP ecosystem. Cboe believes that this focus on market quality has helped Cboe BZX Exchange capture 36% of all new ETP launches in the market in 2020.