Cboe expands ETP incentive scheme options for market makers

The expanded program will provide more incentive options for market makers in ETPs on Cboe BZX Exchange from 1 February.

Exchange operator Cboe Global Markets has confirmed plans to launch a new exchange-traded product (ETP) incentive scheme for market makers on 1 February.

The scheme is an extended version of its existing program, which encourages lead marker makers (LMMs) to provide liquidity in newly launched or thinly traded ETPs by awarding them a flat daily fee instead of payment based on transaction volume.

Under the new scheme, Cboe will allow LMMs on its Cboe BZX Exchange to select between the two incentive models each month on a symbol-by-symbol basis. Market makers can opt-in to receive a higher payment per share than the flat default for ETPs with an average daily volume of 1,000,000 or more shares.

“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,” said Laura Morrison, senior vice president and global head of listings at Cboe.

“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.” 

Alongside the expanded ETP incentive scheme, Cboe has been trying to bolster its offering in off-exchange trading. The markets operator recently completed the acquisition of BIDS Trading after entering into a definitive agreement in October.

Cboe said the deal would enable it to diversify its US equities offerings beyond traditional products and give it an edge in off-exchange trading.