Cboe launches FX central limit order book

Liquidity providers will be rewarded with faster access to market data when quoting at the best bid or offer via the new FX central limit order book from Cboe.

Cboe Global Markets has confirmed plans to launch a new central limit order book for FX trading in a move that will see the exchange group compete with the likes of Refinitiv and CME Group.

Known as Cboe FX Central, the platform has been designed as an all-to-all market with firm liquidity for instant executions. It will initially offer trading in the most actively traded pairs in spot FX, and will go live on 29 June.

“We believe there is a unique opportunity to improve upon the two central limit order books that currently exist in the FX market by providing a new central limit order book built on great technology and a unique market model designed to incentivise and democratise FX liquidity provision and market data,” said Bryan Harkins, head of markets at Cboe Global Markets.

Cboe added that platform extends the traditional central limit order book model by rewarding liquidity providers with faster market data when their liquidity is at or close to the best bid or offer. Order matching on Cboe FX Central will also be consistent with other central limit order books in the FX market, with all orders subject to a minimum quote life of 25 milliseconds and executed on a price/time priority.

Upon launch, Cboe will compete with other FX central limit order book operators such as Refinitiv, which is in the process of being acquired by the London Stock Exchange for $27 billion, as well as CME Group, which inherited the EBS FX platform following its £3.9 billion acquisition of NEX Group in 2018.

“With no average daily volume requirements, Cboe FX Central provides a more democratic model to access real-time data than the current primary markets where real-time data is provided to those that execute a certain monthly volume threshold. Any market participant on Cboe FX Central, regardless of the size or volume of its trading activity, is able to earn faster market data on Cboe FX Central on an order-by-order basis,” said Jonathan Weinberg, head of Cboe FX. “Additionally, this model incentivises liquidity providers to improve the quality and depth of our order book, benefitting all market participants by their receiving better prices for their orders.”

The institutional foreign exchange business at Cboe, Cboe FX, reported average daily value traded of $43.3 billion in the first quarter this year, boosting its market share to 15.7%. Cboe FX’s market share also grew to a record 17.3% in May, surpassing the prior record set in December of 16.6%.