The Chicago Board Options Exchange (CBOE) announced plans to launch a separate new options exchange to compliment its existing hybrid-trading marketplace. The new exchange, dubbed C2, will have a separate board of directors, exchange license, access and fee structure, rules, connectivity and systems architecture. It will be capable of listing and trading all CBOE products using multiple market models and pricing structures.
“The ability to offer different execution venues under a single exchange holding company enables these combined entities to appeal to option users across the entire customer spectrum,” said CBOE Chairman William J. Brodsky in a membership circular.
The wave of exchange consolidation has allowed competitors to operate multiple venues and given rise to the maker-taker model, which compensates market makers for providing liquidity and charges customers, the liquidity takers. That model has been lucrative for exchanges and market makers dealing with tighter spreads that have resulted from the penny pilot pricing model.