Cboe FX has unveiled Cboe FX Central, a central limit order book (CLOB) that, according to the company, “rewards liquidity providers in real time for the value they provide”.
The launch is scheduled for June 29 and will cover EUR/USD, USD/JPY, Cable, AUD/USD, USD/CAD, USD/CHF and USD/CNH.
Under the new model, participants receive market data on one of three channels dynamically assigned based on the quality of liquidity they have posted to the market. The speed of market data will be real-time, 3 millisecond delay, and 10 millisecond delay and what Cboe FX views as “good” LPs, will be able to earn faster market data as a result of their liquidity contributions, rather than their market maker status or the fees they pay. Randomised order processing and a minimum quote lifespan are also embedded in the new model, thus bringing it closer to the primary venues’ methods of operating.
According to information published by Cboe FX, top of book providers will gain access to real time data, while passive orders resulting in a trade will be rewarded with real-time data “for a period of time”.
The platform has seen a steady increase in its firm liquidity over recent months, Cboe FX Central formalises that liquidity in an all-to-all, anonymous, environment.
“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,” says Bryan Harkins, head of markets at Cboe Global Markets.
“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,” adds Jonathan Weinberg, head of Cboe FX. “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. 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.”