Cboe Tweaks Perks for Top Market Wizards
Published Date: 3/18/2025
Notice
Summary
Cboe Exchange is updating the rules for Preferred Market-Makers (PMMs) to give them a clearer 60/40 share of trades and make sure they get at least one contract when they quote the best price. This change affects traders using PMM roles and starts right away, aiming to make trading fairer and smoother without extra costs. The new rounding method for partial trades also helps keep things simple and fair.
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Analyzed Economic Effects
5 provisions identified: 5 benefits, 0 costs, 0 mixed.
PMM 60/40 Participation Split
The Cboe rule change amends Rule 5.32 so Preferred Market-Makers (PMMs) receive a 60/40 participation entitlement split. This 60/40 percentage structure defines how trades are allocated under the PMM participation entitlement.
PMM Guaranteed Minimum One Contract
Under the amended Rule 5.32, a PMM that is quoting at the best price (the highest bid or lowest offer) will receive at least one contract under the participation entitlement. The rule ensures a PMM receives a minimum of one contract when it has the best quote.
Exchange Says Change May Boost Liquidity
The Commission noted the Exchange believes the PMM entitlement change could result in greater liquidity and more trading opportunities, to the benefit of investors. The Commission cited that potential benefit when waiving the 30-day delay.
New Rounding for Fractional Fills
The Exchange changed how the System rounds fractional fills that result from the PMM participation entitlement for orders of more than one contract. The new rounding method is intended to simplify and make allocation of partial fills fairer.
Rule Change Effective Immediately
The Exchange filed the change on February 25, 2025, and the Commission designated the proposed rule change to be operative upon filing, waiving the normal 30-day operative delay. Interested persons may submit comments on or before April 8, 2025.
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