Cboe Boosts Deals on Penny Stocks: Retail Wins Tiny Price Wars
Published Date: 3/20/2025
Notice
Summary
Cboe BYX Exchange is upgrading its Retail Price Improvement (RPI) program by adding a new Enhanced RPI Order and including stocks priced under $1.00. This change helps everyday investors get better prices when buying or selling these cheaper stocks. The update kicks in soon after approval and aims to save money for retail traders by boosting price improvements.
Analyzed Economic Effects
4 provisions identified: 4 benefits, 0 costs, 0 mixed.
New Enhanced RPI Order Type
The Exchange will add an "Enhanced RPI Order" that lets liquidity providers post a limit order with a Step-Up Range so they can "step up" their price to give greater price improvement and gain execution priority against incoming retail orders. The rule says Enhanced RPI Orders generally are expected to provide $0.01 of price improvement to gain priority, but the minimum required improvement may vary between $0.001 and $0.01.
Program Expanded to Sub-$1 Stocks
The Retail Price Improvement program will be expanded to include securities priced below $1.00. For securities below $1.00, RPI and Step-Up Range instructions may be priced in $0.0001 increments and must provide at least $0.0001 of improvement to be eligible to execute.
Minimum Price-Improvement Execution Rules
RPI Orders and Enhanced RPI Orders will be ineligible to execute at prices equal to or worse than the Protected NBB or Protected NBO. For securities priced at or above $1.00, an RPI Order must be at least $0.001 better than the Protected NBB/NBO (and may be entered in $0.001 increments). For securities below $1.00, an RPI Order must be at least $0.0001 better (and may be entered in $0.0001 increments). Orders that are ineligible will remain on the BYX Book and can become eligible later if the Protected NBBO moves.
Midpoint Pegging Allowed for Retail Orders
Retail Orders may now be submitted with an optional Mid-Point Peg instruction and all Retail Orders (including Mid-Point Peg) must use an Immediate-or-Cancel (IOC) time-in-force. The Mid-Point Peg option lets a Retail Order peg to the NBBO midpoint so it can guarantee midpoint or better pricing when interacting with RPI interest.
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