Cboe Tweaks Rewards for Stock Market Liquidity Providers
Published Date: 8/18/2025
Notice
Summary
Cboe Exchange is updating its Lead Market-Maker (LMM) incentive programs by tweaking the rules about how tight their quotes must be and how big their trades need to be. They’re also adjusting the money rewards (rebates) LMMs get, either up or down, to keep things fair and competitive. These changes take effect right away and aim to make the market smoother and more efficient for traders.
Analyzed Economic Effects
5 provisions identified: 2 benefits, 1 costs, 2 mixed.
VIX and VIXW Monthly Rebate Changes
If you are a Trading Permit Holder (TPH) with a Lead Market-Maker (LMM) appointment for GTH VIX/VIXW, the Exchange proposes that an LMM that posts continuous electronic quotes meeting the heightened VIX/VIXW quoting standards in at least 95% of each series 90% of the time in a month would receive $30,000 for VIX and $5,000 for VIXW (pro-rated if appointment begins or ends mid-month). The GTH quoting window is from 7:15 p.m. CST to 8:25 a.m. CST the next day.
MBTX Rebate Cut; Contract Credit Kept
If you are an LMM appointed to the RTH MBTX/MBTXW program and meet the program's heightened quoting standards in at least 85% of MBTX series 85% of the time in a month, the monthly rebate is proposed to decrease from $10,000 to $5,000 (pro-rated if appointment begins or ends mid-month). The program continues to provide a $0.25 per-contract credit applied to MBTX contracts executed in Market-Maker capacity during RTH.
New Heightened Quoting Standards
The Exchange proposes new heightened quoting standards (specific minimum quote widths and sizes) for LMM Incentive Programs covering VIX, SPX/SPXW (GTH1 and GTH2), XSP (GTH1 and GTH2), MBTX, CBTX, and SPEQX. The filing states that the proposals generally adopt tighter widths for VIX, SPX/SPXW, MBTX, and SPEQX, and generally wider widths for XSP and CBTX, with size changes for MBTX, CBTX, and SPEQX.
Exchange Says Markets Should Tighten Spreads
The Exchange states it believes the amended LMM Incentive Programs will encourage LMMs to provide more liquidity, which the Exchange says can produce tighter spreads, increased trading opportunities, and enhanced price discovery that benefit market participants. The Exchange frames these market-quality benefits as applicable to trading in the affected products during the relevant trading sessions (RTH or GTH).
Clarification On Quote Aggregation (Footnote 53)
The Exchange proposes to add Footnote 53 stating that, for LMM Incentive Programs, an LMM's continuous electronic quotes across all Executing Firm IDs (EFIDs) will be aggregated when calculating whether the LMM met monthly heightened quoting standards, and that adjustments will be made for trading halts and abbreviated sessions. The Exchange says this clarification will not result in practical changes to calculations but will reduce potential confusion.
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