Longer Prep Time for IPO Auctions on Cboe Exchange
Published Date: 12/31/2025
Notice
Summary
Cboe BZX Exchange wants to give more time for quote-only periods during IPO auctions, especially for exchange-traded products (ETPs). This change helps traders get a better feel for new listings before trading fully starts. It mainly affects companies going public on BZX and could improve market fairness without changing costs or timing for investors.
Analyzed Economic Effects
4 provisions identified: 3 benefits, 0 costs, 1 mixed.
Optional price validation for ETP IPOs
The Exchange would let ETP issuers optionally use a price validation test during the IPO Quote-Only Period. A lead market maker (LMM) can lock an "Expected Price" and set upper/lower price bands; if the live "Indicative Price" falls outside those bands, the Quote-Only Period is automatically extended in five-second increments until the test passes (or until 9:45 a.m.).
Quote-Only timing and auction deadline
The Quote-Only Period for IPO Auctions begins at 8:00 a.m. ET. Under the proposed ETP process, the IPO Auction generally must occur by 9:45 a.m. ET at the latest; if the price validation test fails the Quote-Only Period may extend in five-second increments up to 9:45 a.m. (or end earlier if conditions are met). Existing automatic extension for price volatility (Indicative Price moving the greater of 10% or $0.50 in the 15 seconds prior to the auction) remains applicable.
Price band limits and defaults set
For the ETP price validation test the LMM may choose upper and lower price bands in $0.01 increments up to a maximum of $0.50. If the LMM does not select bands by 9:30 a.m., the Exchange will apply default upper and lower bands of $0.10.
ETP opt-out and corporate IPO differences
The proposal lets an ETP issuer opt out of the price validation test; if the issuer opts out, the Quote-Only Period would only be extended for price volatility (the greater of 10% or $0.50 move in the last 15 seconds). The Exchange also separates rules so corporate BZX-listed IPOs retain the underwriter-extension provision that is inapplicable to ETP IPOs.
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