Cboe BYX Lets Retail Traders Play Principal – With Strings Attached
Published Date: 3/13/2026
Notice
Summary
Cboe BYX Exchange is updating its rules to let Retail Member Organizations enter retail orders as principals, as long as they follow new requirements. These organizations must have policies to prove they’re playing by the rules and be ready to show proof if asked. This change is effective immediately and aims to make trading smoother for retail investors without extra costs.
Analyzed Economic Effects
5 provisions identified: 4 benefits, 1 costs, 0 mixed.
RMOs May Enter Retail Orders as Principal
Retail Member Organizations (RMOs) may now enter Retail Orders onto BYX in a principal capacity so they can provide post-execution price improvement to their retail customers. The Exchange gives an example where an on-Exchange execution at $10.005 is later allocated to the retail customer at $10.01 (a $0.005 improvement).
Retail Price Improvement Minimums
Under BYX's Retail Price Improvement (RPI) Program, RPI and Enhanced RPI Orders must be priced at least $0.001 better than the Protected NBBO for securities priced at or above $1.00, and at least $0.0001 better for securities priced below $1.00. These sub‑penny thresholds determine which liquidity providers are eligible to trade against incoming Retail Orders.
Timed Allocation Requirement Protects Customers
When an RMO enters a Retail Order in a principal capacity, the total number of shares executed as principal must be fully allocated to the underlying retail customer(s) in a consistent manner and within 60 seconds of execution. This allocation requirement applies to principal-mode Retail Orders entered onto the Exchange.
RMOs Must Maintain Policies and Produce Records
RMOs that enter Retail Orders in a principal capacity must have policies and procedures reasonably designed to ensure compliance with the new Rule 11.24(h) and must be able to produce documentation evidencing compliance upon the Exchange's request. The existing RMO application, attestation, and annual representations for routed Retail Orders remain in place.
Off‑Exchange Reporting to TRF for Adjusted Trades
Principal-mode Retail Order executions that are allocated to retail customers at a different (better) price will be reported to the Transaction Reporting Facility (TRF) consistent with FINRA off-exchange reporting rules and guidance. The Exchange states these off‑exchange customer price adjustment transactions will follow FINRA reporting practices.
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