Cboe Global Markets

Cboe Advocates for Targeted Equity Market Structure Reform

Adam Inzirillo
August 19, 2021

Adam Inzirillo, Senior Vice President, Head of North American Equities, recently wrote a note to customers detailing highlights from a paper written by Cboe's Market Policy and Government Affairs team regarding targeted equity market structure reform. Read his note below.

I wanted to share a paper our Market Policy and Government Affairs (MPGA) team recently published, which outlines Cboe’s perspective on areas for increased efficiency and advocates for creating greater transparency and investor choice by modernizing certain rules and regulations that level the playing field between on and off exchange market centers. The paper outlines five key recommendations, highlighting that certain current rules and regulations in the U.S. equities market are outdated and need to be updated to fully align with modern markets.

  • Modest Tick Size Reform – A more granular minimum increment should be established for a subset of national market system stocks in order to enhance and support price discovery and competition to the benefit of all investors.
  • Enhance Best Execution – In connection with any tick size reform, the duty of best execution should be reviewed and potentially clarified in order to increase transparency and consistency for investors.
  • Limit Order Protections – Limit order display requirements should be revisited to better reflect today’s stock prices, which enhance protection of investor’s limit orders, increase transparency and bolster price formation.
  • Improve Execution Quality Reports –The publication of accessible and targeted execution quality information by broker-dealers should be pursued to further transparency and choice for investors.
  • Shorten the Settlement Cycle – The settlement cycle should be shortened from T+2 to T+1.

Overall, Cboe remains steadfast in its approach to equities market reform: do no harm. At Cboe, we believe any changes to the U.S. market structure should meaningfully benefit end-users without harming the strong framework that already exists.

I am sharing this with you today both in the interest of transparency, and in the hope that this sparks a conversation that leads to meaningful changes that benefit all market participants. We welcome your thoughts and look forward to your feedback on our recommendations.

Read Cboe’s Vision: Targeted Equity Market Structure Improvements for more details on the Cboe MPGA team’s recommendations.