Cboe’s Pan-European Solution for Enhancing Retail Executions

This article was originally published by The Trade.

As Europe’s largest stock exchange by value traded, Cboe Europe is leveraging its pan-European coverage, extensive market relationships and commitment to innovation to deliver better execution outcomes for retail investors. Alex Dalley, Head of European Cash Equities, explores our new European Best Bid and Offer (EBBO) retail service, its points of differentiation and the regulatory tailwinds behind the initiative.

Cboe’s EBBO retail service is a new trading solution designed to improve execution quality for retail investors trading European stocks and Exchange Traded Funds (ETFs). This service will go live on 8 September, subject to all of the required regulatory external assessments. While we already handle retail order flow from existing participants — including retail-focused, regional and agency brokers, as well as tier-one banks — this will be our first dedicated solution for the retail community. It will enable any broker that handles retail order flow to execute those orders free of charge at or better than the EBBO.

To support this initiative, we are launching a retail liquidity provider (RLP) programme featuring highly competitive fees. The programme is designed to incentivize liquidity providers to post orders at the EBBO, exclusively accessible to retail order flow.

The service will be fully integrated into Cboe’s Lit Order Book, which offers access to over 8,000 stocks and ETFs from 18 countries across Europe, including Switzerland and the UK. This will allow retail orders to interact with liquidity from both RLPs and the broader market to ensure they have access to the best possible prices.

How does the service work?

Participation begins with brokers completing a retail order attestation form, which designates retail orders eligible for the EBBO Retail Service and free execution. When routing these orders to Cboe’s lit order book, brokers can opt-in for executions at no worse than the prevailing EBBO. These orders can then interact with quotes from both RLPs and other market participants.

If multiple quotes are available at the same price, RLP orders are prioritized. Any remaining volume can then interact with the broader lit book. Retail orders are also eligible for free execution on Cboe’s dark and periodic auctions, offering opportunities for price improvement.

What are the benefits to retail investors and other participants?

Cboe’s EBBO retail service has been designed to deliver value for participants across the trading landscape:

• Retail investors will benefit from EBBO-level pricing, zero execution fees when accessing the Cboe’s lit order books with the potential for price improvement if accessing Cboe’s dark and periodic auctions books—all within a highly transparent and regulated exchange environment.
• Retail brokers and other intermediaries handling order flow will gain access to free execution in shares and ETFs from across 18 European markets, offering a simpler and more cost-efficient solution. This initiative meets demand from the well-established retail broker trading community across Europe, and rising interest from neo-brokers – many of whom spearheaded the retail trading revolution in the US—which are arriving into the European market targeting low-cost, commission- free style platforms. Our service is purpose-built to meet the evolving needs and expectations of the retail community head-on.
• Institutional participants gain a new opportunity to interact with retail liquidity in the transparent, highly-regulated and multilateral environment of Europe’s largest exchange. We believe that bringing together diverse investor types in such settings enhances price competition and strengthens the overall process of price formation—benefiting both retail investors and the broader market.

How does Cboe’s offering compare to existing retail offerings?

Cboe Europe’s strong track record of innovation and successful delivery in cash equities has helped us build deep, trusted relationships with market participants. This service was developed in close collaboration with them, directly addressing demand for greater competition in the retail segment and a more efficient trading solution.

Cboe’s approach distinguishes itself in several key areas:

• Pan-European coverage: Our coverage across 18 markets will make it one of the most comprehensive retail execution services in Europe.
• Better lit prices: Retail customers will be able to access some of the best available lit liquidity in European equities, with our orderbooks demonstrating superior levels of market quality across many metrics, including EBBO presence, and certainty and time to fill.
• Deeper and more integrated liquidity: Retail-attested order flow will be able to interact with both dedicated retail liquidity providers and other passive liquidity on Europe’s largest exchange, creating a highly liquid and diverse order book that benefits all investors.
• Price improvement: Retail orders will also be eligible to benefit from free execution on other Cboe Europe trading mechanisms, including our dark and periodic auction order books – the leading venues of their type – offering potential price improvement opportunities.

What is the state of retail trading in Europe?

Levels of retail participation in European equity markets have historically been low, with significant variation across countries but our research indicates around 12- 14% of on-exchange volume originates from retail investors.

We anticipate a rise in European retail involvement – mirroring trends seen in other regions – supported in part by the EU’s Savings and Investments Union initiative, which aims to mobilise an estimated €13 trillion in household savings into capital markets.

Retail execution mechanisms vary significantly across Europe. The UK relies on the RSP network—an RFQ-based model—while Germany permits payment for order flow (“PFOF”), and countries like Italy see a large proportion of retail flow directed to the primary exchange. However, regulatory shifts are beginning to reshape this landscape. The EU-wide ban on PFOF from 2026, alongside restrictions on CFDs in certain jurisdictions, is driving a move toward more on-exchange retail trading.

We view these developments as positive steps toward strengthening public markets in Europe. The US (and UK) experiences—where nearly all retail trading occurs off-exchange—has segregated retail and institutional liquidity into different ecosystems, which is unhealthy for markets and investors overall. Europe has an opportunity to take a different path, drawing inspiration from markets like Canada and Australia, where on-exchange retail trading is encouraged and public markets remain robust.

How does this fit into Cboe’s broader retail strategy?

The EBBO retail service builds on Cboe’s global leadership in serving retail investors across multiple regions and asset classes, particularly in US equities and options—and we see significant potential to unlock similar growth in Europe. Retail participation is already strong on our European equities exchange, and we’ve further expanded our presence in this segment through Cboe Europe Derivatives (CEDX), our pan-European equity derivatives exchange.

With the launch of the EBBO retail service for equities, we will have an even more compelling proposition for the retail community. Through a single connection to Cboe, brokers can seamlessly access both pan-European equities and equity derivatives markets—delivering a more efficient, integrated trading experience for retail participants.

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