SEC Approves Cboe EDGX Retail Price Improvement Program with Sub-Penny Pricing Exemption
AI-generated summary for informational purposes only. Not legal advice. See the original source for the authoritative text.
The SEC granted accelerated approval to Cboe EDGX's proposed rule change establishing a Retail Price Improvement Program. The program allows Retail Member Organizations to submit Retail Orders (Type 1: IOC only interacting with price-improving liquidity; Type 2: flexible TIF that can post or route) and permits any User to submit non-displayed Retail Price Improvement (RPI) Orders priced at least $0.001 better than the Protected NBBO. RPI Orders can be limit orders in $0.001 increments, MidPoint Peg, or Primary Pegged, but only interact with incoming Retail Orders and cannot remove resting Retail Orders. The Exchange will broadcast a Retail Liquidity Identifier when qualifying RPI interest exists. The order also approves amendments clarifying the behavior of Non-Displayed orders regarding posting, ranking, and execution in locked or crossed markets. A limited exemption from Rule 612 of Regulation NMS (Sub-Penny Rule) was granted to permit the $0.001 pricing.
AI-generated summary. May contain errors. Refer to official sources for legal decisions.
Key Changes
- Introduces Retail Price Improvement (RPI) Orders executable only against incoming Retail Orders at least $0.001 better than Protected NBBO
- Creates two types of Retail Orders: Type 1 (IOC, interacts only with price-improving liquidity) and Type 2 (flexible TIF, can post to book or route)
- Allows RPI Orders in $0.001 increments, as MidPoint Peg Orders, or Primary Pegged Orders
+ 3 more changes with Pro
Obligations
What this law requires
Cboe EDGX Exchange must modify Rule 11.21 to establish a Retail Price Improvement Program allowing Retail Member Organizations to submit Type 1 (IOC only) and Type 2 (flexible TIF) Retail Orders
Cboe EDGX Exchange must ensure RPI Orders are non-displayed and priced at least $0.001 better than the Protected NBBO to be executable
Cboe EDGX Exchange must restrict RPI Orders to interact only with incoming Retail Orders and prohibit RPI Orders from removing resting Retail Orders from the EDGX Book
Cboe EDGX Exchange must rank RPI Orders by price then time of entry into the System and execute in price/time priority accordance with Rule 11.9
Cboe EDGX Exchange must disseminate a Retail Liquidity Identifier through proprietary data feeds or Consolidated Quotation System when an RPI Order with ranked price at least $0.001 better than Protected NBBO is available