The Chicago Board Options Exchange’s (Cboe) institutional FX arm has launched an electronic foreign exchange trading venue enabling certain institutions to enter into spot transactions with their preferred counterparties to meet their specific trading needs.

Cboe FX Point is a direct execution model that provides institutional investors with a flexible range of options including the ability to create custom, relationship-based connections. This helps simplify pricing options, including transaction and connectivity fees for clients interacting with certain liquidity providers.

An eligible participant, who meets certain criteria to apply to interact on the platform, may designate one or more Cboe FX users as Cboe FX Point takers. The chosen user may then accept or decline, by notification to Cboe FX, to interact with such Cboe FX Point market maker. Notification of executions is restricted to counterparties, minimising market impact.

Cboe FX Point offers liquidity providers different membership options, including Platinum, Gold, and Silver status, which will be assigned based on expected levels of trading volumes.

Liquidity management focus

“With the launch of Cboe FX Point we’re streamlining relationship-based trading in the FX market and allowing clients to focus on what is most important – sourcing the unique liquidity they need to achieve an optimal trading outcome,” said Bryan Harkins, Cboe’s co-head of markets.

“One of the key benefits of utilizing Cboe FX Point is that there is no technology development work for either makers or takers, which enables clients to reduce the costs and complexity of connecting to multiple counterparties.”

Mark Bruce, head of sales and strategy at Chicago-based Jump Trading, added: “The participation criteria is a great way for Cboe FX clients to identify genuine non-bank market makers, so we are proud to join Cboe FX Point at the highest level, as a Platinum Member.

“As Jump Liquidity continues to grow and focus on its direct trading business, Cboe FX Point will serve as an efficient and cost-effective way for counterparties to connect to us for their spot FX and precious metals trading.”

According to reports, liquidity management has been a key focus at Cboe FX over the past year, coupled with adding extensive analytics capabilities. During this time the platform created a liquidity management team in a bid to increase the number of matches on the venue.

Cboe’s institutional spot FX platform saw its average daily trading volumes reach US$36.5 billion in Q1 2019, while its market share hit a record high of 15.8% in the same quarter.