North American Equities Year in Review

In 2024, Cboe’s North American Equities team evolved with changing market dynamics and delivered innovative solutions to meet the needs of customers in the U.S. and Canada. Delivering customer-driven solutions and providing insightful analysis were top priorities for the team and will continue to be at the forefront as we head into 2025.

Read a detailed review of 2024 accomplishments for Cboe’s U.S. and Canadian equities businesses below.

U.S. Equities

In 2024, the U.S. equities market reacted and responded to changes in the U.S. and beyond its borders, driving increased competition among lit exchanges and off-exchange players and providing opportunities to challenge the boundaries of our existing U.S. market structure. Throughout the year, Cboe evolved with the ever-changing U.S. equities regulatory landscape to meet the needs of market participants.

The North American Equities team delivered objective market analysis throughout 2024, alongside new product announcements to help our valued customers improve their trading experience.

Read more about our accomplishments in 2024 and plans for 2025 on Cboe Insights.

Market Trends and Observations

Continued Strength in Equities Volume

Over the past two years, U.S. equities volumes remained elevated while displaying steady growth, indicative of growing interest and global access to the U.S. equities market. In 2024, average daily volume (ADV) increased 10.2% year-over-year to 12.2 billion shares. U.S. equities notional volumes have followed a similar trend, with U.S. equities average daily notional value (ADNV) increasing 18.1% year-over-year to $607.7 billion. U.S. equity markets reached a 2024 peak of 23.76 billion shares and $1.41 trillion notional value on December 20, 2024.

Growth in TRF Market Share

The increase in equities Total Consolidated Volume (TCV) over the past two years has been accompanied by fragmentation of the marketplace between different venues and increased trading on off-exchange venues. In 2024, Trade Reporting Facility (TRF) market share increased 300 basis points (bps) to 47% of TCV. Through November 2024 YTD,17.0% of TRF volume occurred on Alternative Trading System (ATS) platforms and 83.0% through Principal Dealers. Subdollar securities liquidity is the biggest driver of off-exchange trading, with TRF subdollar securities market share increasing 1.1% year-over-year. Furthermore, 33.1% of total TRF volume for the year was composed of securities priced below $5 in value.

Increase in Retail Volume

Retail trading volumes increased steadily in 2024. Cboe’s exchanges have benefited from the growing interest in retail trading. Retail volume on Cboe’s exchanges increased 19.8% year-over-year to 3.2% of TCV. Specifically, Cboe EDGX® Equities Exchange (EDGX) retail volume increased 19.1% year-over-year, representing 27.5% of EDGX volume. 

In November 2024, we published a two-part market analysis, “Growth in U.S. Equities Volumes and Rise of Retail” and “U.S. Equities Volume Drivers: Retail Trading in Subdollar Securities” which highlight the role of subdollar trading as a portion of retail volume. Subdollar retail volume on Cboe’s exchanges has grown steadily, with subdollar retail ADV increasing 13.4% year-over-year to 125.4 million in 2024.

U.S. Equities Product Updates

Dedicated Cores

Cboe introduced Cboe Dedicated Cores on all four U.S. equities exchanges, beginning with Cboe EDGA® Equities Exchange (EDGA). Cboe Dedicated Cores is a new optional service that allows Members and Sponsored Access Participants to host their specific order entry ports on their own dedicated CPU core(s). This service has reduced latency, enhanced throughput and improved customer workflow efficiency through the utilization of the entire processing power of a CPU core. Following a successful launch, Cboe continued to meet demand through increases to its maximum allowable quantity of Dedicated Cores for each of its exchanges from 20 to 120 for Members and from 8 to 35 for Sponsored Access Participants.

Timestamping Reports

Cboe Timestamping Service provides market participants with timestamp information for orders and cancelations. Timestamping Service reports provide numerous timestamps relating to the message lifecycle to help market participants better interact on Cboe’s exchanges. Also included in the Timestamping Reports are Missed Liquidity subsections, which help market participants fine-tune their aggressive strategies, and Late Cancel subsections, which help liquidity adders potentially mitigate adverse market moves.

EDGA Fee Structure

In November Cboe transitioned its EDGA Equities Exchange from an inverted fee model to a maker-taker fee model with no volume-based tiers. Cboe’s transition of EDGA from inverted to maker-taker has resulted in an increase in hidden ADV on the venue, specifically driven by a surge in midpoint adders. According to Cboe Internal Data, hidden ADV increased by 21.2% to 32.8 million shares month-over-month, while midpoint adding ADV increased 18.3% to 32.6 million shares. With these increases, EDGA’s percentage of market share is composed of 33.2% percent midpoint volume, up 161.1% from 12.7% midpoint prior to the fee model transition in 2024.

Cboe Premium Products

Retail Price Improvement

Retail Price Improvement (RPI) on Cboe’s BYX® Equities Exchange (BYX) grew 26.1% year-over-year, with a total of 417.1 million RPI shares executed. RPI enables retail members to obtain price improvement (PI) in $0.001 increments better than the National Best Bid or Offer (NBBO). Retail orders also offer an opportunity for earning enhanced rebates when interacting with price-improving orders. This can result in a retail customer receiving meaningful price improvement from both the price improvement executions in $0.001 increments as well as from the enhanced rebates.

RPI ADV increased steadily during the latter half of 2024, with Q4 ADV growing 123.4% year-over-year. This increase was driven by steady growth in Tape B and Tape C RPI volume, which grew 105.7% and 147.3% year-over-year, respectively.

Despite growth in RPI usage, there remains significant retail missed opportunity on BYX, with an average of 97 million shares of marketable retail orders that could have received RPI per day in 2024. This highlights a significant stream of retail order flow through BYX seeking price improvement from liquidity providers exclusively positioned to execute against retail-attested order flow. Retail orders can also receive price improvement from other hidden liquidity in addition to liquidity-providing RPI orders.

In May 2024, we published “Retail Price Improvement Provides Unique Opportunities for Retail Investors and Liquidity Providers,” which analyzed retail missed opportunities while examining the benefits and opportunities of interacting with retail orders through the RPI programs. Overall, Cboe's RPI program offers significant advantages to liquidity providers that choose to submit RPI Orders that interact with retail orders, as well as providing retail orders the benefit of price-improved executions. 

Quote Depletion Protection

Quote Depletion Protection (QDP), an optional instruction that market participants can utilize with Midpoint Discretionary Orders (MDOs), disables the discretionary range of MDOs for a short period of time to prevent the execution of trades at prices more aggressive than their ranked price. QDP provides investors with an additional trading tool to protect against such adverse selection risk and enhance trading outcomes when using MDOs. Available on Cboe’s EDGA and EDGX exchanges, QDP ADV in 2024 was 4.9 million shares on EDGA and 19.7 million shares on EDGX in 2024 according to Cboe Internal Data.

Periodic Auctions

Periodic Auctions (PA) on Cboe’s BYX exchange offer an on-exchange model for block-sized liquidity seamlessly integrated into the continuous book that competes with various off-exchange solutions. PA offers enhanced trade outcomes, with 43.7% of PA Only shares executing at midpoint during the year according to Cboe Internal Data. In addition, 60.6% of PA Eligible shares executed at midpoint in periodic auctions during the year according to Cboe Internal Data. We anticipate that PA usage will continue to grow in 2025 as clients continue to leverage and extract the value of the product on-exchange.

What’s Next in 2025?

Tick Sizes, Access Fees, and Transparency of Better Priced Orders

On September 18, 2024, the Securities and Exchange Commission (SEC) approved proposed amendments affecting tick sizes, access fees and transparency of better priced orders. The approved amendments will establish a second minimum tick size, or price increment, for securities priced above $1 and reduce the access fee caps as outlined by Rule 610 of Regulation NMS. Exchanges will be required to ensure that all fees and rebates are determinable at the time of trade execution. The amendments will also accelerate the implementation time for round lot definitions and odd-lot information previously adopted as part of the Market Data Infrastructure Rules. Odd-lot order information will be disseminated by the SIPs and will contain a new data element that identifies the best odd lot orders to buy and sell. Read the fact sheet here.

On December 12, 2024, the SEC granted a motion to stay the effect of the changes made affecting tick sizes and access fees. The SEC’s granting of the stay did not impact the implementation of round lot sizes, odd lots, and the transparency of fees at the time of transactions. As such, these elements of the final rule will proceed as scheduled. Read the full motion here.

CT Plan

On November 20, 2024, the SEC approved the CT Plan, which will modify the existing equity market data system, consolidating the UTP Plan and the CTA Plans into a single consolidated national market system plan. This consolidated plan will, amongst other things, govern and regulate the dissemination of equity market data for NMS products, unifying the trade and quote management of Tape A, Tape B and Tape C.

New Products

Aggregate Credit Risk Checks

In 2025, Cboe will offer Aggregate Credit Risk Checks, which include the Aggregate Gross Credit Exposure Limit and the Aggregate Net Credit Exposure Limit, allowing Members and Clearing Members to include additional risk settings that enable the exchange to take automatic action if a Member reaches its designated limit. The new risk checks will aggregate trading activity across ports for the same MPIDs and Risk Group IDs and will incorporate both executed and open orders. These risk settings will first be made available on EDGA at the end of January, while the settings will be made available on EDGX, BYX and BZX® beginning in February.

Cboe Market Close

Cboe Market Close (CMC) is a cost-effective alternative to primary market closing auctions and off-exchange venues for execution of Market-On-Close (MOC) orders. Beginning at the end of January, Cboe will implement additional CMC MOC cut-off times. In addition to the existing cut-off time of 3:49 p.m. ET, the new times of 3:15 p.m. ET, 3:30 p.m. ET and 3:54 p.m. ET (Nasdaq only) will enable participants to execute at the official closing price.

Enhanced RPI

Cboe plans to submit an SEC proposal requesting the addition of an Enhanced Retail Price Improvement (ERPI) order type to the RPI Program. Like standard RPI orders, ERPI orders consist of non-displayed interest on the exchange that is eligible to execute against contra-side retail orders in $0.001 increments and is ranked at its limit price. However, an ERPI order is required to include a step-up range (maximum execution price for buy orders and minimum execution price for sell orders) at which the ERPI order is willing to execute. As a result, ERPI orders will allow retail liquidity providers to post orders at a specific limit price, but at the same time be positioned to earn price priority by providing a meaningful amount of price improvement as compared to other resting orders on the BYX book, pending SEC approval.

Looking Ahead to 2025

In 2025, we will continue to build upon the momentum started last year by expanding our innovative offerings and deepening our analysis of market trends. We hope to help you, our valued customers, make more informed trading decisions and enhance the overall equities markets.

Thank you for your trust and insightful feedback. We value your business and will strive to continue delivering innovative solutions in 2025. As always, please contact a member of our team with questions.

Canadian Equities

2024 was a busy and exciting year for Cboe Canada. Cboe’s North American Equities team has continued to evolve and respond to the changing equities landscape in 2024 and has remained dedicated to analyzing how these changes impact investors and sharing potential solutions. As a result, Cboe Canada saw tremendous growth throughout the year and hit record highs in Cboe BIDS Canada, Exchange Traded Funds (ETFs) and Canadian Depositary Receipts (CDRs).

The increase in Conditional order usage was one of the main drivers of growth in Canada, and as a result, Cboe BIDS Canada saw record numbers in total volume and notional value traded.

Additionally, Cboe’s Listings business grew in Canada last year, with a total of 114 new listings, including 87 new or transferred ETFs and 18 new CDRs, further improving liquidity for the growing Canadian equities market.

The migration of Cboe Canada’s NEO-L, NEO-N and NEO-D Trading Books (or “markets”) to our proprietary technology platform, Cboe TitaniumSM (Cboe TiSM), began in 2024 and will be complete in 2025, bringing all Cboe exchanges together on one global network. With a unified platform (given the successful migration of Cboe Canada’s MATCHNow market to Cboe Ti in 2022), Cboe Canada can innovate, integrate and grow while creating more efficiency for customers with a more user-friendly platform. The pending Cboe Canada migration is set to be completed by March 3, 2025.

This year, we also continued to provide timely, objective market analysis and new product enhancements to help our customers improve their trading experience. Read more about our work in 2024 and our plans for 2025 on Cboe Insights. 

Overall Market Structure

As Cboe’s Canadian business grows, we aim to leverage the infrastructure, market expertise and innovative mindset Cboe is known for, enabling Canadian investors to pursue global growth opportunities through a holistic equity offering with market data, access services and listings.  

Cboe Canada’s four markets, NEO-L, NEO-D, NEO-N and MATCHNow, each fill different needs. The overall market share across all four markets remained steady in 2024, with a slight decrease of -2.1 basis points since 2023.

The overall Canadian equities market saw peak values in fourth-quarter 2024 as average daily volumes (ADV) and average daily notional values (ADNV) hit 1.1 billion shares and $22.7 billion, respectively. ADV rose 18.9% and ADNV rose 29.2% between fourth-quarter 2023 and fourth-quarter 2024.

There was also a steady increase in total dark market share in Canada as the pure dark market grew +64.8 basis points in third-quarter 2024 from first-quarter 2023. The pure dark market includes the pure dark pools: NEO-D, MATCHNow, Nasdaq CXD, Liquidnet, Instinet and TSX Alpha Dark. The increase in the pure dark market can be partially attributed to an increase in Conditionals trading throughout 2024, evidenced by record trading on Cboe BIDS Canada. Additionally, Cboe BIDS Canada’s MATCHNow market share grew +454.6 basis points between first-quarter 2023 and third-quarter 2024 as Conditionals become a larger sector of the pure dark market.

Cboe BIDS Canada

Block trading is on the rise in Canada, and Cboe BIDS Canada is now the leading block trading platform in the country with over 80% market share. As of December 2024, block trading constitutes over 25% of the total Canadian market on a volume basis and over 45% on a notional basis.1

Conditionals trading in Cboe BIDS Canada continued to grow in 2024, reaching a high point of more than $2.46 billion CAD notional value in October 2024 and representing more than 84.0 million shares in volume, making Cboe BIDS Canada the country’s leading Conditionals provider. Cboe BIDS Canada also reached a record ADV of 3.8 million shares in October 2024.

Growth in Conditionals and Cboe BIDS Canada can be attributed to the diverse and unique liquidity on Cboe BIDS Canada, with the opportunity to interact directly with buyside volume, originating from around the world. Cboe BIDS Canada also offers price improvement opportunities as most trades are executed at the midpoint of the National Best Bid and Offer (NBBO).

To learn more about the growth of Cboe BIDS Canada and block trading, read our article on Cboe Insights.

Listings

Cboe Canada offers a marketplace that is home to over 260 unique public listings including public companies, ETFs, CDRs, Special Purpose Acquisition Companies (SPACs) and Closed-End Funds (CEFs). Throughout 2024, Cboe Canada’s Listings business continued to grow with new ETFs, CDRs and corporate common share listings.

As of December 2024, there were 217 ETFs listed on Cboe Canada, and their ADV has consistently grown since 2023. Between fourth-quarter 2023 and fourth-quarter 2024, the ADV for ETFs listed on Cboe Canada grew 96%, reaching a peak of 7.17 million shares during fourth-quarter 2024, with Cboe Canada continuing to account for the vast majority (72%) of ADV for trades of Cboe listed ETFs (as of Q4 of 2024). 

CDRs

CDRs are designed to make it easier for Canadian investors to access popular publicly listed U.S. companies, in Canadian dollars, with a built-in currency hedge. Cboe Canada launched CDRs in July 2021 and since then CDRs have become one of the fastest growing investment products in Canada.   

A total of 65 CDRs are now listed on the Cboe Canada exchanges, an increase of 18 CDRs since fourth-quarter 2023. And the ADNV for Cboe Canada listed CDRs climbed from $39.14 million in first-quarter 2023 to $243.7 million in fourth-quarter 2024, a 523% increase, demonstrating growing interest in accessing popular publicly listed U.S. companies. Figure 10 shows the incredible growth in Cboe Canada’s CDR listings and ADNV over the past two years.

All 65 CDRs are traded across all four of Cboe Canada’s markets. Cboe is a clear leader in CDR market share, accounting for 77% of the CDR market share by notional value traded in 2024. Overall, CDRs are an innovative and effective way for Canadian investors to gain exposure to international blue-chip companies, a growing area of interest worldwide, and are easily tradeable through Cboe Canada’s markets.

Read more about the growth of CDRs in our analysis on Cboe Insights.

NEO-D Change to Simple Price-Time Priority Model

NEO-D shifted to a simple price-time priority model in 2024 with the removal of broker preferencing, NEO Trader order priority and Size-Time as matching priorities in the NEO-D Trading Book. This change helped differentiate the functionality of NEO-D from Cboe Canada’s other dark book, MATCHNow, diversifying Cboe Canada’s exchange offerings to meet client needs.

The simpler matching priority on NEO-D offers Cboe Canada Members a more meaningful alternative between the NEO-D and MATCHNow trading books with differentiated allocation models. Furthermore, the removal of broker preferencing from NEO-D helped small and mid-sized dealers compete more successfully with larger dealers for liquidity on the NEO-D trading book, as compared with other Canadian dark or lit markets with broker preferencing.

Trading volume on NEO-D increased +259 basis point between fourth-quarter 2023 and fourth-quarter 2024. And in fourth-quarter 2024, 14.3% of NEO-D traded volume was retail, compared to 11.7% in fourth-quarter 2023.

What’s next for Canadian Equities

In 2025, we are looking forward to continued innovation across our Canadian markets to best serve the needs of our valued clients.

Cboe has filed for regulatory approval to launch Directed Indications of Interest (Directed IOIs), which would enable Members and their institutional clients to match large block orders without the information leakage and undue price volatility that can occur when using traditional IOI communication methods or lit markets, with the added advantage of allowing market participants to select specific liquidity attributes to further refine potential trading interactions, with improved efficiency compared to traditional dealer workflows. Directed IOIs, if approved as filed, would be subject to a minimum notional threshold of $100,000 in value.

We are also excited for the anticipated completion of Cboe Canada’s technology migration to Cboe Titanium in 2025, as it will extend a standardized global approach to connectivity and trading functionality to all four of Cboe Canada’s markets, offering our Canadian clients greater efficiency in a more user-friendly platform and the introduction of new features (including our proprietary binary order entry—or “BOE”—protocol for NEO-L, NEO-N, and NEO-D, and enhancements to the NEO-L closing auction). We would like to extend a huge thank you to all the industry participants who have collaborated with us through this process. Additional information about Cboe Canada’s migration to Cboe Titanium, including details on certification and remaining pre-production environment testing opportunities, can be found here.

North American Equities in 2025

In 2025, the North American Equities Team will continue to operate trusted markets and provide innovative solutions to meet the needs of our customers. The team is excited to share more market analysis and insights about the overall equities landscape to help inform trading decisions. Please reach out to a member of the North American Equities team with any questions, and we look forward to receiving your input on all our upcoming innovations and analysis for 2025.

^{[1] For purposes of this discussion, block trades should be understood as trades of over 50 board lots and greater than $30,000 in notional value, or greater than $100,000 in notional value, as that is the minimum size threshold applicable to Conditionals on Cboe BIDS Canada. (The applicable minimum size threshold is based on the threshold set out in Rule 6.6 of the Universal Market Integrity Rules.)}