Cboe BIDS VWAP-X, a pioneering trading mechanism that allows participants to source and match liquidity based on a forward benchmark price, has successfully launched in the UK. With its introduction in September 2024, the platform has already made notable strides, recording a record day of trading in March 2025. However, despite its success in the UK, the platform faces significant regulatory challenges preventing it from being offered in the European Union.
Success in the UK Market
The Cboe BIDS VWAP-X platform debuted in the UK with a focus on trading UK and Swiss securities, with the added benefit of enabling non-EU investors to trade EU securities. According to Alex Dalley, Head of European Cash Equities at Cboe Global Markets, the platform has seen a steady increase in both participation and trading volume since its launch.
On March 3, 2025, Cboe BIDS VWAP-X recorded a peak value of €6.1 million in a single day, marking a significant milestone. The average daily traded value in March was €1.4 million, up from €979,000 in February and €695,000 in January, showcasing steady growth in usage. Dalley credited this success to a well-balanced mix of early adopter banks and brokers, along with a strong emphasis on maintaining high standards for platform integrity.
While Dalley acknowledged that building liquidity and volume on a new platform takes time, he pointed out that similar challenges were faced when Cboe launched periodic auctions in Europe in 2015—an initiative that only matured last year. He remains confident that, over time, Cboe BIDS VWAP-X will establish itself as a key player in the market, offering benefits to participants in the coming years.
BMO Capital Markets: A Key Early Adopter
BMO Capital Markets, one of the early adopters of Cboe BIDS VWAP-X in the UK, has been using the platform since day one. Eric Stockland, Co-Head of Global Electronic Trading at BMO, emphasized the value of the platform in creating a new and innovative way to match trades. Stockland, who has extensive experience with trajectory crossing in the U.S., believes the platform is especially beneficial during periods of market volatility, as it minimizes slippage and provides high-quality execution.
Cboe BIDS VWAP-X allows participants to trade based on a forward price, known as the volume-weighted average price (VWAP), which represents the average price at which a security has traded over a specified time period. The trajectory cross aims to match counterparties who agree to trade at an unknown forward price. According to Stockland, this mechanism minimizes market impact, offering traders a more efficient way to execute trades.
Stockland also highlighted the importance of the platform in helping traders optimize other strategies, such as percentage of volume (POV) algorithms. These algorithms allow traders to execute large trades with minimal market disruption by breaking them into smaller child orders. Trajectory crosses complement this by ensuring that both parties are willing to trade at a fair price, further reducing the likelihood of adverse selection.
In the U.S., trajectory crossing has proven effective for many institutional investors, and Stockland believes the same benefits can be transferred to the UK market. He also noted that trajectory crossing venues in the U.S., such as Purestream and Level, are seeing growing adoption, with more competition expected in this space.
Regulatory Challenges in the European Union
Despite the success in the UK, Cboe faces regulatory obstacles that prevent the platform from being offered in the European Union. The European Securities and Markets Authority (ESMA) has proposed changes to Regulation Technical Standard 1 (RTS 1), which would preclude exchanges—such as Cboe—from adopting the negotiated trade waiver for trajectory crossing mechanisms.
Dalley expressed concern that this regulatory development could limit competition in European equity markets and stifle innovation. The proposal would effectively prevent exchanges from providing trajectory crossing services, which could have a negative impact on market quality, according to Dalley.
Cboe has received strong support for its trajectory crossing platform from institutional investors, including Norges Bank Investment Management (NBIM), the manager of the Norwegian sovereign wealth fund. NBIM voiced its concerns over the ESMA amendment in a letter to EU regulators in February 2025, arguing that the proposed changes could disadvantage European markets in comparison to international venues that offer similar services. NBIM highlighted that trajectory crossing platforms have helped reduce trading costs and improve market quality in the U.S. and UK, and restricting access to these tools in Europe would be detrimental to the competitive landscape.
Looking Ahead: The Future of Trajectory Crossing in Europe
While Cboe is optimistic about the future of its trajectory crossing platform, the regulatory landscape in Europe remains uncertain. Dalley expressed a desire to continue offering this innovative service in the EU, but emphasized that regulatory changes could limit its ability to do so.
“We are very pro-competition and choice in trading,” Dalley said, “but we feel ESMA’s recent decision is an unwelcome development in this regard. We need to ensure that there is a level playing field for exchanges, venues, brokers, and other investment firms to innovate fairly and improve the market for the benefit of end investors.”
Cboe is currently exploring its options in response to the regulatory challenges, while also continuing to expand the reach of its trajectory crossing platform in the UK and beyond. As demand for systematic and passive trading solutions grows, Cboe’s BIDS VWAP-X could play a crucial role in shaping the future of European equity markets—if the regulatory landscape evolves to support such innovations.
Frequently Asked Questions
What is Cboe BIDS VWAP-X?
Cboe BIDS VWAP-X is a trading mechanism designed to help participants source and match liquidity at a forward benchmark price, specifically the Volume Weighted Average Price (VWAP). It allows traders to execute large trades while minimizing slippage and market impact.
When was Cboe BIDS VWAP-X launched in the UK?
The platform was officially launched in the UK in September 2024, initially supporting trading in UK and Swiss securities. Non-EU investors are also able to trade EU securities through the platform.
What is the VWAP and how is it used in Cboe BIDS VWAP-X?
VWAP represents the average price a security has traded at over a given time period. In Cboe BIDS VWAP-X, participants agree to trade at a forward VWAP price, which helps ensure fair pricing and minimizes slippage during execution.
What are the main benefits of using Cboe BIDS VWAP-X?
- Reduced Market Impact: Helps minimize the effect of large trades on the market.
- Efficient Execution: Participants can execute trades based on forward VWAP pricing, leading to high-quality executions.
- Minimized Slippage: The mechanism is designed to reduce slippage by matching counterparties who agree to a fair price.
How successful has the platform been since its launch?
The UK launch has been successful, with a steady increase in participation and volumes. A record €6.1 million of value was traded in a single day on March 3, 2025. The platform has seen consistent growth in daily traded value, reaching an average of €1.4 million in March 2025.
Who are the early adopters of Cboe BIDS VWAP-X?
Early adopters include major financial institutions such as BMO Capital Markets, Bernstein, BNP Paribas, Instinet Europe, Jefferies, KCx, and Virtu Financial.
What are trajectory crosses and how do they work?
Trajectory crosses are a type of trading mechanism where counterparties agree to trade at an unknown forward price based on a specific time interval (e.g., five minutes). This method minimizes slippage and helps achieve an average fair price for both parties.
What makes trajectory crosses different from traditional trading venues?
Unlike continuous markets where prices fluctuate in real time, trajectory crosses offer a predetermined forward price, which helps ensure that both buyers and sellers agree on a fair trade price. This approach is particularly valuable during volatile market conditions.
What are the challenges Cboe faces in the European Union?
Cboe is facing regulatory challenges in the EU due to proposed changes to the European Securities and Markets Authority (ESMA) Regulation Technical Standard 1 (RTS 1). These changes would prevent exchanges like Cboe from using the negotiated trade waiver for trajectory crosses, limiting the platform’s ability to offer this service in European markets.
How is Cboe addressing the regulatory challenges in Europe?
Cboe is actively exploring options to overcome these regulatory obstacles. The company is advocating for a level playing field where exchanges, brokers, and other investment firms can innovate fairly to benefit end investors.
Conclusion
The launch of Cboe BIDS VWAP-X in the UK marks a significant milestone for the trading industry, offering a new and efficient way to match trades based on a forward benchmark price. While the platform has seen early success, regulatory challenges in the European Union threaten to limit its adoption in one of the world’s largest financial markets. As Cboe continues to navigate these regulatory hurdles, its trajectory crossing platform remains an exciting development that could shape the future of equity trading in Europe—provided it can overcome the regulatory obstacles that stand in its way.
