Trading

As a result of our unique vision and innovative solutions at the NEO Exchange, now operating as Cboe Canada, long-term investors are reaping the benefits of a level playing field. Time to trade has been consistently shortened, quote fading is virtually non-existent, and unnecessary intermediation has been reduced - with a far greater percentage of trades taking place between long-term investors.

Two Types of Traders

We see two distinct types of traders operating in the markets today, and we classify them based on their trading profile:

Latency-sensitive or high-frequency traders are those who trade for their own account using sophisticated technology and automated, often co-located, trading strategies. Their orders are typically part of intra-day strategies. LSTs can substantially benefit trading liquidity, but certain trading strategies are detrimental to long-term investors.

Traders who work on behalf of long-term investors, buying or selling securities within the frame of an investment strategy. We refer to these as NEO Traders, and their classification includes all institutional and retail client flow.

Three Trading Venues

NEO-L is a transparent and protected marketplace that encourages liquidity and levels the playing field for long-term investors by:

Giving NEO Trader resting orders priority over high-frequency trader resting orders, regardless of which orders hit the market first
Combining a make-take fee model with NEO Trader priority, to provide an attractive financial rebate while reducing the time to trade

NEO-N is a transparent marketplace that encourages liquidity and levels the playing field for long-term investors by:

Giving priority to larger resting orders over smaller, fleeting orders through a unique size-time order matching priority, in addition to the NEO Trader priority
Imposing a technical “speed bump” – a randomized 3-9 millisecond delay applied only to orders from high-frequency traders actively looking to take liquidity out of the market
Displaying volume aggregated by price (market-by-price), creating additional pre-trade anonymity to liquidity providers looking to post sizeable orders
Leveraging a take-make fee model attracting active order flow and thus further reducing the time to trade

NEO-D is a dark marketplace that offers options for all types of traders, while continuing to provide an enhanced trading experience for long-term investors by:

Allowing all participants to submit marketable and resting orders but, subject to the parameters specified on the resting orders, define what type of orders may interact with each other
Leveraging the NEO Trader priority combined with the size-time priority
Leveraging a take-make fee model attracting active order flow and thus further reducing the time to trade

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