What is the EDGX?

EDGX Exchange is a U.S. equities exchange operated by CBOE U.S. Equities.

Key Takeaways

  • EDGX Exchange is a U.S. equities exchange operated by CBOE U.S. Equities.
  • CBOE Global Markets acquired Bats Global Markets and now operates the BZX Exchange and BYX Exchange along with EDGX and EDGA.
  • EDGX and CBOE members are registered broker-dealers across a broad range of financial services companies.

Understanding the EDGX

The EDGX and EDGA exchanges were formerly independent platforms owned by Direct Edge LLC before merging with Bats Global Markets in 2014. CBOE Global Markets acquired Bats Global Markets and now operates the BZX Exchange and BYX Exchange along with EDGX and EDGA.

These four equity exchanges provide pools of liquidity and facilitate varying types of liquid markets (choice or active) for their customers. In the U.S. and Europe, the exchanges focus on providing liquidity and quality order execution. The variety of members enhances the liquidity across marketplaces. CBOE offers its members risk management tools to mitigate risk and to smooth market functioning. It structures risks checks along the life of a trade order to manage risk and monitor activity. In the U.S., CBOE's markets are regulated by the Securities and Exchange Commission (SEC) and it is classified as a self-regulatory organization (SRO) with an objective toward fair and orderly markets.

EDGX Members

EDGX and CBOE members are registered broker-dealers across a broad range of financial services companies. Members include automated market makers, such as electronic market-making firms as well as wholesale broker dealers that mainly are market makers for retail orders. Retail brokers may directly route trades to EDGX and CBOE. In addition, the bulge bracket investment banks that offer research and trading to clients also are members. Proprietary traders who buy and sell for their own accounts rather than for clients are also active on the exchanges.

CBOE Holdings

CBOE Global Markets parent company, CBOE Holdings, enables trading in multiple asset classes and regions, including options, futures, U.S. and European equities, exchange-traded funds (ETF​​​​), and multi-asset volatility and global foreign exchange (FX) products. CBOE Holdings has 14 trading venues, which include the largest options exchange in the U.S. and the largest stock exchange in Europe. CBOE Holdings is the second-largest stock exchange operator in the U.S. and a leading market globally for ETF trading. It is located in Chicago and has offices in Kansas City, New York City, London, San Francisco, Singapore, and Ecuador.

CBOE Holdings Inc. owns the Chicago Board Options Exchange, the Bats exchanges, CBOE Futures Exchange (CFE). It houses the CBOE Volatility Index (VIX Index), which is a global indicator of equity market volatility. It also operates the CBOE Options Institute, its education arm, as well as CBOE Livevol, an options technology, trading analytics, and market data services provider. It has CBOE Vest, an asset management company, and CBOE Risk Management Conferences (RMC), a financial industry conference provider on derivatives and volatility products. It also owns ETF.com, an ETF news, data, and analysis provider, as well as Hotspot, a global FX trading platform.