The Prop Trader's Chronicles: Short-Term Proprietary Trading Strategies for Both Bull and Bear Markets

CBOE STOCK EXCHANGE—CBSX

In 2007, the Chicago Board Options Exchange (CBOE) launched the CBOE Stock Exchange (commonly called CBSX) in cooperation with four major market makers. While the electronic platform utilized by the CBSX is based on the same technology as its parent company's options exchange systems, it should be noted that this is not actually the CBOE system. The CBSX is a fully electronic equities exchange created to compete with the other ECN systems in the U.S. stock markets.

In July of 2011, the CBSX moved its servers from its original Chicago-based facilities to the Equinix NY4 data center in Secaucus, New Jersey—the same building where Direct Edge's servers are located as of this writing—to compete for business from the high-frequency trading industry.

This ECN often appears as either “CBOE” or “CBSX” on the Level 2 quotes, depending on your direct access trading platform. On the consolidated tape, it often appears with the unfortunate letter code W, most likely for the same reasons as Direct Edge platforms' letter codes (few other options were available, least of all one that actually makes any intuitive sense).

The pricing scheme on the CBSX was initially an inverse maker-taker pricing model (pays rebates for removing, charges fees for adding liquidity) to compete with EDGA and NQBX at the time. As of this writing, CBSX has changed to a flat fee pricing model with identical (but relatively low) fees for both liquidity removers and liquidity providers on its platform. ...