Flipped & Flowing: Liquidity Growth on EDGA’s Maker-Taker Conversion

Off-exchange U.S. equities trading continues to gain momentum, reaching a new record high of 51.5%¹ market share in January 2025 and pushing exchanges to adapt. The inverted fee model has been particularly affected, experiencing a sharp decline in market share since late 2019, coinciding with the rise in retail participation and off-exchange trading activity. By 2024, inverted markets accounted for less than 3%² of total market volume.

In response to these market trends and customer demand, Cboe implemented a key change on its EDGA^® Equities Exchange (EDGA), supported by two additional improvements:

• EDGA transitioned from an inverted model to a maker-taker, tier-free exchange on November 1, 2024. Under this structure, liquidity providers receive a rebate, while liquidity takers pay a fee, all within a simpler pricing model that does not include volume-based tiers.
• A New Member Program was launched where qualifying members receive one free Logical Order Entry Port (FIX or BOE) and a first-year Membership Fee Waiver to further support market participants.
• Dedicated Cores³ were rolled out in 2024 across Cboe’s four U.S. equity exchanges to further improve efficiency of client workflow, with the first two available for free on each market, including EDGA. 

In this analysis, the Cboe Equities Execution Consulting team reviewed changes in participation, liquidity profile and benefits following EDGA’s transition to a high rebate model without volume-based tiers. 

Enhanced Displayed Liquidity: Greater NBBO Presence and Depth

In November 2024 — the first month as a maker-taker venue — EDGA’s total market share climbed up to 0.91% with an average daily volume (ADV) of 133 million shares, a modest increase compared to the prior three months when it operated as an inverted venue. While market share has since stabilized, the shift to a maker-taker model with a high rebate meaningfully altered the liquidity profile of EDGA’s order book. Notably, the number of firms adding liquidity has increased over the past three months, reflecting broader participation in EDGA’s liquidity pool

The enhanced presence and depth of the displayed liquidity at the National Best Bid or Offer (NBBO) is one of the key improvements on EDGA. Over the past two months, the notional weighted average NBBO size increased by 80% since November 2024, reaching approximately 1,700 shares. EDGA’s presence at the inside quote grew by 150%, moving up three spots in the exchange ranking to achieve an 11% NBBO presence time in January 2025⁴. The performance remains consistently strong across both sub-dollar and above-dollar securities. With these improvements, EDGA is now a more attractive venue for order routing, as increasingly large quote sizes and longer duration at the inside of the NBBO can lead to a higher fill rate.

Enhanced Hidden Liquidity: Growing Non-displayed and Midpoint Executions

Beyond the improvements in displayed liquidity, there have also been significant enhancements in non-displayed adding flow on EDGA, following its transition to a maker-taker model. Hidden ADV increased by 15% to approximately 30 million shares per day. Looking at the share of hidden volume across all Cboe equities exchanges, EDGA has emerged as the leader relative to Cboe’s other equities exchanges, with hidden liquidity accounting for 34% of its executed volume over the last two months – surpassing Cboe’s two largest traditional maker-taker equities markets, Cboe EDGX^® Equities Exchange (EDGX) and Cboe BZX^® Equities Exchange (BZX).

As shown in the chart below, the growth in hidden flow has been broad-based, spanning both lower-priced and higher-priced securities. Hidden block liquidity represents around 9.3% of EDGA’s total hidden volume over the past three months when defining blocks as greater than 10,000 shares, and 3.6% when using a $200,000 notional threshold. In comparison, other Cboe equities exchanges typically see hidden blocks representing less than 6.5% and 2%, respectively⁵.

Among EDGA’s total hidden volumes, nearly 60% occur at the midpoint of the NBBO, driving a 90% increase in midpoint ADV on the exchange. As a result, at-the-touch (ATT) volume decreased to 60% of total EDGA shares, while midpoint volume now represents 24% of total EDGA shares, up from 8% between January and October 2024. EDGA has also become one of the most competitive exchanges for midpoint executions, following IEX, and ranking second among all lit venues⁶ by percentage of midpoint volume when excluding TRF activity. With the increased hidden executions, EDGA provides even more meaningful price improvement (PI), totaling approximately $581,000 per day with an average PI of two basis points (bps) for active flow in January 2025.

Great Execution Quality: Strong Protection from Adverse Selection

As a thinner maker-taker book, EDGA offers faster fills and shorter queue lengths compared to other exchanges with the same fee model. To evaluate post-trade price movements, we compared markouts on EDGA with EDGX – a retail friendly market with approximately 30% retail participation.  

The chart below highlights that executions with Quote Depletion Protection (QDP) experience minimal slippage, with markouts remaining within one bps up to one second after execution. Additionally, hidden flow on EDGA and EDGX performs nearly identical, while displayed liquidity on EDGA sees only up to two bps of slippage after one second. Overall, EDGA exhibits strong price stability, making it a healthy and resilient venue where investors are better protected from adverse selection compared to larger maker-taker books – especially with the added protection of QDP. 

The transition of EDGA to maker-taker model has provided investors with a valuable alternative exchange featuring a simpler market model, leading to significant improvements in key liquidity and execution quality metrics. Enhancements in displayed liquidity have increased NBBO presence and depth, while a 15% rise in hidden liquidity and a 90% increase in midpoint volumes have resulted in improved price execution. Overall, these developments position EDGA as a more competitive exchange that delivers better liquidity access and stronger execution outcomes for participants. 

Looking ahead, Cboe’s Equities Execution Consulting Team will continue to monitor equities market trends and share meaningful insights about our products around the globe. 

As always, please reach out to a member of our North American Equities Team with any questions or to learn more about how to best utilize Cboe’s products, exchanges and services to optimize your trading strategies.

^{1 The market share figure is based on the SIP data.} 

^{2 The market share figure is based on the SIP data.} 

^{3 Dedicated Cores is a new optional service allowing Members and Sponsored Participants to host their specific logical order entry ports on their own dedicated CPU core(s).}

^{4 In January 2025, according to the SIP data, the top 10 exchanges had NBBO presence times as follows: #1 - 60%, #2 - 32%, #3 - 29%, #4 - 27%, #5 - 25%, #6 - 21%, #7 - 16%, #8 - 15%, #9 (EDGA) - 11%, #10 – 7%. Before EDGA transitioned to a maker-taker model, during Jan-Oct 2024, it ranked #12 with value around 4%.}

^{5 From November 2024 to January 2025, hidden blocks accounted for 6.5%, 4.1%, and 2.9% of total volume on BZX, EDGX, BYX, respectively, when defined as trades exceeding 10,000 shares. When defined as trades exceeding $20,000 in notional value, hidden blocks represented 1.5%, 1.2%, 1.3% of total value on BZX, EDGX, BYX, respectively.}

^{6 From December 2024 to January 2025, according to SIP data, the top 5 exchanges by % of midpoint volume as a share of total traded volume were ranked as follows: #1 (IEX) - 35%, #2 (EDGA) - 19%, #3 - 14%, #4 - 12%, #5 - 11%.}

^{The information provided is for general education and information purposes only. No statement provided should be construed as a recommendation to buy or sell a security, future, financial instrument, investment fund, or other investment product (collectively, a “financial product”), or to provide investment advice. © 2025 Cboe Exchange, Inc. All Rights Reserved.}