Follow the Flow: Maximizing Executions with Cboe Routing Strategies

The U.S. equities market continues to grow, both in volumes traded and the number of venues in operation, increasing complexity and liquidity fragmentation. Since 2020, three new exchanges have entered the U.S. equities landscape - The Long-Term Stock Exchange (LTSE), Miami International Holdings (MIAX) and Members Exchange (MEMX) - increasing the total number of lit U.S. venues to 16. Additional exchanges¹ have applied or been approved to become registered securities exchanges, while the number of Alternative Trading Systems (ATS) continues to grow, with over 32 currently operating. With additional trading platforms comes more fragmentation, causing liquidity dispersion and increased technology costs for firms connecting to new venues.

To help participants navigate the complex equities landscape and maximize access to liquidity, Cboe has a comprehensive routing offering integrated across all four of its U.S. cash equities venues. Cboe’s routing strategies provide members with access to multiple pools of liquidity from a single-entry point with connectivity to all U.S. equities exchanges and access to multiple dark pools. Cboe utilizes a proprietary machine learning algorithm which ranks routing venues each day, allowing for users to receive better fill rates and venue selection optimization when multiple venues have the same price. Cboe’s routing algorithm will decide the best venue to route to based on response latency, price improvement and order fill rate. Cboe’s Best Execution Committee regularly reviews routing statistics and makes adjustments to the algorithm as needed.

In the first quarter of 2025, Cboe routed an executed Average Daily Volume (ADV) of 94.2 million shares — up 55% year-over-year — to dark pools and other exchanges. There are numerous advantages to marking orders as routable, including increased fill rates and access to possible price improving liquidity. Across all four of Cboe’s cash equities venues during the first quarter of 2025, routable orders on average executed an extra 17.1% through routing out.

Cboe Routing Strategies Overview

Cboe offers a comprehensive line-up of routing strategies that vary in the venues and order in which liquidity is accessed to achieve different trading goals, including maximize liquidity, reduce costs, price improvement and other specialized goals such as auction participation. Cboe also gives members the ability to direct the order to a specific market through its DIRC routing strategy.

In reviewing the most used strategies, the top two, ROUT and ROUX, are liquidity maximizing strategies, with DIRC in the third spot. ROUT, the default and most popular routing strategy on all Cboe markets, accesses both lit exchanges and dark markets, and was the strategy used by 66% of the routed orders during the first quarter of 2025. ROUX is a similar strategy to ROUT but only accesses lit exchanges and is the second most used routing strategy across Cboe’s equity markets, with 11% of routed orders during the first quarter of 2025 employing this particular strategy.

We will review each of the major categories of routing strategies below.

^{Figure 1: Routing Strategies Usage. Source: Cboe Internal Data}

Liquidity Maximizing Strategies

Liquidity-maximizing strategies excel for large or time-sensitive orders where execution certainty outweighs cost considerations. Cboe has three main liquidity maximizing strategies outlined below: ROUT, ROUX and ROUC.

ROUT: Default Routing Strategy

ROUT is the default routing strategy and most used across all four of Cboe’s cash equities exchanges. When using ROUT, the order will first execute as much of the order on the Cboe exchange as possible, before first routing to the dark markets, followed by the lit exchanges. During the first quarter of 2025, ROUT dominated routing activity on Cboe EDGX Equities Exchange (EDGX) and Cboe EDGA Equities Exchange (EDGA), accounting for 75% and 73% of routed volume respectively. Meanwhile, only 29% of routed volumed on Cboe BYX Equities Exchange (BYX) used ROUT during first-quarter 2025 as routing on BYX was primarily characterized by midpoint strategies.

ROUX aka “ROUT Light”: Accessing Only Lit Exchanges Quickly

ROUX is the second most utilized routing strategy across all Cboe exchanges and is a max liquidity-seeking strategy for firms who prefer to execute on lit exchanges. Designed for users seeking direct access to lit markets without dark pool interaction, ROUX has become the primary routing strategy on Cboe BZX Equities Exchange (BZX) and BYX, accounting for 29.3% and 24.0% of routed volume respectively in the first quarter of 2025.

When routed to lit exchanges, fill rates are typically higher due to transparency and price discovery, providing a key benefit of the ROUX strategy as it reduces the number of venues and fill time. In March 2025, ROUX orders on BZX achieved a 62% fill rate. ROUX can be especially beneficial during periods of high volatility because price discovery on exchanges is crucial as markets need to quickly absorb new information and help firms manage risk effectively. Without robust price discovery or when relying heavily on dark pools, volatility can amplify, causing wider spreads and more extreme price movements.

Due to price discovery and the nature of lit exchanges, ROUX delivers superior execution velocity on BZX compared to visible orders using alternative routing strategies. The lit only aspect of ROUX contributes to higher fill rates due to quotes being displayed publicly, allowing for more efficient matching and faster executions. This makes ROUX particularly advantageous for members who prioritize execution speed, as a higher velocity directly translates to faster order processing and execution times. In the first quarter of 2025, ROUX executed on average 50 shares per second while other routing strategies executed only 19 shares per second.

^{Figure 2: BZX Routed Visible Orders Velocity. Source: Cboe Internal Data}

Cost Sensitive Routing Strategies

Cost sensitive routing strategies target venues with lower fees and rebates. Using a cost-sensitive strategy can help reduce overall trading expenses. ROUC can fall into both categories of liquidity maximizing and cost-sensitivity due to its nature of prioritizing LCPMC routing.

ROUC: Liquidity Maximization and Cost-Sensitive Routing on EDGX and EDGA

ROUC, is a max liquidity seeking strategy that emphasizes execution cost over speed of fill. This is accomplished by ROUC prioritizing Low-Cost Protected Market Centers (LCPMC) within its routing sequence ahead of traditionally more expensive and larger venues. Unlike more selective cost sensitive routing strategies such as TRIM (discussed in greater detail below), ROUC has more comprehensive coverage of all accessible liquidity and all available displayed liquidity, making it a liquidity maximizing strategy as well. ROUC also offers cost advantages over standard routing on EDGX and EDGA. For example, on average, during the first quarter of 2025, firms were assessed a fee of $0.00250 when using ROUC routing during continuous trading hours across both EDGA and EDGX exchanges. In comparison, the average fees which firms were assessed on EDGX and EDGA during continuous trading hours for using the routing strategy ROUT was $0.00293 and the average fee for ROUX was $0.00298.

^{Figure 3: Average Rate for ROUX, ROUC and ROUT on EDGX and EDGA. Source: Cboe Internal Data}

ROUC experienced remarkable growth from 2023 to 2025 with an increase of 639 bps. ROUC saw a 116% increase in ADV between the fourth quarter of 2024 and the first quarter of 2025, with a total ADV of 6.8 million shares in the first quarter of 2025. When comparing year-over-year growth there was a 1,588% increase in ADV between the first quarter of 2024 and the first quarter of 2025. The majority of ROUC’s recent growth can be attributed to its use on EDGX. In the first quarter of 2024, only 0.4% of routed volume on EDGX used ROUC compared to 11.7% of routed volume using ROUC in the first quarter of 2025.

^{Figure 4: ROUC Routing Strategy Overall Usage. Source: Cboe Internal Data}

TRIM and SLIM: Utilizing Inverted Markets for Lower Execution Costs

Both TRIM and SLIM strategies leverage markets with inverted fee schedules, such as BYX, to reduce execution costs. TRIM is a cost-effective routing strategy designed to minimize execution costs by prioritizing venues with favorable fee structures or inverted markets. When utilized on orders submitted to BYX, the order first checks the local book, then routes to NYSE National then to Nasdaq BX before exploring dark markets. Using TRIM on BZX is similar to TRIM on BYX with some additional routing stops. After checking its local book, BZX first, the order will route to BYX and check Cboe’s inverted market. TRIM on BZX will then route to NYSE National, then Nasdaq BX and finally will route to NYSE American prior to checking the dark markets.

SLIM is another cost-efficient routing strategy that accesses liquidity across multiple venues while minimizing execution costs. On BYX, SLIM first examines the local book before routing to LCPMCs. Orders then route to dark books, return to LCPMCs, and finally route to all remaining protected markets. The BZX version of SLIM includes an additional step—routing to BYX immediately after checking the local book—taking advantage of BYX's favorable inverted fee structure. BZX also offers SLIM+ which immediately routes to BYX prior to checking the local book, BZX. If there is price improvement available on BZX it will not route to BYX first. After the BYX check, SLIM+ returns to the BZX book and proceeds with the standard SLIM routing sequence.

Midpoint Liquidity - Price Improving

On BYX, the largest inverted exchange with 57% of the inverted market share, midpoint strategies RMPT and RMPL captured 39% of routed volume during the first quarter of 2025. These strategies offer access to potential price improvement through hidden midpoint liquidity on both lit and dark exchanges. Both routing strategies saw price improvements during the first quarter of 2025, RMPT had an average price improvement of 6.93 bps and RMPL had an average price improvement of 13.67 bps.

RMPT and RMPL: Low-Cost Midpoint-Only Strategies on BYX

RMPT and RMPL are only available on BYX and are both low-cost, midpoint-only routing strategies. RMPT will first check the BYX book, followed by routing to Midpoint IOC select dark and lit venues and any remainder will post on the local book. While these strategies share similar foundations, RMPL enhances RMPT's capabilities by accessing additional lit venues that offer midpoint liquidity beyond RMPT's reach, like NYSE Arca, NYSE and Nasdaq. The fundamental trade-off between these strategies centers on execution priorities: RMPT delivers faster execution speed while RMPL provides more extensive platform coverage for midpoint liquidity access. During the first quarter of 2025, RMPL usage on BYX grew significantly, representing 30.5% of all routing executed volume — a 778 bps increase from quarter one of 2024. This makes RMPL substantially more popular than RMPT, which accounted for just 8.1% of BYX routed volume.

Other

ROOC: Routing Options for Participation in Auctions

ROOC is a specialized routing option that allows Members to participate in the opening, re-opening (unhalts) or closing auction process with a single order. ROOC orders can be sent as early as 2:30 a.m. on EDGX (and beginning May 1 on BZX), and before the listing markets open, EDGX and BZX will route ROOC orders to the opening auction of the primary listing market, where it will participate in the opening process. If the order is unexecuted, it will return to EDGX or BZX where it will post for the remainder of the day, before being routed to the closing auction of the primary listing market where the security is listed if the order does not execute on EDGX or BZX during the core trading session.

Cboe’s Full Routing Strategy Offerings

Overall, routing can be a strategic and important trading tactic for traders who are looking for a specific outcome. With the changing equities landscape and an increased number of both exchanges and ATSs, routing is a useful tool for members to have increased connectivity, faster executions and lower costs. Cboe also offers additional routing strategies to those mentioned above outlined in the webpage found here: Cboe Order Types and Routing. For questions about our routing strategies, please reach out to your Cboe representative.

^{[1] New US exchanges include: 24X, Green Impact Exchange (GIX), Dream Exchange, MEMX2, NYSE Texas, and Texas Stock Exchange.}

^{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.}