Regulators have given Cboe Global Markets approval to create an alternative to closing auctions for the US stock market, in a victory for the exchange that could shake up one of the most important moments in the trading day. The decision by the Securities and Exchange Commission, late on Wednesday, is a blow to the New York Stock Exchange, a unit of Intercontinental Exchange and Nasdaq, where nearly all companies list their shares and for whom the closing auction has guaranteed a certain amount of trading volume. While US equities trade on about a dozen exchanges and through a myriad of dark pools during the trading session, the official closing price is set through the auction on a company’s home exchange. The new regulatory approval allows Cboe to launch what it calls the “Cboe Market Close”, which will match trades using the closing price set on the home exchanges, potentially luring volume away from its rivals. Cboe argued industry participants were frustrated with closing auction trading fees, which it said have increased between 16 per cent at NYSE and 60 per cent at Nasdaq over the past five years. “It is a big win and a significant change in market structure,” said Larry Tabb, founder of the Tabb Group, a capital markets consultancy. “To the extent that 8-10 per cent of volumes is at the close, that is 8-10 per cent [Cboe] does not get, but now has access to,” Mr Tabb said. “It could be an impactful aspect of their trading revenues.” Cboe equity exchanges are second to NYSE in terms of volumes traded, but can boast only one corporate listing: Cboe’s own shares. With the growth of index investing and exchange traded funds, the closing auction has become an even more critical part of the overall system, since ETFs need to create or redeem shares by the close of trading. Volume executed in the auctions rose more than 70 per cent between 2012 and 2016 — meaning a growing portion of trading is increasingly expensive. “Cboe Market Close was created in response to widespread industry frustration with existing closing auctions,” said Bryan Harkins, head of US equities and global FX at Cboe, in a statement. Given the increasing importance of the closing auction . . . and the apparent concerns that a competing facility could have unintended consequences, we respectfully advise great caution Alex Matturri, chief executive, S&P Dow Jones Indices The SEC approved Cboe’s plan against opposition from NYSE and Nasdaq. A NYSE spokesperson declined to comment on whether the exchange would appeal the regulator’s decision. “The NYSE Closing Auction is consistently the largest daily liquidity event globally thanks to its unique mix of technology and human judgment that reliably delivers the best outcome for listed companies, investors and index providers,” they said. Nasdaq declined to comment. Large fund managers, such as T Rowe Price, and listed companies including FedEx also opposed the approval of Cboe Market Close. For their part, S&P Dow Jones Indices, the owner of the benchmark S&P 500 and other indices widely tracked by ETFs, urged caution. “In keeping with the overall ethos of passive investing, SPDJ applauds any measures that decrease costs, increase transparency and generally result in greater utility for investors,” said Alex Matturri, its chief executive, in a letter to the SEC. “However, given the increasing importance of the closing auction to those same investors, and the apparent concerns that a competing facility could have unintended consequences, we respectfully advise great caution in approaching any changes to this aspect of our market structure.” Supporters included Sifma, the US trade group for the securities industry, rival exchange IEX and market maker Virtu Financial.