Livin’ The High Life: CBOE posts solid 2014, looks to global growth in 2015

Jan 15, 2015

The Chicago Board Options Exchange held its annual Chicago press lunch yesterday. Among the highlights of the company’s success in the past year were these:

  • 2014 volume was up 11 percent, to 1.3 billion contracts, outpacing the industry average of 4 percent.
  • VIX options’ ADV was 632,000 contracts, while VIX futures ADV was 201,000.
  • Its SPX Weeklys continued to show great growth, up 38 percent with an ADV of 272,277.
  • CBOE’s shareholder return in 2014 was 25 percent, and the stock hit an all time high of $68 last Thursday.
  • CBOE had total market share of 28.6% compared to 27.5% in December 2013.
  • CBOE & C2 accounted for 30.6% of industry volume (compared with 29.3% in Dec. 2013.

The exchange is “a products company,” according to its CEO, Ed Tilly, and in keeping with that the CBOE launched several new products in the past year. Most recently, the exchange began disseminating volatility index values on three of the CME Group‘s FX options contracts: the Dollar/Euro, Dollar/British Pound and Dollar/Yen futures options.

It also is expanding its index complex by adding options on MSCI Indexes in the first quarter of this year. This is another exclusive licensing agreement on indexes, adding to the licensing agreements CBOE has for index options with the S&P and Dow Jones.

Another product launch in 2014 was the the VXST – short-term volatility futures that trade on the CBOE Futures Exchange (CFE).  Tilly acknowledged that the VXST’s volumes “have been limited” but the exchange plans to add more liquidity providers for the contracts in 2015.

Growth of non-US participants is also on the list for CBOE. The industry estimates that about 20 percent of all options traded come from outside the US., Tilly said. However, overseas customers who want exposure in U.S. markets often trade the CBOE’s exclusive SPX and VIX products, so CBOE may have a slightly higher than 20 percent average. CBOE is looking to cater to that audience with extended trading hours on its SPX and VIX options which run from 2 a.m. to 8:15 a.m. CST.

CBOE is looking augment these moves with its annual risk management conference in Europe in September, and plans to launch its first Asian risk management conference in December.

Options market participants should see savings in 2015 resulting from the CBOE’s decision to hand over its self regulatory responsibilities to FINRA, Tilly said. FINRA now oversees all the options exchanges, which should lead to more efficiency, he said.

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