2015 Risk Management Conference: CBOE President and COO Edward Provost on New Initiatives

Thursday, March 5, 2015      

CBOE President and COO Edward Provost kicked off Day Two of RMC with an update on recent CBOE developments, highlighting the exchange’s efforts to broaden access to its marketplace and to   expand and diversify its product offerings.

Provost began with an update on CBOE’s extended trading hours initiative.  Last June, CFE implemented near 24-hour trading in VIX futures.  Approximately 9 percent of all VIX futures trading currently takes place outside of regular U.S. trading hours.  Provost added that “on days where there is breaking market news outside of U.S. trading hours, we’ve seen that figure rise as high as 20 percent.”

This past Monday, CBOE introduced extended trading hours in VIX options, adding a session from 2:00 a.m. to 8:15 a.m., Central Time.  Extended trading hours for SPX options begin next Monday, March 9.  “Naturally, the new session provides more convenient access to our overseas customers,” Provost said. “But we hope our stateside VIX and SPX customers will value the ability to get in and out of positions and directly manage their exposure outside of regular U.S. trading hours.”

Provost also spoke about another major development for CBOE: the company’s new licensing agreements with MSCI Inc. and the London Stock Exchange Group (LSEG), providers of key domestic and global indexes.  The MSCI agreement enables CBOE to operate as the only U.S. exchange to list options on several MSCI global indexes, while the LSEG agreement will make CBOE the exclusive U.S. home for listed options on FTSE and Russell Indexes.

“These license agreements enable us to significantly expand CBOE’s product line into new asset classes and markets and create new trading opportunities for our customers,” Provost said. “They will also lay the foundation for us to develop new products, including volatility indexes.”

On that note, Provost also discussed CBOE’s continued expansion of its VIX product line across asset classes. In January, CBOE began calculating and disseminating values for three new foreign exchange (FX) volatility indexes: the Dollar/Euro; the Dollar/British Pound; and the Dollar/Japanese Yen. Provost noted that the “new indexes offer the first-ever measures of pure FX volatility, and we look forward to developing tradable products based on them going forward.”

Provost also emphasized the importance of developing markets in Short-term VIX (VXST) futures and options and Interest Rate VIX futures based on the CBOE/CBOT 10-Year Treasury Note Volatility Index (VXTYN).

“Customer feedback confirms an appetite for short-term volatility trading and fuels our belief in the product’s potential,” Provost said. “We are working closely with customers on this one, and will continue to evaluate and adjust our approach as necessary.”

Finally, Provost shared an exciting update related to RMC itself: that CBOE will be expanding the conference beyond the U.S. and Europe with the first RMC in Asia later this year.  Watch for additional details on RMC Europe and RMC Asia in the coming months.

Provost concluded by noting how much CBOE values hosting the Risk Management Conference and the opportunity it provides for CBOE staff and customers to exchange ideas – “working closely with customers like you, in forums like this one, helps us create products and services that add value to your trading experience and expertise.”

CBOE RMC is in full swing – be sure to check www.cboermc.com throughout the conference for all of the latest news and highlights, including session blogs and CBOE TV videos.