From RMC Europe: CBOE President and COO Edward Provost on CBOE’s New Initiatives      

CBOE President and COO Edward Provost began Day Two of CBOE RMC Europe in Switzerland with a global perspective, highlighting CBOE updates that will create new opportunities for international traders.

Provost called it “gratifying” to open with a VIX product update, noting that some of the earliest adopters in VIX futures and options trading were in Geneva and Zurich. By working with customers, including RMC Europe attendees, CBOE has been able to create a volatility product that more closely tracks the spot VIX and fills the gaps between monthly VIX expirations. “So we launched our VIX Weeklys futures product in July,” Provost said. “And I’m pleased to say we have seen steady traction from day one.” CBOE plans to launch VIX Weeklys options on October 8.

Encouraged by the enthusiastic participation in 24-hour VIX futures trading, CBOE elected this year to launch an additional six-hour session in VIX options, as well as SPX options.  The new VIX and SPX options session begins at 2:00 a.m. Chicago time, which aligns with the market open in London and the close in Asia. “VIX is increasingly viewed as a proxy for global market volatility,” Provost said. “So we considered it critical to improve access for our customers here in Europe and beyond.” CBOE will also add SPXPM — S&P 500 Index options with PM expiration — to its extended trading session on October 1.

Provost acknowledged CBOE’s partners and collaborators at key index providers S&P Dow Jones Indices and FTSE-Russell in the audience.  Provost highlighted the 10 new S&P options-based strategy performance benchmark indexes launched in August. SPX Weeklys were used to create new versions of the CBOE S&P 500 BuyWrite Index (BXM) and the CBOE S&P 500 PutWrite (PUT) Index. The remainder are completely new risk-managed option selling strategies featuring SPX and VIX options.

Provost also spoke about the company’s recent licensing agreement with the London Stock Exchange Group (LSEG), which makes CBOE the exclusive U.S. provider for cash-settled options on numerous FTSE and Russell Indexes. He then announced the October 20 launch of options on three additional Russell indexes:  the Russell 1000, the Russell 1000 Value and the Russell 1000 Growth indexes.  He also said CBOE would look to roll-out an entire family of options-based strategy performance benchmarks similar to the new S&P benchmarks, and first up would be new indexes tied to the Russell 2000 (RUT).

Through another new licensing agreement with MSCI this year, CBOE has launched options on the MSCI EAFE and MSCI Emerging Markets Indexes. “Our ability to offer cash-settled, European-style options on these indexes, in addition to the ETF options, is very similar to our SPX and SPY offering, and we are very excited about what this means for customers,” Provost said, noting the current focus on building liquidity in these products.

The final product development Provost discussed was the August launch of four new benchmark indexes with Eurekahedge, a Singapore-based hedge fund research company. The new indexes, which Provost called “first of their kind,” measure the performance of hedge funds that employ distinct volatility-based investment strategies.

Provost made a few shout outs to the growing number of members of the CBOE family. Up first, Livevol.  In August, CBOE acquired the options analytics and data tools platform of Livevol, Inc., a provider of equity and index options technology for professional and retail traders. As members of the Livevol team attend their first CBOE RMC, Provost invited the audience to participate in a demo of Livevol’s “cutting-edge technology.” Another partner of CBOE, Tradelegs, is also providing demos for attendees. The company recently released an updated version of its Derivatives Strategist software.  The software enables investors and portfolio managers to structure efficient hedges that maximize risk protection and now includes support of options on indexes, beginning with SPX.

In closing, Provost thanked the audience for their growing participation, which he credited for the ability to expand the conference for the first time into Asia. CBOE RMC Asia will run November 30 to December 1 in Hong Kong.

“Working closely with customers like you, in forums like this one, helps us innovate products and services that add value to your trading experience and expertise – and ultimately, create new opportunities everywhere.”

The fourth annual CBOE RMC Europe is in full swing – follow coverage on Twitter with the hashtag #CBOERMC and check out  throughout the conference for all of the latest news and highlights, including session blogs.