Yesterday afternoon at the 41st Annual International Futures Industry Conference in Boca Raton, CBOE and S&P Dow Jones Indices teamed up for a session highlighting the growing use of VIX around the world.
Reid Steadman from S&P Dow Jones Indices offered a brief welcome address where he noted the various markets where participants have access to a consistent measure of implied volatility. He underscored that a wide variety of equity markets including India, Australia, and Hong Kong have access to a volatility index using the VIX methodology. A full list of Global VIX Indices may be found here – www.spvixviews.com/indices/
Bill Speth, Vice President, Research & Product Development at CBOE and Dominic Salvino, VIX Options Specialist from Group One Trading followed Reid with an open discussion on the emergence of VIX as a tradable asset. Both Speth and Salvino were involved in the development of VIX futures and options at CBOE through their work on the new product committee. Dominic was the first and only designated primary market maker for VIX options as he applied his experience as a market maker in options on high volatility stocks to VIX. Over the course of the presentation Dominic noted how VIX futures volume growth was boosted by the introduction of VIX options in 2006 and then again in 2009 when the development of the first VIX related ETP (VXX). The chart below shows the average daily volume for VIX futures from 2004 through March 16, 2016 by year.
The presentation wrapped with thoughts about the future of volatility trading. Looking to the future it was noted that VIX trading is mostly a US-centric phenomena, so there is considerable opportunity for listed volatility market growth around the world.