Cboe Global Markets and MSCI Collaborate to Offer New Index Options and Volatility Indices
- Strategic initiative with MSCI Inc. to introduce new index options and volatility indices
- Expansion of collaboration to offer innovative solutions for investors worldwide
- Introduction of Cboe MSCI World Index Options, Cboe MSCI ACWI Index Options, and Cboe MSCI USA Index Options
- Launch of Cboe MSCI EAFE Volatility Index and Cboe MSCI Emerging Markets Volatility Index
- Aimed at providing transparent measures of market volatility for international and emerging equity markets
- Expected launch on March 18, pending regulatory approval
- None.
Insights
The expansion of Cboe's product suite through the introduction of three new options tied to MSCI's benchmark indices represents a strategic move to cater to the evolving needs of investors seeking diversified international exposure. The inclusion of these options broadens the spectrum of investment products available, potentially attracting a wider clientele interested in hedging or speculating on international markets. The introduction of products with smaller index values, such as MXWLD and MXUSA, may particularly appeal to retail investors and smaller asset managers due to their increased affordability and accessibility.
From a market research perspective, the demand for such instruments typically correlates with the global economic climate and the volatility of international markets. As investors look for tools to manage risk in a cost-effective manner, the new Cboe MSCI Volatility Indices, which apply the VIX methodology to international markets, could become a benchmark for measuring market sentiment and implied volatility in these regions. This innovation could enhance the attractiveness of Cboe's offerings and potentially increase trading volumes and revenue for the exchange.
Financially, the launch of new index options and volatility indices may have several implications for Cboe Global Markets, Inc. and its stakeholders. For one, the diversification of products could lead to an increase in trading activity, as these options provide investors with additional avenues to gain exposure to international, developed, emerging and U.S. markets. This could result in higher transaction fees and revenue growth for Cboe. Furthermore, the fractional index options could lower the barrier to entry for smaller investors, thereby potentially expanding Cboe's customer base and market share.
It is important to note, however, that the success of these new offerings will depend on various factors, including market reception, competitive dynamics and the broader economic environment. The ability of these products to generate significant volume and liquidity will be critical in determining their impact on Cboe's financial performance. Additionally, the regulatory approval process is a key variable that could influence the timeline and success of these product launches.
Regulatory approval is a pivotal aspect of introducing new financial instruments to the market. The pending regulatory approval for the new Cboe MSCI Index options and volatility indices indicates that these products must comply with stringent regulatory standards to ensure they operate within the legal framework of financial markets. The regulatory scrutiny will likely focus on the transparency, fairness and systemic risk implications of these new products.
Moreover, the European-style exercise and cash-settlement of these options highlight the legal and operational considerations taken into account to streamline the settlement process and minimize legal complexities associated with physical delivery. The tax treatment of these instruments is another legal aspect that could influence investor interest and participation in these markets. Should these products receive favorable tax treatment, it could enhance their appeal to investors seeking tax-efficient investment strategies.
- Latest initiative represents Cboe and MSCI's growing relationship and will expand Cboe's current product suite
- Cboe plans to offer three new options tied to MSCI's international, developed, emerging and
U.S. markets benchmark indices, set to launch on March 18, pending regulatory approval - Cboe also introduces two new volatility indices based on existing MSCI Index options and the proprietary VIX Index Methodology
Cboe and MSCI have collaborated successfully for many years to offer a variety of indices and tradable products. In this latest initiative, Cboe will further expand its existing MSCI Index options suite by introducing three new products based on additional MSCI global indices: Cboe MSCI World Index Options (MXWLD), Cboe MSCI ACWI Index Options (MXACW), and Cboe MSCI
In addition, Cboe is broadening its volatility index suite with the launch of two new Cboe MSCI Volatility Indices: the Cboe MSCI EAFE Volatility Index (VXMXEA) and the Cboe MSCI Emerging Markets Volatility Index (VXMXEF). Developed using Cboe's proprietary VIX® Index methodology, these indices are based on existing MSCI EAFE Index Options (MXEA) and MSCI Emerging Markets Index Options (MXEF) and are designed to provide a transparent measure of the market's expectation of 30-day implied volatility by these respective MSCI index option classes.
Similar to the VIX Index, which is designed to reflect investors' consensus view of future (30-day) expected
"In today's rapidly evolving landscape, investors require sophisticated tools to navigate the markets with confidence," said Catherine Clay, Global Head of Derivatives at Cboe. "Our ongoing collaboration with MSCI reflects our shared commitment to fostering innovation and providing solutions that empower investors to better manage risk and seize potential opportunities in the global marketplace. We are excited to expand our Cboe-MSCI toolkit with additional index options and volatility indices – an enhancement that will not only broaden our customers' product choice, but also enrich the ways they interact with and analyze the global markets." Clay added, "Crucially, the three new index options, which cover developed and emerging markets, are expected to also give investors comprehensive access to gain a variety of different exposures around the globe."
The new options will be based on the MSCI World Index, the MSCI ACWI Index and the MSCI
With a smaller index value, MXWLD and MXUSA options may be more accessible to a broad base of customers with diverse investment objectives, ranging from asset owners aiming to track benchmark index exposure, registered investment advisers in search of new sources of yield, or individual investors seeking straightforward exposure to options linked to global benchmark indices.
"We are pleased to expand our strategic relationship with Cboe in new offerings that investors around the world can use to help them manage risk and exposure," said George Harrington, Global Head of Derivatives Licensing at MSCI. "The launch of the Cboe MSCI EAFE Volatility Index (VXMXEA) and Cboe MSCI Emerging Markets Volatility Index (VXMXEF) provides the investment community with benchmarks for option investing, and Cboe's launch of options linked to the MSCI World Index, MSCI ACWI Index and MSCI
MXACW, MXUSA, and MXWLD will have standard options that expire on the third Friday of each month. In response to customer feedback, Cboe plans to also list five end-of-week expirations, which are expected to begin trading on March 21, 2024, pending regulatory approval.
The new index options join the current suite of Cboe MSCI tradable products, which includes the Cboe MSCI EAFE Index Options (MXEA) and Cboe MSCI Emerging Markets Index Options (MXEF). Like these existing offerings, the newly launched options will follow a European-style exercise (no early exercise), are cash-settled (no delivery or assignment of shares) at expiration and may potentially offer favorable tax treatment1. In addition, the new options are integrated into Cboe's existing infrastructure and will be traded and settled via the same exchange connections and clearinghouse as the current Cboe MSCI index options.
For more information on Cboe MSCI Index options, visit Cboe's website.
About Cboe Global Markets, Inc.
Cboe Global Markets (Cboe: CBOE), a leading provider of market infrastructure and tradable products, delivers cutting-edge trading, clearing and investment solutions to market participants around the world. The company is committed to operating a trusted, inclusive global marketplace, providing leading products, technology and data solutions that enable participants to define a sustainable financial future. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives, FX, and digital assets, across
Media Contacts | Cboe Analyst Contact | ||||
Angela Tu | Tim Cave | Kenneth Hill, CFA | |||
+1-646-856-8734 | +44 (0) 7593-506-719 | +1-312-786-7559 | |||
CBOE-C
CBOE-OE
Cboe® and Cboe Global Markets® are registered trademarks of Cboe Exchange, Inc. All other trademarks and service marks are the property of their respective owners.
Any products that have the MSCI Index or Indexes as their underlying interest are not sponsored, endorsed, sold or promoted by MSCI Inc. or Cboe and neither MSCI Inc. nor Cboe make any representations or recommendations concerning the advisability of investing in products that have MSCI indexes as their underlying interests. All other trademarks and service marks are the property of their respective owners.
Cboe Global Markets, Inc. and its affiliates do not recommend or make any representation as to possible benefits from any securities, futures or investments, or third-party products or services. Cboe Global Markets, Inc. is not affiliated with MSCI Inc. Investors should undertake their own due diligence regarding their securities, futures, and investment practices. This press release speaks only as of this date. Cboe Global Markets, Inc. disclaims any duty to update the information herein.
Nothing in this announcement should be considered a solicitation to buy or an offer to sell any securities or futures in any jurisdiction where the offer or solicitation would be unlawful under the laws of such jurisdiction. Nothing contained in this communication constitutes tax, legal or investment advice. Investors must consult their tax adviser or legal counsel for advice and information concerning their particular situation.
Cboe Global Markets, Inc. and its affiliates make no warranty, expressed or implied, including, without limitation, any warranties as of merchantability, fitness for a particular purpose, accuracy, completeness or timeliness, the results to be obtained by recipients of the products and services described herein, or as to the ability of the indices referenced in this press release to track the performance of their respective securities, generally, or the performance of the indices referenced in this press release or any subset of their respective securities, and shall not in any way be liable for any inaccuracies, errors. Cboe Global Markets, Inc. and its affiliates have not calculated, composed or determined the constituents or weightings of the securities that comprise the third-party indices referenced in this press release and shall not in any way be liable for any inaccuracies or errors in any of the indices referenced in this press release.
Options involve risk and are not suitable for all market participants. Prior to buying or selling an option, a person should review the Characteristics and Risks of Standardized Options (ODD), which is required to be provided to all such persons. Copies of the ODD are available from your broker or from The Options Clearing Corporation, 125 S. Franklin Street, Suite 1200,
Cautionary Statements Regarding Forward-Looking Information
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. You can identify these statements by forward-looking words such as "may," "might," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," and the negative of these terms and other comparable terminology. All statements that reflect our expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements.
We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Some factors that could cause actual results to differ include: the loss of our right to exclusively list and trade certain index options and futures products; economic, political and market conditions; compliance with legal and regulatory obligations; price competition and consolidation in our industry; decreases in trading or clearing volumes, market data fees or a shift in the mix of products traded on our exchanges; legislative or regulatory changes or changes in tax regimes; our ability to protect our systems and communication networks from security vulnerabilities and breaches; our ability to attract and retain skilled management and other personnel; increasing competition by foreign and domestic entities; our dependence on and exposure to risk from third parties; global expansion of operations; factors that impact the quality and integrity of our and other applicable indices; our ability to manage our growth and strategic acquisitions or alliances effectively; our ability to operate our business without violating the intellectual property rights of others and the costs associated with protecting our intellectual property rights; our ability to minimize the risks, including our credit, counterparty, investment, and default risks, associated with operating a European clearinghouse; our ability to accommodate trading and clearing volume and transaction traffic, including significant increases, without failure or degradation of performance of our systems; misconduct by those who use our markets or our products or for whom we clear transactions; challenges to our use of open source software code; our ability to meet our compliance obligations, including managing potential conflicts between our regulatory responsibilities and our for-profit status; our ability to maintain BIDS Trading as an independently managed and operated trading venue, separate from and not integrated with our registered national securities exchanges; damage to our reputation; the ability of our compliance and risk management methods to effectively monitor and manage our risks; restrictions imposed by our debt obligations and our ability to make payments on or refinance our debt obligations; our ability to maintain an investment grade credit rating; impairment of our goodwill, long-lived assets, investments or intangible assets; the impacts of pandemics; the accuracy of our estimates and expectations; litigation risks and other liabilities; and operating a digital asset business and clearinghouse, including the expected benefits of our Cboe Digital acquisition, cybercrime, changes in digital asset regulation, losses due to digital asset custody, and fluctuations in digital asset prices. More detailed information about factors that may affect our actual results to differ may be found in our filings with the SEC, including in our Annual Report on Form 10-K for the year ended December 31, 2023 and other filings made from time to time with the SEC.
We do not undertake, and we expressly disclaim, any duty to update any forward-looking statement whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
1 Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of "Characteristics and Risks of Standardized Options." Copies are available from your broker or from The Options Clearing Corporation at 125 South Franklin Street, Suite 1200,
View original content to download multimedia:https://www.prnewswire.com/news-releases/cboe-global-markets-and-msci-collaborate-to-offer-new-index-options-and-volatility-indices-302067520.html
SOURCE Cboe Global Markets, Inc.
FAQ
What new options will Cboe offer tied to MSCI's benchmark indices?
When are the new options set to launch?
What are the new volatility indices introduced by Cboe?
What is the aim of the new Cboe MSCI Volatility Indices?
What is the significance of MXWLD and MXUSA options being based on a fraction of the value of their underlying index?
