Cboe Signs Licensing Agreement with Validus, Creating Framework for Index Innovation
Cboe Global Markets (CBOE) announced a licensing agreement with Validus Macro Strategies aimed at enhancing its global index business. This collaboration allows Cboe to develop exclusive derivatives-based indices using Validus’ proprietary methodologies, starting with the Cboe Validus Dynamic Indices that will demonstrate active BuyWrite and PutWrite strategies. This initiative builds on Cboe’s established reputation in index innovation and seeks to meet increasing investor demand for sophisticated options-based strategies.
- Cboe expands its index offerings and capabilities through the licensing agreement with Validus.
- The Cboe Validus Dynamic Indices will provide innovative investment strategies for various investors.
- Cboe's established reputation for index innovation strengthens with this partnership.
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- Agreement furthers Cboe's growing global index business and track record in index innovation
- Enables Cboe to exclusively develop and offer new indices and solutions based on select Validus' proprietary methodologies
CHICAGO, June 22, 2022 /PRNewswire/ -- Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced it has signed a licensing agreement with Validus Macro Strategies, a provider of rule-based options-based solutions for institutional investors, that creates the framework for Cboe and Validus to collaborate on the development of new indices and solutions.
Under this agreement, Cboe will have exclusive rights to develop and offer a range of derivatives-based indices and associated investable financial products using Validus' proprietary methodologies. Cboe expects to initially launch a new series of Cboe Validus Dynamic Indices designed to show the performance of active BuyWrite and PutWrite strategies on major U.S equity indices in the coming months. In addition, Cboe may work with Validus to develop other active indices for unique index-based products in the future.
The new relationship furthers Cboe's growing global index business and builds on Cboe's proven track record in creating and disseminating some of the industry's most innovative index offerings, including the Cboe Volatility Index® (VIX® Index), and its suites of Strategy Performance Benchmark indices and Target Outcome indices.
"At Cboe, we seek to innovate to define markets that benefit all participants. Often, this begins with indexing, which has long been a Cboe core competency," said Catherine Clay, Executive Vice President, Data and Access Solutions at Cboe Global Markets. "Cboe has been a pioneer of strategy performance benchmark indices, which continue to gain traction with investors seeking to use options to hedge risk, reduce volatility and enhance yields. Validus offers a unique, rule-based methodology for constructing options strategies that we believe could further enhance investment outcomes, and we're excited to leverage their expertise to help develop additional index solutions to meet customer demand."
"Validus is excited to partner with Cboe Global Markets, a global leader in indices and index products. Combining our risk-centric philosophy and derivatives expertise with Cboe's focus on product innovation and world class trading infrastructure creates the ideal platform for the development of exciting investment products and risk solutions," said Kevin Lester, Chief Executive Officer at Validus Risk Management.
Validus' proprietary methodologies differ from traditional options-based strategies in that they are active and rule-based at the same time. Characteristics such as options expiries, strikes or roll dates are dynamically selected. The new Cboe Validus Dynamic Indices, unlike many benchmark indices, are specifically designed to be used as investable strategies by a wide range of investors. The indices also account for trading impact and consider other operational aspects such as margin rules and the impact of interest rates.
"We are very excited and thankful for the opportunity to work with Cboe to bring innovative solutions based on our hands-on market experience to investors," said Kambiz Kazemi, Chief Investment Officer at Validus Macro Strategies. "Markets have been undergoing major structural shifts in the last two decades and the effect of these changes are now becoming increasingly apparent to investors. Options-based strategies and indices are increasingly a crucial part of building portfolios and managing their risk. Through this partnership with Cboe, we look forward to bringing practical state-of-the-art solutions to investors and helping them navigate the road ahead."
The planned launch of the Cboe Validus Dynamic Indices will complement Cboe's existing suite of Strategy Performance Benchmark indices, which aim to provide investors with an effective way to employ options strategies to improve risk-adjusted returns within their investment portfolio.
A BuyWrite, also called a covered call, generally is considered to be an investment strategy in which an investor buys a stock or a basket of stocks, and also sells call options that correspond to the stock or basket of stocks. A PutWrite generally involves the selling of put options to earn premiums.
As a leader in the creation and dissemination of more than 450 volatility and derivatives-based indices, Cboe is at the forefront of creating an investment ecosystem that encompasses product design, calculation, administration, listing, trading, and benchmark licensing. To learn more, visit https://www.cboe.com/indices/.
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 and FX, across North America, Europe and Asia Pacific. To learn more, visit www.cboe.com.
About Validus Macro Strategies
Validus Macro Strategies (a subsidiary of Validus Risk Management with offices in London, Toronto and New York) specializes on the design and implementation of derivatives-based investment strategies and hedging solutions. Our rule-based strategies stem from the combination of hands-on expertise of our principals – who have successfully navigated a wide range of market regimes – and industry-leading proprietary technology that enables us to translate their expertise into investment strategies and solutions. We seek to enable market participants to access institutional quality investment solutions with attractive risk/reward and be a reference and active participant in derivatives education and content.
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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 (ODD). Copies of the ODD are available from your broker or from The Options Clearing Corporation, 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 (investorservices@theocc.com). The information in this document is provided for general education and information purposes only. No statement(s) within this document should be construed as a recommendation to buy or sell a security, or to provide investment advice. Supporting documentation for any claims, comparisons, statistics or other technical data in this document is available by contacting Cboe Global Markets at www.cboe.com/contact. Past performance is not predictive of future returns.
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