CBOE to found futures exchange
Brodsky says effort will start with volatility index
By Steven R. Strahler
Chicago Board Options Exchange (CBOE) on Tuesday said it would launch a futures exchange in March, focusing on volatility-related products that will allow its options customers to hedge risk.
Pending regulatory approval, CBOE Futures Exchange LLC will initially list one contract, based on the CBOE’s own volatility index (VIX), a gauge of market sentiment.
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“This gives us flexibility to control our own destiny with a very low entry fee,” says CBOE Chairman and CEO William Brodsky, referring to increasing convergence of options and futures markets.
In line to head the new exchange is Managing Director Pat Fay, who recently returned to CBOE after a stint at single-stock futures exchange NQLX LLC. “His primary assignment right now is to coordinate the futures exchange,” says Mr. Brodsky.
The Commodity Futures Trading Commission (CFTC) must still approve the launch. Mr. Brodsky acknowledges, “There’s always going to be snags—ask Eurex.” The CFTC on Tuesday delayed a vote until next week on the Swiss-German exchange’s bid to start a U.S. Exchange on Feb. 1. If approved, Eurex says it will launch its U.S. exchange Feb. 8.
Last August, CBOE was approved as a designated contract market by the CFTC, which regulates futures exchanges. VIX, based on S&P 500 Index options prices, is designed to reflect investor consensus of 30-day stock market volatility. |
