CBOE Holdings, Inc. (Nasdaq: CBOE) announced plans today to list on C2, the company’s new alternative exchange, an electronically-traded version of its flagship S&P 500 Index option (SPX), which it is calling “SPXpm.” The Company submitted a rule filing to the Securities and Exchange Commission (SEC) today and plans to list SPXpm upon SEC approval.
Under the proposed rule change filed with the SEC, SPXpm will be identical in structure to CBOE’s traditional SPX index option product, except it will have “p.m.” settlement.
The company intends to broaden its customer reach by providing this “point-and-click,” “p.m.” settled version of its most actively traded index product. As proposed, SPXpm will enable customers to trade SPX options with a settlement convention found in the OTC market, without having to sacrifice the benefits and safeguards of exchange trading and clearing.
“We worked very closely with our customers to determine how best to design and roll out an electronic version of this very popular product,” said William J. Brodsky, CBOE Holdings Chairman and CEO. “Feedback from market participants indicated that p.m. settlement could bring new users into our market.”
“We are very pleased, of course, to continue to offer our traditional SPX product in open outcry to customers who prefer that method,” Brodsky said. “We expect to provide our customers with two very deep pools of liquidity, one that favors point-and-click access and one that favors the flexibility and negotiation available in open outcry.”
CBOE’s traditional SPX options product is a cash-settled contract with “a.m.” settlement. The electronic version of the SPX contract also will be cash settled, but will feature “p.m.” settlement. Both feature European-style expiration.
An “a.m.” settlement value is based on the reported level of the index derived from the opening prices of the component securities on the day of exercise, while a “p.m.” settlement value is based on the reported level of the index derived from the last reported prices of the component securities of the index at the close of market hours on the day of exercise.
About S&P 500 Index (SPX) options
SPX options are CBOE’s flagship product. Today, the S&P 500 Index stands as the premier broad-market indicator. The options based on the index provide a powerful and flexible tool that allows investors to synthetically adjust their positions to a 500-stock portfolio, making SPX options a leading portfolio risk management tool among institutional investors. SPX options have been traded exclusively at CBOE since 1983 and have grown into the largest and most-actively traded contract at the exchange, as volume totaled more than 175 million contracts in 2010.
CBOE Holdings, Inc. is the holding company for Chicago Board Options Exchange (CBOE), C2 Options Exchange and other subsidiaries. CBOE, the largest U.S. options exchange and creator of listed options, continues to set the bar for options trading through product innovation, trading technology and investor education. CBOE offers equity, index and ETF options, including proprietary products, such as S&P 500 options (SPX), the most active U.S. index option, and options on the CBOE Volatility Index (VIX). Other products engineered by CBOE include equity options, security index options, LEAPS options, FLEX options, and benchmark products such as the CBOE S&P 500 BuyWrite Index (BXM). CBOE’s Hybrid Trading System incorporates electronic and open-outcry trading, enabling customers to choose their trading method. CBOE’s Hybrid is powered by CBOEdirect, a proprietary, state-of-the-art electronic platform that also supports C2 Options Exchange (C2), CBOE Futures Exchange (CFE), CBOE Stock Exchange (CBSX) and OneChicago. CBOE is home to the world-renowned Options Institute and www.cboe.com, named “Best of the Web” for options information and education. CBOE is regulated by the Securities and Exchange Commission (SEC), with all trades cleared by the AAA-rated Options Clearing Corporation (OCC).
This press release contains statements which may be considered forward-looking statements within the meaning of the Securities Exchange Act of 1934, including, without limitation, statements regarding operating strategies, future plans and financial results. Forward-looking statements may be accompanied by words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “possible”, “predict”, “project” or similar words, phrases or expressions. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements made herein. Among the factors that might affect our performance are: legislative or regulatory changes affecting the options markets, including a possible cap of transaction fees; changes in law or government policy, including changes relating to the recently enacted or proposed legislation relating to the current economic crisis; changes to the tax treatment for options trading, including the possible imposition of a transaction tax on options transactions; increasing competition by foreign and domestic entities, including increased competition from new entrants into our markets and consolidation of existing entities; our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities, and our ability to maintain the competitiveness of our existing products and services; our ability to adjust our fixed costs and expenses if our revenues decline; our ability to maintain existing customers, develop strategic relationships and attract new customers; our ability to keep pace with rapid technological developments, including our ability to complete the development and implementation of the enhanced functionality required by our customers; our ability to accommodate increases in trading volume and order transaction traffic without failure or degradation of performance of our systems; our ability to maintain our growth effectively; the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others; our ability to preserve and maintain our exclusive licenses; our ability to generate revenue from our market data that may be reduced or eliminated by the growth of electronic trading or declines in subscriptions; changes in our rate per contract due to shifts in the mix of the products traded, the trading venue and the mix of customers; the ability of our compliance and risk management methods to effectively monitor and manage our risks; changes in price levels and volatility in the derivatives markets and in the equity markets in general; economic, political and market conditions, including the recent volatility of the capital and credit markets and the impact of current economic conditions on the trading activity of our current and potential customers; our ability to continue to generate funds to allow us to continue to invest in our business; industry and customer consolidation; decreases in trading activity; and the unfavorable resolution of material legal proceedings.
The Company does not undertake any obligation to update the information contained herein, which speaks only as of the date of this press release. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 under the heading “Forward-Looking Statements” and/or “Risk Factors,” and other reports filed by the Company from time to time with the SEC. Such discussions regarding risk factors and forward-looking statements are incorporated herein by reference.
CBOE®, Chicago Board Options Exchange®, CBSX®, CBOE Stock Exchange®, CFE®, CBOEdirect®, FLEX®, Hybrid®, LEAPS®, CBOE Volatility Index® and VIX® are registered trademarks, and BuyWrite(SM), BXM(SM), C2(SM), C2 Options Exchange, Incorporated(SM), CBOE Futures Exchange(SM), SPX(SM) and The Options Institute(SM) are servicemarks of Chicago Board Options Exchange, Incorporated. Standard & Poor’s® , S&P® , S&P 500® , Standard and Poor’s Depositary Receipts®, and SPDR® are registered trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Chicago Board Options Exchange, Incorporated.
CONTACT: Media, Gail Osten, +1-312-786-7123, firstname.lastname@example.org, or Gary Compton, +1-312-786-7612, email@example.com; or Analyst, Debbie Koopman, +1-312-786-7136, firstname.lastname@example.org
Web Site: http://www.cboe.com
Tagged with: (NASDAQ: CBOE) • Business • CBOE Holdings Inc • CBOE S&P 500 BuyWrite Index • Chicago Board Options Exchange • Chicago Mercantile Exchange • Commodities • Companies • Futures • Industry • Markets • NASDAQ • options • Options Clearing Corporation • S&P 500 Index • Securities Exchange Act of 1934 • SPX • trading • U.S. Securities and Exchange Commission • VIX • William J. Brodsky
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