2010 Annual Report
  • Chairman Letter
  • Market Leadership
  • Unique Products
  • Trading Technology
  • Industry Advocacy
  • CBOE Holdings
  • Financial Report
Trading Technology:
Multiple Market Models Image of VIX Pit
CBOE’s Hybrid model allows for both floor and screen-based trading in a single environment.

CBOEdirect, among the most advanced trading platforms in the world, allows us to leverage our proprietary technology, create synergies in trading and quickly adapt to changes in the marketplace. CBOEdirect now supports four different market models: CBOE’s Hybrid Trading System, which blends features of electronic and open outcry trading into a single market; the all-electronic “maker-taker” model on the C2 Options Exchange; the open access model with dedicated liquidity providers at CBOE Futures Exchange (CFE); and the high-frequency, order driven marketplace of CBOE Stock Exchange (CBSX).

CBOE’s Hybrid Trading System, created in 2003, allows customers to choose how their options orders are handled; access a diverse pool of liquidity; and execute complex strategies that may not be available on purely screen-based trading systems.

CBOE’s Hybrid has carved a unique niche within the industry by enabling the exchange to offer both electronic and open outcry trading models simultaneously—without sacrificing the benefits each brings to different types of customers.

In October 2010, the Company introduced an alternative market to its Hybrid model with the launch of the C2 Options Exchange. C2 is an all-electronic market that emphasizes speed and efficiency in trading execution, while its pricing model offers a different, but competitive fee schedule. The all-electronic nature of C2 enables CBOE Holdings to compete head-to-head with the growing number of maker-taker market models in the U.S. options industry space and extend our customer reach beyond its traditional Hybrid market model, appealing to an even broader base of options market participants, including high speed traders.

C2 is positioned to capture volume in two ways: by seeking to retain the order flow currently routed away from CBOE’s Hybrid to other exchanges because of industry linkage requirements; and by attracting incremental volume from other exchanges by virtue of its differentiated market model and fee schedule.

A major goal for C2 in the upcoming year will be the listing of an electronic S&P 500 Index option (SPX) product in the first half of 2011. The electronic version of the SPX index option will be identical in structure to CBOE’s traditional SPX index option product, except the new electronic product will have “p.m.” settlement. The new product will broaden CBOE’s customer reach by providing a “point-and-click” version of its most-actively traded index product, with a settlement convention found in the Over-The-Counter (OTC) market.

Our trading platform, CBOEdirect, provides state-of-the-art functionality, speed, capacity and reliability, while its flexible design allows the Company to offer multiple trading models, multiple products and multiple matching algorithms—stocks, futures and now, two different options models.


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Hybrid Trading System Executions in 2010
Percentage of Total Trades
All CBOE Products

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Hybrid Trading System Executions in 2010
Percentage of Total Volume
All CBOE Products

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C2 Total Options Volume
In Millions

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