Cboe, CBSX, & CFE Press Releases



CHICAGO, March 5, 2010 - The Chicago Board Options Exchange (CBOE) today announced that it has entered into a license agreement with CME Group that extends the reach of CBOE's volatility franchise. CBOE will apply its proprietary CBOE Volatility Index® (VIX®) methodology to price data of, initially, up to five products that will be listed on one of CME Group's exchanges and create new volatility benchmark indexes that it will license for use to CME Group. CBOE also will disseminate real-time data on the new benchmark indexes to CME Group and industry data providers.

CBOE, which introduced the VIX methodology in 1993 as the first measure of volatility in the overall market, retains ownership of both the methodology and the new volatility indexes that will be used by CME Group. The agreement grants CME Group a worldwide license to trade futures and options on futures products based on the new indexes being calculated by CBOE.

CBOE, through its partnership with Standard and Poor's, has license agreements allowing other exchanges -- including Euronext, Taiwan Futures Exchange, National Stock Exchange of India, and the Australian Stock Exchange -- to use the VIX methodology.  The agreement with CME Group marks the first time that CBOE will apply its VIX methodology to non-CBOE product data to create new volatility index benchmarks.

"We are pleased to be able to further extend the application of CBOE's volatility benchmark index methodology  by working with CME Group. Market participants in different commodity sectors will now have the opportunity to hedge volatility risk distinct from price risk," CBOE Executive Vice President Richard G. DuFour said. "VIX has become the accepted standard for measuring market volatility, and the new products that will result from this agreement illustrate the broad utility of this methodology." CBOE and CME Group have tentatively agreed that the first new volatility indexes could include crude oil, corn, soybeans and gold. CBOE and CME Group in the future may agree to make additional volatility indexes subject to the license agreement. 

CBOE expects to begin dissemination of the volatility benchmark indexes by late summer 2010, with CME Group expected to launch a volatility contract on each of the indexes on one of its exchanges within about nine months of the first dissemination of each benchmark index.

CBOE, the leading exchange in the volatility space and the home of volatility benchmarks, strategies and products, now calculates and disseminates benchmark data on 11 different volatility-related products, including the widely followed VIX, the leading barometer of investor sentiment and stock market volatility.  In addition to its suite of benchmarks and strategies, volatility options and futures contracts on VIX can be traded at CBOE and CBOE Futures Exchange (CFE), respectively. 

Chicago Board Options Exchange (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), the world's barometer for market volatility. Other groundbreaking 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 the 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).    

CBOE Media Contacts:      
Gail Osten  
(312) 786-7123  
[email protected]   

Gary Compton   
(312) 786-7612 
[email protected]   

CBOE®, Chicago Board Options Exchange®, CBSX®, CBOE Stock Exchange®, CFE®, CBOEdirect®, Hybrid®, CBOE Volatility Index®, and VIX® are registered trademarks, and CBOE Futures ExchangeSM and SPXSM are servicemarks of Chicago Board Options Exchange, Incorporated. Standard & Poor's®, S&P®, S&P 100®, 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.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

In connection with the proposed restructuring transaction, CBOE Holdings, Inc. ("CBOE Holdings") has filed certain relevant materials with the United States Securities and Exchange Commission (SEC), including a registration statement on Form S-4. Members are encouraged to read the registration statement, including the proxy statement/prospectus that are a part of the registration statement, because it contains important information about the proposed transaction. Members are able to obtain a free copy of the proxy statement/prospectus, as well as the other filings containing information about CBOE Holdings and the Chicago Board Options Exchange, Incorporated ("CBOE"), without charge, at the SEC's Web site, http://www.sec.gov/, and the companies' website, http://www.cboe.com/. In addition, CBOE members may obtain free copies of the proxy statement/prospectus and other documents filed by CBOE Holdings or the CBOE from CBOE Holdings by directing a request to the Office of the Secretary, CBOE Holdings, Inc., 400 South LaSalle Street, Chicago, Illinois 60605.

CBOE Holdings, the CBOE and their respective directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of CBOE Holdings and of the CBOE is available in the prospectus/proxy statement.     

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, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606. The information on this release is provided solely for general education and information purposes. Supporting documentation for claims, comparisons, recommendations, statistics or other technical data is available by calling 1-888-OPTIONS, sending an e-mail to [email protected], or by visiting http://www.cboe.com/VIX.  No statement within the release should be construed as a recommendation to buy or sell a security or to provide investment advice.  Past performance is not indicative of future results. Performance information contained within this release is hypothetical. Unlike an actual performance record, hypothetical results do not represent actual trading.     Research results represent those of the author and do not necessarily represent the views of CBOE.