Cboe Europe Equity Benchmarks FAQ

Cboe Europe Equity Benchmarks use real-time data from trading taking place on its own exchange, which is Europe’s largest by value traded – Cboe Europe accounts for over 30% of the value traded in the largest stocks each day. This means that any investor using a Cboe Europe index will be able to get an accurate, real-time view of exactly how markets are moving.

Furthermore, Cboe Europe indexes have a very high degree of correlation to existing products. We worked hard with investors and index users to ensure we offered a robust and trustworthy alternative.

 

In June 2016, Cboe Europe launched 18 UK indexes that provide benchmarks for the performance of large, medium and small capitalised UK companies, the UK market as a whole, the alternative investment market in the UK and the 12 major UK economic sectors. Our coverage has expanded to offer single country indices in all major European markets (15 in total), as well as a range of European regional (e.g. Cboe Eurozone 50 index, Cboe Europe All Companies Index) and sector indices, a total of 57 Cboe Europe Equity Benchmarks.

The Brexit 50/50 Indexes measure the impact of currency movements and evolving trade deals on the performance of the top 100 UK-listed companies by dividing these  equally between those with the largest and smallest proportion of GBP revenue.

Currency movements and changes to the cost of buying or selling goods and services are both fundamental elements associated with Brexit and will have a material impact on companies’ profitability over the coming years.

The Brexit 50/50 indexes, in using accurate and normalised data related to companies’ overseas earnings, are able to measure the impact of these two important elements.

A company’s exposure to overseas earnings will be affected by Brexit, through both currency movements and new trade deals.

Cboe Europe has partnered with FactSet as geographic revenue data is difficult to analyse due to companies’ non-standardised disclosures and FactSet’s GeoRev service has analysed and normalised this data to derive a consistent, accurate and flexible dataset that accurately breaks down a company’s revenues into any geographic country and region.

The Equity Benchmarks are valued immediately using the real-time trading data taking place at the same time on Cboe Europe’s market. Because of the sheer size of Cboe Europe’s European market, and the varied participants trading at any given time, our prices are often a more accurate representation of those on other markets.

By using real time data, private investors will be able to make trading and investment decisions as the market moves, closing the gap on institutional investors, who have historically been privileged with access to real time index data.

All the indexes are rebalanced quarterly in March, June, September and December. Cboe Europe’s Index Rules and Methodology also make provision for adapting the indexes between rebalance dates, for example to account for corporate actions so they do not unduly affect the index.

Cboe Europe Index Rules and Methodology are applied to the creation and management of all the indexes. Valued using Cboe Europe’s own price data, the performance of all the Equity Benchmarks has, as intended, been highly correlated with their corresponding peer benchmark.

Cboe Europe’s family of indexes are all designed and managed under its own set of consistent and transparent rules and valued using its own market data. The Equity Benchmarks are all valued at 10,000 @ 31 Dec 2010. This allows the market to easily and accurately compare market and sector performance.

We believe that using Cboe Europe’s own prices provides licensees with the necessary assurance that market data prices and, by consequence, license costs, will not spiral out of control. This contrasts to the approach of our competitors, whose market data costs have continued to decouple from their reducing market share.

For the Cboe Europe Equity Benchmarks, there is historical data available from September 2010, with one exception. The Brexit 50/50 indexes started from 31 December 2015.

Cboe Europe trades throughout the continuous trading period of the national market, from as soon as their opening auction complete until their closing auction starts. The Equity Benchmarks are therefore calculated throughout the trading day.

We are actively monitoring the demand for derivatives on our indexes and considering alternatives for trading and settlement of these products.