Cboe Europe Derivatives 2023 Recap and Look Ahead

Iouri Saroukhanov
January 30, 2024

As we start a new year, we wanted to recap some of our key achievements in 2023 and provide an update on what to expect from us in 2024 to help support your European derivatives trading needs.

Some of our 2023 highlights, which we explore further below, include:

  • Successfully expanding into pan-European single stock options from November; 
  • Securing commitment from Interactive Brokers, one of the world’s largest retail brokers, to join CEDX and provide its clients with access to the exchange’s index derivatives and single stock products;
  • A series of volume records in our index derivatives, including a record monthly ADV in December and record quarterly volume in Q4;
  • The introduction of a new Volume Incentive Programme for our index futures;
  • Re-enforcing the eligibility of CEDX index futures to qualified US investors.

2023 Volumes and Participation

The last year was a busy and exciting one as we continued our journey to creating a modern, vibrant pan-European equity derivatives marketplace that brings greater efficiencies to participants and grows the European market overall. Total CEDX volumes were 46,970 lots compared with 22,857 in 2022. March was an all-time record month with 6,574 contracts traded, beating the previous record of 3,824 contracts set in January (see chart 1).

Chart 1 - CEDX's Total Volumes Since Launch

Source: CEDX data

CEDX ended the year particularly strongly, with a record monthly ADV in December of 295 lots across our futures and options products. We also enjoyed record quarterly volumes of 15,195 in Q4, up 85% on Q4 2022. In terms of specific contracts, the largest volume since launch continues to be in the Cboe Eurozone 50 index options contract (EZ50O), followed closely by the Cboe Eurozone 50 index future (EZ50F). You can view our December 2023 infographic here for further information on volume breakdowns.

The introduction of a new Volume Incentive Programme in August for our index futures has helped to boost activity, and this was recently extended to at least 31 March 2024.

Given market developments, we spent a lot of time highlighting to clients that all CEDX index futures products are based on indices from our benchmark administrator Cboe Europe Indices, where daily checks are performed that help to ensure that CEDX index futures adhere to CFTC rules on broad-based indices. This enables qualified US investors to access CEDX futures, providing they do so via brokers.

From a participant perspective, we continued to expand our client base in 2023 and are seeing interest from a range of new firms, including retail brokers, institutions and regional firms who are excited by CEDX’s proposition.

Product Highlights

The highlight from a product perspective - and our major focus in the early part of 2024 - was the successful expansion into pan-European single stock options in November. Our strategy is to grow volumes in European options by building a pan-European ecosystem – in terms of trading, clearing, and market data – that simplifies access to and dramatically reduces costs for those wishing to access this market. We are also promoting a US-style on-screen market to attract participants accustomed to this type of market in the US.

Furthermore, single stock options traded on CEDX will be cleared by Cboe Clear Europe, the largest pan-European clearing house. As well as offering margin offsets between index and single stock products, Cboe Clear will permit the use of underlying stocks as collateral to provide offsets against matched equity option positions, delivering a potential initial margin reduction for a covered call position of around 70%, according to initial estimates. Stock settlement (on options exercise and assignment) will take place in domestic Central Securities Depositories (CSDs), removing unnecessary costs and allowing for settlement netting with relevant cash equities transactions.

We will have a wider universe of products available by the end of Q1 2024 and, in line with client readiness, will start our liquidity provision programmes at the end of the March 2024 expiry. You can trade CEDX’s single stock options for free during all of 2024.

We announced that the firms that have committed to supporting our expansion into single stock options include existing participants ABN AMRO Clearing, All Options, Barak Market Making B.V, Goldman Sachs, Morgan Stanley and Susquehanna International Securities. We are also excited that Interactive Brokers committed to connecting to CEDX for the first time, which is a strong endorsement of our strategy to grow volumes in European through the creation of a simpler, lower cost, more efficient pan-European marketplace.

Daily-Expiring Options

I will leave the final word on the hot topic of daily-expiring options. We have been closely monitoring the successful adoption of these products on Cboe’s US options exchanges and recent developments in Europe. CEDX’s product development is driven by client demand primarily, but weekly and daily-expiring contracts are under consideration for 2024 on a select group of underlyings for our index derivatives. Please stay tuned for further information.

Disclaimer: This information is not being provided as part of an offer or sale of any futures or options products to any persons located within the United States.