Reflecting on 47 Years of Defining Markets

Ed Tilly
April 27, 2020

Sunday, April 26, marked the 47th anniversary of Cboe Global Markets’ founding. But this global pandemic has shown that even after 47 years, the core purpose of our business has not changed: we remain committed to providing a forum for investors to express their views on the market and manage their risk.

The functionality of our markets is more important than ever in this period of unprecedented uncertainty. Each day, the impact of the COVID-19 virus all-too-vividly plays out in the cities and communities in which we work and live. In addition to the tremendous pressure the pandemic puts on our healthcare system, it continues to severely undermine our economy.

While the well-being of our team, customers and broader community has been foremost, as a global exchange operator, Cboe Global Markets remains steadfast in our mission of defining markets.

Working for Our Customers

Cboe’s exchanges have demonstrated remarkable utility throughout this pandemic. The products and services we provide play a vital role in enabling investors to efficiently price and transfer risk, a function that becomes even more critical during periods of tremendous volatility. The technology backing our exchanges is robust and has proven incredibly resilient during these extreme market conditions. Overall, exchanges are well equipped to handle significant volume, and Cboe’s systems are resilient, backed up and have been tested to handle volumes and message rates multiple times our highest volume day on record.

But this is what we do. Exchanges are built to be tested like this. It’s why we operate back-up facilities, design operational redundancies and test our systems repeatedly. And thanks to the diligent preparations of the Cboe team and our trading community, the temporary transition of our trading floor to all-electronic trading was seamless and has continued without incident. I personally look forward to the reopening of our trading floor and its eventual move to its new home in the 141 W. Jackson building in 2021.

Working with Our Regulators

Turning now to recent market conditions. Like many operators, we experienced all-time record trading volumes across many of our platforms in March, and we should all take comfort from the fact that our market infrastructure stood up extremely well to the high levels of activity. That is testament to the work of all participants: Markets have been functioning as they should, investors have been able to manage risk appropriately and it was absolutely the right call for markets to stay open.

I’ll also note that the responsiveness of our regulators during this crisis has been incredible. We worked in close consultation with the SEC and CFTC to facilitate emergency rule relief, receiving approval of several rule filings within 48 hours, allowing us to focus on the day-to-day operation of all of our markets.

But again, this is what we do. We routinely engage with our regulators and legislators to promote markets that work for the benefit of those who participate in them. And this dialogue has never been more critical than during this crisis.

I was grateful to see industrywide acknowledgement that the financial markets are critical infrastructure for the American economy after Cboe joined other industry organizations in a joint letter urging the Federal Reserve, Treasury Department, SEC and CFTC to keep markets open during the crisis.

Elsewhere, we have tirelessly championed for the Standardized Approach to Counterparty Credit Risk (SA-CCR) for years. We commend the action of the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency to authorize early adoption of SA-CCR by banking organizations beginning this month.

The agencies’ decisive action signals how important the options markets are to our broader economy and, in turn, how important professional liquidity provision is to maintaining optimal markets. We led the effort for early adoption of SA-CCR on a best efforts basis because we believe it will be an important step to ameliorate the effects of the Current Exposure Method (CEM) and strengthen liquidity in our marketplace at a time when it is needed most.

Working in Our Communities

I am mindful of Cboe’s role as a global corporate citizen. With offices and customers around the world, we are committed to doing our part to stem the flow of this virus and serve our communities in this time of need. To that end, we are donating Patient Isolation Units, which protect healthcare workers by containing and isolating infected individuals, to health care facilities in our U.S. and UK communities, including Chicago, New York, Kansas City and London.

We have also expanded our corporate matching gift program to increase support of our associates donating to local, national and international organizations involved in COVID-19 relief efforts. I am honored to do our part in helping all those working on the front lines each day to provide and care for those suffering from this virus.

Working toward Our Future

Cboe is experienced in the business of risk management, which requires prudence, knowledge, flexibility and composure. I have full confidence that the Cboe team will continue to meet these challenging times with flexibility and creativity, bringing innovative solutions to customers, and better serving our marketplace and global community.

After Cboe’s 47 years in business, I hope the broader industry and investing public share my renewed appreciation for what exchanges like Cboe have always strived to do: operate fair and orderly markets while serving the needs of our customers.