1 cboe holdings 1 cboe press luncheon new york january 13, 2015 edward tilly, chief executive...
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1CBOE HOLDINGS 1
CBOE Press LuncheonNew YorkJanuary 13, 2015
Edward Tilly, Chief Executive OfficerJim Lubin, Vice President, CFE Senior Managing DirectorDavid Gray, Vice President
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Forward-Looking Statements
This presentation may contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those statements that reflect our expectations, assumptions or projections about the future and involve a number of risks and uncertainties. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause actual results to differ materially from that expressed or implied by the forward-looking statements, including: the loss of our right to exclusively list and trade certain index options and futures products; increasing price competition in our industry; compliance with legal and regulatory obligations and obligations under agreements with regulatory agencies; decreases in the amount of trading volumes or a shift in the mix of products traded on our exchanges; legislative or regulatory changes, including heightened capital requirements for some of our customers ; increasing competition by foreign and domestic entities; our ability to operate our business without violating the intellectual property rights of others and the costs associated with protecting our intellectual property rights; our ability to accommodate trading volume and order transaction traffic without failure or degradation of performance of our systems; our ability to protect our systems and communication networks from security risks, including cyber-attacks; economic, political and market conditions; our ability to maintain access fee revenues; our ability to meet our compliance obligations; our ability to attract and retain skilled management and other personnel; our ability to maintain our growth effectively; our dependence on third party service providers; and the ability of our compliance and risk management methods to effectively monitor and manage our risks.
More detailed information about factors that may affect our performance may be found in our filings with the SEC, including in our Annual Report on Form 10-K for the year ended December 31, 2013 and other filings made from time to time with the SEC.
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Today’s Agenda
Introductions
2014 By the Numbers
Trading Volume
Market Share
Stock Performance
Key Initiatives
Develop New Products
Increase Access to Our Marketplace
Educate and Engage Customers
Q & A
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2014 Trading Volume
CBOE Holdings volume was a record 1.3 billion contracts
Increases in ADV across each product category
Record total volume and ADV for CBOE, C2 and CFE
CBOE options volume growth outpaced industry (11% vs 4%)
New all-time highs for total index options, SPX options, VIX options and futures…
CBOE Holdings Total Volume and ADV Increased 12% in 2014
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2014 Trading Volume
*includes SPX Weeklys
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2014 Market Share
In December 2014:
CBOE & C2 accounted for 30.6% of industry volume; up versus 29.3% in December 2013
CBOE total market share of 28.6% versus 27.5% in December 2013
CBOE multiply-listed market share of 20.8% versus 20.3% in December 2013
Focused on being among the leaders in options market share
28.6%
22.8%
¹Market share stats exclude dividend trades
20.3%
27.5%
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2014 Stock Performance
CBOE’s total shareholder return was 25% for 2014, compared with an average of 13% for our Exchange peers
For the fourth consecutive year since our IPO, we increased our quarterly dividend in 2014 to $0.21 per share, an increase of 17%
Stock reached an all-time high of $68.00 last Thursday
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Strategic Initiatives
Develop New Products
Increase Access to Our Marketplace
Educate and Engage Customers
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TABB Group on Institutional Use of U.S. Equity Index Derivatives
Some of the Study Findings: Over 90% of asset managers say their equity index derivatives volume will increase over the next year
Use of equity index derivatives has steadily increased over past 5 years and TABB predicts use will increase by another 6% in the coming year
Reasons for increased usage included market structure changes in both OTC and cash markets, as well as the efficiencies of index derivatives -- lower trading costs due to their inherent leverage and an efficient way to access foreign markets
Develop New Products
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Expanding Index Complex
CBOE is home to the most extensive line of index options products in our industry: S&P, Dow Jones, Nasdaq and Russell
Pleased to expand our index complex with addition of key MSCI Indexes
Combining MSCI’s experience in global benchmark indexes with CBOE’s leadership in developing and trading successful index options
MSCI: global exposure, S&P and Dow: U.S. exposure
CBOE only U.S. exchange for trading MSCI Index options
Launch two of MSCI’s best-known indexes in first quarter:
MSCI EAFE Index (Europe, Australasia, Far East)
MSCI Emerging Markets Index
4 others to follow later in 2015
Ability to develop MSCI volatility products in the future
Develop New Products
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Extended Trading Hours
Increase Access to Our Marketplace
VIX FuturesSuccessfully expanded trading to nearly 24-hours a day, 5 days a week
4.3M contracts traded during non-U.S. hours / 9% of total CFE volume
SPX and VIX OptionsPlans underway to launch SPX and VIX options in first quarter
Hours: 2:00 a.m. to 8:15 a.m., CT, Monday through Friday
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Develop New Products
Diversifying Volatility Product Line
Short-Term VIXFutures and options launched in 2014
9-day gauge, complements flagship, 30-day VIX
10-Year Treasury Note VIX Hedge pure interest rate volatility risk based on U.S. government debt with a single product for the first time
Massive space, but new area for volatility trading, we’ve embarked on extensive education initiative
Foreign ExchangeToday, began calculating values for 3 new volatility indexes on CME Group products (press release in folder):
Dollar/Euro (EUVIX)
Dollar/British Pound (BPVIX)
Dollar/Yen (JYVIX)
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CBOE the “Go-To” Source for Options, Volatility Trading Information
Educate and Engage Customers
World-Renowned Options InstituteConducting hundreds of seminars for tens of thousands of investors -- in the classroom and online
Revised CBOE.comEnhanced site optimizes desktop, mobile phone and tablet viewing
New “CBOE Mobile” App17,000+ downloads/updates since Nov
Global Marketing/EducationIncreasing efforts in Europe and Asia
Institute hosting groups from China
Annual Risk Management Conference held in U.S., Europe and in 2015, Asia
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New White Paper on Fund Use of Options
Study analyzed investment companies that focus on the use of exchange-listed options for portfolio management (options-based funds)
Key Findings:First-ever list of 119 options-based funds (up from 10 funds in 2000)
Options-based funds had higher risk-adjusted returns and lower volatility
Notional $ value of SPX ADV grew to more than $170 billion in 2014
Educate and Engage Customers
(press release & white paper excerpts in folder)
Q&A
CBOE400 South LaSalle StreetChicago, Illinois 60605www.cboe.com@CBOE