Cboe at ‘Critical Inflection Point’

Shanny Basar
Credit Trading at Crossroads

Ed Tilly, chairman, president and chief executive of Cboe Global Markets, said the exchange group is at a critical inflection point as it focuses on the strategic growth drivers of data and analytics, global derivatives and digital assets.

Cboe hosted its first investor day in 10 years on 16 November.

Edward Tilly, CBOE

Edward Tilly, Cboe Global Markets

Tilly said: “We chose this time because we believe Cboe is at a critical inflection point in our next phase of growth. As we broaden our global footprint, we have an unmatched opportunity to evolve the CBOE network.”

Chris Isaacson, chief operating officer at Cboe, described the firm as building one of the world’s largest derivatives and securities networks as it trades more than $100bn in value daily in 23 markets, overseen by 18 regulators across four asset classes.

He described Cboe as a dramatically different company from when he joined as part of the Bats acquisition following nine acquisitions, with three further M&A transactions in recent weeks.

“We’ve grown from only three markets to 23 markets in the last five years,” Isaacson added. “We already have three more markets planned to come online in the first half of next year with the launch of US Treasuries, the acquisition of ErisX and the NEO exchange.”

On November 4 Cboe announced it will be launching a trading platform for on-the-run US Treasuries based on the electronic trading capabilities of Cboe FX.

Cboe Fixed Income is slated to go live in the second quarter of 2022, subject to regulatory approvals.

David Howson, president Europe and Asia Pacific, said the FX team plans to launch a differentiated  dealer-to-dealer trading platform for US treasuries with liquidity curation and a quantitative approach using data and analytics.

“It brings the opportunity to improve the outcomes for liquidity providers and order flow providers alike,” said Howson.

Cboe announced on 15 November that it is acquiring Aequitas Innovations, more commonly known as NEO, a fintech that includes a fully registered Tier-1 Canadian securities exchange. The deal will take Cboe’s total market share in Canada to more than 16%.

Howson said:  “NEO has a growing exchange-traded product and corporate listings business which will help inform us in how we grow our listings business globally.”

In October Cboe said it was acquiring Eris Digital Holdings (ErisX),  a US-based digital asset spot market, a regulated futures exchange and a regulated clearing house.

Digital assets

Isaacson described the pending acquisition of ErisX as Cboe’s  latest ecosystem play.

“In one step, we acquire spot trading, derivatives and clearing with exceptional partners committed to help us define the digital asset class for the future,” he added. “It leverages all our core competencies.”

Source: Cboe.

Isaacson continued that the digital asset market is at a critical inflection point with strong retail demand, institutional interest and mainstreaming, even in traditional financial firms.

“As a leading provider of global market infrastructure and tradable products, we can bring the knowledge structure and transparency of our trusted markets to the digital asset space,” said Isaacson.

Cboe said the digital asset market is conservatively expected to grow at an annual rate of at least 25% over the next five years and it expects turnover to reach more than $1 trillion per day by the end of the decade.

In addition to transactions, Cboe said there is also tremendous potential to generate and provide benchmark crypto data that is currently opaque and untimely.


Cboe anticipates that organic revenues in Data and Access Solutions will grow at between 7% and 10% annually over the next three to five years.

Cathy Clay, Cboe Global Markets

Cathy Clay, global head of Data & Access Solutions, said the business has made revenues of $422m so far this year, which is just 1% of the total addressable market.

Cboe estimated that the total addressable market is $37bn, including a $33bn annual spend on financial market data and more than $4bn annual spend on indices. The market is estimated to have a compound annual growth rate of between 4% and 6% to reach between $45bn and $50bn by 2025.

“Advances in big data and scale computing are creating opportunities for greater efficiencies in the financial markets,” said Clay. “Regulation has also created new data requirements from customers as they conform to the ever changing, ever more complex landscape.”

The business builds on the foundation of Cboe’s global exchange data with proprietary analytics and indices, with  products built on an integrated core technology stack which allows new asset classes and geographies to be added quickly. Clay said this allows Cboe to move nimbly as new client demands or market trends emerge.

“Our index business is built in a way that allows us to respond to the rapidly changing investment landscape, where we expect to see high growth in ESG and thematic indices as well as new indices and benchmarks,” she added.

Data revenues are currently highly concentrated in the US but Clay believes Cboe has a tremendous opportunity to grow into EMEA and APAC in the next few years and distribute the product portfolio globally.

“The next step is to bring all the data from all our exchanges into our data products, analytics and indices,” Clay added. “We are already in motion to bring the new EU derivatives marketplace into our products so that more market participants can gain access to that market.”


Tilly described the recent rise in engagement from retail customers as unprecedented. To cater to this audience, Cboe is launching Nanos, an options contract designed to simplify trading. The first Nanos on the S&P 500 Index is due in the first quarter of 2022.

Tilly said Nanos are targeting the 150 million retail customer accounts, of which only 30% currently use options.

Source: Cboe.

“We are very excited about the many initiatives in the works with the derivatives franchise,” he added. “We anticipate that collectively they will contribute 2% to 4% of total organic net revenue growth over the next three to five years.”

Arianne Criqui, head of derivatives and global client services, said Cboe will enable auctions for retail customers in SPX options to improve execution. In addition, at the end of next year Cboe will deliver options on futures.

Rob Hocking head of derivatives strategy, said Cboe will be focussing on capital efficiencies for customers through initiatives such as customer portfolio margin compression and exploring cross-market clearing relationships.

Ade Cordell, Cboe NL

Ade Cordell, president, of Cboe Netherlands, said the European derivatives business – which launched on September 6 – provides an annual revenue opportunity of €25m over a three-year horizon as it provides a single point of access to European markets which were previously fragmented.

“We are bringing US market structure and on-screen trading to Europe and allowing market participants to trade a range of pan-European benchmarks on one venue,” Cordell added. “Clearing is in one silo which brings margin offsets and efficiencies.”


Howson said Cboe has been able to build an unrivalled presence in all of the highest value markets open to competition across the world.

David Howson, Cboe Global Markets

“Our customers are increasingly global and looking for coherent global offerings,” he added. “There is a real opportunity for us to unlock incremental value by bringing uniformity to customers – uniformity of access to markets and products; access to data and trading protocols.”

For example, periodic auctions are being introduced to the US think about from Europe and the BIDS network will be extended into Canada and Asia Pacific.

Revenue growth

Cboe has increased its target of growing medium-term organic total net revenue growth for the group to between 5% and 7% annually, from the pervious goal of between 4% – 6%.

Tilly said: “The company believes that by expanding its global presence to the highest value markets, increasing access to its differentiated products and solutions and accelerating its growth with recurring non-transaction revenue, Cboe is positioned to drive long-term shareholder value.”

Cboe is also introducing a return on invested capital (ROIC) target of greater than or equal to 10% over a three to five years.

Related articles

  1. Buy Side Responds to Esma on Clearing Swaps

    Reasonable steps should be taken to make derivatives referencing €STR available to customers.

  2. Basel Committee Consults on Interest-Rate Risk

    LCH SwapAgent said trade highlights its coordination of the transition to risk free rates for non-cleared OTC ...

  3. Nasdaq has ambitions to launch futures on carbon removals as the market grows.

  4. Anticipated Ethereum Merge has increased demand to hedge risk on a regulated venue.

  5. From The Markets

    CME Launches Ether Options

    Interest in Ether derivatives is surging ahead of the upcoming Ethereum Merge.