· Latest initiative represents Cboe and MSCI’s growing relationship and will expand Cboe’s current product suite
· Cboe plans to offer three new options tied to MSCI’s international, developed, emerging and U.S. markets benchmark indices, set to launch on March 18, pending regulatory approval
· Cboe also introduces two new volatility indices based on existing MSCI Index options and the proprietary VIX Index Methodology
CHICAGO – February 21, 2024 – Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, today announced a new strategic initiative in collaboration with MSCI Inc. (MSCI), a leading provider of critical decision support tools and services for the global investment community, to expand its suite of Cboe-MSCI Index options and volatility indices. The initiative underscores Cboe and MSCI’s deepening relationship and continues to leverage the companies’ combined expertise to develop innovative solutions for investors worldwide.
Cboe and MSCI have collaborated successfully for many years to offer a variety of indices and tradable products. In this latest initiative, Cboe will further expand its existing MSCI Index options suite by introducing three new products based on additional MSCI global indices: Cboe MSCI World Index Options (MXWLD), Cboe MSCI ACWI Index Options (MXACW), and Cboe MSCI USA Index Options (MXUSA). These options are set to begin trading on Monday, March 18, pending regulatory approval.
In addition, Cboe is broadening its volatility index suite with the launch of two new Cboe MSCI Volatility Indices: the Cboe MSCI EAFE Volatility Index (VXMXEA) and the Cboe MSCI Emerging Markets Volatility Index (VXMXEF). Developed using Cboe’s proprietary VIX® Index methodology, these indices are based on existing MSCI EAFE Index Options (MXEA) and MSCI Emerging Markets Index Options (MXEF) and are designed to provide a transparent measure of the market’s expectation of 30-day implied volatility by these respective MSCI index option classes.
Similar to the VIX Index, which is designed to reflect investors’ consensus view of future (30-day) expected U.S. stock market volatility, the new Cboe MSCI Volatility Indices aim to provide comparable measures for international and emerging equity market volatility.
“In today’s rapidly evolving landscape, investors require sophisticated tools to navigate the markets with confidence,” said Catherine Clay, Global Head of Derivatives at Cboe. “Our ongoing collaboration with MSCI reflects our shared commitment to fostering innovation and providing solutions that empower investors to better manage risk and seize potential opportunities in the global marketplace. We are excited to expand our Cboe-MSCI toolkit with additional index options and volatility indices – an enhancement that will not only broaden our customers’ product choice, but also enrich the ways they interact with and analyze the global markets.” Clay added, “Crucially, the three new index options, which cover developed and emerging markets, are expected to also give investors comprehensive access to gain a variety of different exposures around the globe.”
The new options will be based on the MSCI World Index, the MSCI ACWI Index and the MSCI USA Index, which are renowned benchmarks for measuring international, developed and emerging markets and U.S. equity performance, respectively. Significantly, both MXWLD and MXUSA options will be based on a fraction (1/100th) of the value of their underlying index.
With a smaller index value, MXWLD and MXUSA options may be more accessible to a broad base of customers with diverse investment objectives, ranging from asset owners aiming to track benchmark index exposure, registered investment advisers in search of new sources of yield, or individual investors seeking straightforward exposure to options linked to global benchmark indices.
“We are pleased to expand our strategic relationship with Cboe in new offerings that investors around the world can use to help them manage risk and exposure,” said George Harrington, Global Head of Derivatives Licensing at MSCI. “The launch of the Cboe MSCI EAFE Volatility Index (VXMXEA) and Cboe MSCI Emerging Markets Volatility Index (VXMXEF) provides the investment community with benchmarks for option investing, and Cboe’s launch of options linked to the MSCI World Index, MSCI ACWI Index and MSCI USA Index further develops the ecosystem of tradable products.”
MXACW, MXUSA, and MXWLD will have standard options that expire on the third Friday of each month. In response to customer feedback, Cboe plans to also list five end-of-week expirations, which are expected to begin trading on March 21, 2024, pending regulatory approval.
The new index options join the current suite of Cboe MSCI tradable products, which includes the Cboe MSCI EAFE Index Options (MXEA) and Cboe MSCI Emerging Markets Index Options (MXEF). Like these existing offerings, the newly launched options will follow a European-style exercise (no early exercise), are cash-settled (no delivery or assignment of shares) at expiration and may potentially offer favorable tax treatment[1]. In addition, the new options are integrated into Cboe’s existing infrastructure and will be traded and settled via the same exchange connections and clearinghouse as the current Cboe MSCI index options.
For more information on Cboe MSCI Index options, visit Cboe’s website.
