CBOE, CFE to Launch New ETF-Based Volatility Index Products

Options Industry

CBOE, CFE to Launch New ETF-Based Volatility Index Products

Posted February 21st, 2012 by The Options Insider in Industry

Last Friday, CBOE Holdings, Inc. announced that Chicago Board Options Exchange (CBOE) and CBOE Futures Exchange (CFE) will each launch new ETF-based volatility index products.

On Tuesday, CFE will launch the CBOE Brazil ETF Volatility Index security futures (VXEW) and on Tuesday, March 6, CBOE Brazil ETF Volatility Index options (VXEWZ) will debut.

The calculation of the CBOE Brazil ETF Volatility Index is derived from applying CBOE's VIXÆ methodology to the prices of CBOE listed options on the iShares MSCI Brazil Index Fund (EWZ).

In 2011, EWZ options were the seventeenth most actively traded ETF options in the U.S., according to CBOE.

CBOE Holdings Chairman and CEO William J. Brodsky said of the new products, "We continue to see tremendous interest in trading VIX options and futures and our other volatility-related products and are committed to building our volatility franchise to meet this investor demand. Expanding our roster of volatility options and futures products into sectors such as emerging markets is the next step in this evolution."

Barclays Capital is the Lead Market Maker (LMM) for the CBOE Brazil ETF Volatility Index security futures at CFE while Group One Trading is the Designated Primary Market Marker (DPM) for VXEWZ options at CBOE.

The new CBOE Brazil ETF Volatility Index products join a series of CBOE and CFE volatility index product launches in 2012. On January 9, CFE began trading CBOE Emerging Markets ETF Volatility Index security futures (VXEM) and the CBOE options trading on VXEEM started on January 31.