New Mini VIX Future Product Impacts Cboe Global Markets 2020 Revenue
Posted on 02/06/2021
Cboe Global Markets, Inc. (Cboe: CBOE) recently reported financial results for the 2020 fourth quarter and full year.
Cboe Global Markets saw futures net revenue of US$ 21.5 million decreased US$ 9.4 million, or 30 percent, primarily due to a decline in net transaction fees. Net transaction and clearing fees decreased $10.1 million, or 39 percent, reflecting a 30 percent decrease in ADV and a 12 percent decline in revenues per contract (RPC). The revenues per contract decline was primarily due to the addition of Mini-VIX futures, which are one-tenth the size of the standard VIX futures and have a lower fee per contract. The RPC variance also reflects higher volume from corporate bond index futures and associated lead market maker incentives.
On August 10, 2020, launched the trading in Mini Cboe Volatility Index (VIX) futures on Cboe Futures Exchange (CFE). The new smaller-sized contract builds on the success of VIX futures. New Mini VIX futures (ticker symbol: VXM) are structured like the standard VIX futures contract, but feature a $100 multiplier, making them one-tenth the size of the standard contract. The smaller notional value of the mini contract is designed to provide additional flexibility in volatility risk management and greater precision when allocating among smaller, managed accounts, which is expected to appeal to a broad set of market participants, including Commodity Trading Advisors (CTAs), Futures Commission Merchants (FCMs), proprietary trading firms, institutional investors and sophisticated retail investors.