Transcript CBOE Press Lunches Chicago and New York January 14 and 15

CBOE Press Luncheon
New York
January 13, 2015
Edward Tilly, Chief Executive Officer
Jim Lubin, Vice President, CFE Senior Managing Director
David Gray, Vice President
CBOE HOLDINGS
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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 Total Volume and ADV Increased 12% in 2014
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…
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2014 Trading Volume
*includes SPX Weeklys
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2014 Market Share
Focused on being among the leaders in options 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
28.6%
27.5%
22.8%
20.3%
CBOE multiply-listed market share
of 20.8% versus 20.3% in December
2013
¹Market share stats exclude dividend trades
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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
CBOE Relative Stock Performance vs Major Indexes
January 1, 2014 through December 31, 2014
115%
105%
95%
CBOE
CBOE HOLDINGS
Dow Jones
NASDAQ Financials 100
S&P 400 Mid Cap
12/26/2014
12/16/2014
12/6/2014
11/26/2014
11/16/2014
11/6/2014
10/27/2014
10/17/2014
10/7/2014
9/27/2014
9/17/2014
9/7/2014
8/28/2014
8/18/2014
8/8/2014
7/29/2014
7/19/2014
7/9/2014
6/29/2014
6/19/2014
6/9/2014
5/30/2014
5/20/2014
5/10/2014
4/30/2014
4/20/2014
4/10/2014
3/31/2014
3/21/2014
3/11/2014
3/1/2014
2/19/2014
2/9/2014
1/30/2014
1/20/2014
1/10/2014
85%
12/31/2013
Indexed Price Performance
125%
S&P 500
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Strategic Initiatives
Develop New Products
Increase Access to Our Marketplace
Educate and Engage Customers
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Develop New Products
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
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Develop New Products
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
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Increase Access to Our Marketplace
Extended Trading Hours
VIX Futures
Successfully 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 Options
Plans 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 VIX
Futures 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 Exchange
Today, 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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Educate and Engage Customers
CBOE the “Go-To” Source for Options, Volatility Trading Information
World-Renowned Options Institute
Conducting hundreds of seminars
for tens of thousands of investors -in the classroom and online
Revised CBOE.com
Enhanced site optimizes desktop,
mobile phone and tablet viewing
New “CBOE Mobile” App
17,000+ downloads/updates since Nov
Global Marketing/Education
Increasing 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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Educate and Engage Customers
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) (press release & white paper excerpts in folder)
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
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Q&A
CBOE
400 South LaSalle Street
Chicago, Illinois 60605
www.cboe.com
@CBOE