CBOE Holdings Inc.

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CBOE Holdings Inc.
CBOE Holdings.jpg
Founded 2010
Headquarters Chicago
Key People Edward T. Tilly, CEO
Products Parent Company Of CBOE, C2, CBOE Futures Exchange and other financial service firms
Twitter @CBOE
Website ir.cboe.com>
Releases Company News

CBOE Holdings Inc. is the holding company for the Chicago Board Options Exchange (CBOE), C2 Options Exchange (C2), and CBOE Futures Exchange (CFE).

CBOE Holdings Inc., publicly traded since June 15, 2010, not only owns and operates three exchanges, but also is a majority and minority owner in several financial services firms, including: Livevol, Tradelegs, Vest Financial, American Financial Exchange and CurveGlobal.[1] [2] [3] [4]

On September 26, 2016 CBOE Holdings agreed to buy Bats Global Markets for $3.2 billion in cash and stock.[5]

Background

CBOE Holding's roots go back to the Chicago Board Options Exchange, the first U.S. options exchange launched in 1973. In 1980 the CBOE and the Midwest Stock Exchange consolidated their businesses.

Ten years later, in a Form S-4 filing with the U.S. Securities and Exchange Commission (SEC), CBOE said it intended to change its organizational structure from a non-stock corporation owned by its members to become a wholly-owned subsidiary of a new holding company, CBOE Holdings, Inc., organized as a stock corporation owned by its stockholders.[6]

CBOE used proceeds from the offering for general corporate purposes, but it also returned nearly all of the proceeds to exchange members in two special tender offers after the IPO. CBOE also planned to let members, who would become shareholders, sell stock during the offering.[7]

In February 2012, CBOE Holdings announced its reorganization and the appointment of new officers.[8]

After the restructuring, the CBOE continued to function as a self-regulatory organization (SRO) and to operate its options exchange business. The following entitles became wholly-owned subsidiaries of CBOE Holdings: CBOE Futures Exchange, LLC, Chicago Options Exchange Building Corporation, CBOE, LLC, DerivaTech Corporation, Market Data Express, LLC, The Options Exchange, Incorporated. CBOE Stock Exchange, LLC (CBSX) remained a partially-owned facility of the CBOE.[9]

The stock's IPO price was $29 a share, at the top of the range expected for the public offering. The CBOE sold 11.7 million shares and raised about $339 million. [10] [11] [12]

On September 10, 2015 CBOE Holdings and Environmental Financial Products, LLC, the organization founded by Dr. Richard Sandor, announced plans to launch the American Financial Exchange (AFX), an electronic marketplace for small and mid-sized banks to lend and borrow short-term funds. AFX was designed to bring the benefits of exchange trading, including standardization, transparency and a rules-based process, to interbank lending, while reducing transaction costs through an electronic market. AFX will also offer weekly auctions of a new benchmark rate for U.S. interbank lending, called Ameribor. The companies expect the first AFX auction of Ameribor, which is based on proprietary calculation methodology developed by EFP, to take place in the fourth quarter of 2015.[13]

CBOE Holdings' announcement in September 2016 that it would acquire Bats Global Markets for $3.2 billion heralded a huge change for the exchange group. The Bats acquisition means that CBOE Holdings again has an equities footprint, albeit much larger than its last foray into equities, the CBOE Stock Exchange (CBSX). Moreover, the purchase allows CBOE Holdings to migrate its offerings to Bats' technology. [14]

Contract Volume

Year Total Annual Volume Percent Change
2015 1,173,934,104 -11.4%
2014 1,325,391,523 11.6%
2013 1,187,642,669 4.7%
2012 1,134,316,703 (-) 6.8%
2011 1,216,922,087 8.3%
2010 1,123,505,008 (-) 1.1%
2009 1,135,920,178 --

2015

Exchange Volume Percent Change
Chicago Board Options Exchange 1,043,031,630 -12.6%
C2 Exchange 79,226,943 -2.7%
CBOE Futures Exchange 51,675,531 2.1%
CBOE Holdings 1,173,934,104 -11.4%

Key People

Regulation

CBOE and C2 are regulated by the Securities and Exchange Commission (SEC). CBOE Futures Exchange (CFE) is regulated by the Commodity Futures Trading Commission (CFTC).

In December 2014 CBOE announced they would cede their self-regulatory duties to the Financial Industry Regulatory Authority (FINRA) starting Jan. 1, 2015. After that date, FINRA will be able to perform cross-market surveillance on about 60 percent of the U.S. options market. CBOE also hired FINRA to take over its regulatory duties for the Options Regulatory Surveillance Authority (ORSA), which the U.S. options exchanges established in 2006 to collaborate on insider trading surveillance and investigations. CBOE employees will continue to oversee the CBOE Futures Exchange.[15]

Resources

References

  1. CBOE Continues to Empower Investors with its Acquisition of Livevol, Inc. Technology. Press Release.
  2. CBOE FINALIZES DEAL To INVEST IN TRADELEGS. Press Release.
  3. CBOE buys majority stake in options trading software firm. Crains.
  4. CBOE Holdings Takes Minority Ownership Stake In CurveGlobal. Press Release.
  5. Two Exchange Operators, CBOE and Bats, Agree to Merge. New York Times.
  6. CBOE Board Backs Initial Public Offering. ForexYard/Reuters.
  7. CBOE's IPO Made For Members?. Crain's Chicago Business.
  8. CBOE Holdings, Inc. Announces Reorganization and Names New Officers. CBOE Holdings.
  9. Prospectus. CBOE.
  10. CBOE Up More Than 13%. Fox Business.
  11. CBOE Holdings Shares Jump as IPO Raises $339 Million. Businessweek.
  12. CBOE IPO prices at top of range, seen rising. Reuters.
  13. Environmental Financial Products, LLC (EFP) and CBOE Holdings, Inc. (CBOE) Announce New Interbank Lending Exchange and Interest Rate Benchmark. Press Release via PR Newswire.
  14. CBOE, Bats face challenge of integration. Crain's Chicago Business.
  15. CBOE to pass regulatory duties to FINRA. Reuters.