Cboe Global Markets, Inc. today announced a new strategic initiative in partnership with MSCI Inc. (MSCI), a leading provider of critical decision support tools and services to the global investment community, to expand the range of options and volatility of the Cboe-MSCI indices.
The initiative underscores Cboe and MSCI’s deepening relationship and continues to leverage the companies’ combined expertise to develop innovative solutions for investors around the world.
Cboe and MSCI have worked together successfully for many years to offer a variety of indices and tradable products. In this latest initiative, Cboe will further expand its existing suite of MSCI Index options by introducing three new products based on additional MSCI world 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 expanding its range of volatility indices 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 the 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 implied volatility 30 days. those respective MSCI index selection classes.
Similar to the VIX Index, which is designed to reflect investors’ consensus view of future (30-day) expected US stock market volatility, the new Cboe MSCI Volatility Indices aim to provide comparable measures of international and emerging equity markets.
The new options will be based on the MSCI World Index, the MSCI ACWI Index and the MSCI USA Index, which are well-known benchmarks for measuring the performance of international, developed and emerging markets and US stocks, respectively. Importantly, both MXWLD and MXUSA options will be based on a fraction (1/100th) of the value of their underlying index.
With a lower index price, MXWLD and MXUSA options may be more accessible to a broad client base with different investment objectives, ranging from asset owners aiming to track exposure to benchmarks, registered investment advisors seeking new sources of yield or individual investors seeking direct exposure to options linked to global benchmarks.
MXACW, MXUSA and MXWLD will have standard picks that expire on the third Friday of each month. In response to client feedback, Cboe also plans to list five end-of-week maturities, 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 include the Cboe MSCI EAFE Index Options (MXEA) and the Cboe MSCI Emerging Markets Index Options (MXEF). Like these existing offerings, the new options will follow a European-style exercise (no early exercise), be cash-settled (no delivery or assignment of shares) at expiration and may offer favorable tax treatment1. In addition, the new options are integrated into Cboe’s existing infrastructure and will be traded and settled through the same exchange and clearing links as the current Cboe MSCI index options.