Cboe’s Global Credentials and Growing the European Derivatives Market

By: David Howson, EVP, President Europe and Asia-Pacific, Cboe Global Markets Jun 2021

It is an exciting time at Cboe Global Markets (Cboe) as we broaden our global footprint by entering new markets and expanding the solutions we provide to investors around the world. The company’s thoughtful approach to global expansion is what makes Cboe truly unique. We firmly believe in learning as we grow — taking the best features of our different market centres and repurposing them for other regions, all while leveraging the unmatched expertise of our local leadership and teams.

Cboe Europe Derivatives is an example of how that aptitude for innovation and adaptation enables us to bring our proven solutions to new regions. Following thoughtful planning, securing clients, and working with our regulators, we are now almost ready to debut a new Amsterdam-based futures and options trading venue on 6 September 2021, subject to regulatory approvals.

By leveraging our established European equities business, pan-European clearing arm EuroCCP, along with Cboe’s proprietary state-of-the-art technology and history of global derivatives innovation, we are finally able to make our vision for launching European derivatives a reality. Cboe Europe Derivatives will bring a modern, on-screen market structure that more closely resembles the vibrant U.S. model to Europe, an approach we believe will grow the region’s equity derivatives market overall.

As one of the largest truly pan-European stock exchange operators, Cboe has robust market data covering all of Europe’s major markets. This has enabled us to create our own suite of European country and pan-European indices that will underpin our European derivatives contracts. Cboe Europe Derivatives will initially offer trading in futures and options based on six Cboe Europe equity indices: the Cboe Eurozone 50, Cboe UK 100, Cboe Netherlands 25, Cboe Switzerland 20, Cboe Germany 30 and Cboe France 40, with plans to add futures and options on additional European benchmarks at a later date.

Fervent support

Our teams, both in Europe and around the world, have a deep level of engagement with and understanding of our customers and we’ve designed our market based on their feedback and needs. We have built a contingent of key market participants, including banks, clearing firms, market makers and proprietary trading firms who are ready to support the exchange from day one and will help contribute to the provision of liquidity and client order flow on the new market. The fervent support we have received from these customers further solidifies our belief that Cboe Europe Derivatives will deliver long-awaited enhancements to the European exchange-traded equity derivatives market structure.

Our goal is to create new opportunities for market participants to express their investment views and manage their equity exposure through an innovative and vibrant pan-European equity derivatives market. While there is plenty about European futures and options markets that works well, we believe enhancements can be made that will make the market more attractive to new and existing participants.

As it stands, limited on-screen liquidity prevents active participation from quantitative trading firms in the European options market, where on-screen trade sizes are deemed too low for participants to execute market strategies. Our new venue will promote transparency and deep on-screen liquidity, over the block, and pre-arranged OTC transactions that are the current norm.

Unlocking potential 

Transparency is fundamental to attracting a diverse range of market participants, including retail and institutional investors, whose participation is ultimately necessary to grow derivatives trading globally. We believe there is an opportunity to unlock the true potential of the existing European equity derivatives market structure through the creation of a transparent, efficient, lit pan-European market.

We know market participants want to see an improved U.S.-style market structure in Europe, but what does that look like? Cboe Europe Derivatives is based on a Central Limit Order Book that promotes deep and liquid on-screen markets, complemented by an automated price improvement process for clients, which further helps clients to obtain a better price for their trades. Futures and options will be traded on a single, pan-European platform powered by Cboe’s best-in-class technology, simplifying cross-border trading and keeping Europe’s markets connected. We are confident that a U.S.-style equity options market structure that prioritises on-screen size, liquidity, and transparency, cleared into a single margin pool, will address the inefficiencies market participants currently experience.

A modern, efficient market 

EuroCCP, Cboe's pan-European clearing operator, will provide clearing services for the venue, creating much-needed capital efficiencies for customers. Cboe Europe and EuroCCP have long championed competition and innovation, values that were key to designing this new derivatives venue. Using a pan-European model for Cboe Europe Derivatives provides all market participants with the ability to access a modern, efficient derivatives market through a single access point, creating efficiencies in trading and clearing. We support a single, connected European market that brings investors together in a robust forum, free from national legacies, because we believe efficient, pan-European market infrastructure helps fuel the Capital Markets Union and grow capital markets in Europe.

We listen to and work with our clients and broader industry participants to provide regulated markets that empower participants to define a sustainable financial future through leading products, technology, and data solutions. Our planned launch of Cboe Europe Derivatives is just part of our global mission of defining markets; an active pursuit to make markets better through the service we provide, the new initiatives we pursue, and the market structure enhancements we seek. The global derivatives and securities network we are creating enables us to launch and grow new markets that promote transparency, seek fairness and provide benefits to the broader market.


The views, thoughts and opinions contained in this Focus article belong solely to the author and do not necessarily reflect the WFE’s policy position on the issue, or the WFE’s views or opinions.