The new generation of retail investors is transforming markets

By: The WFE Focus Team Dec 2021

Name: Ed Tilly

Title: Chairman, President and CEO, Cboe Global Markets

What are three key industry themes you will be focused on in 2022?  

We will continue to see companies focus on Environmental, Social and Governance (ESG) issues. WFE has been a leader in promoting global exchange sustainability and we’ve been pleased to follow its lead and become more active in this regard. Cboe recently became a founding member of the derivatives partner exchanges network of the United Nations Sustainable Stock Exchanges initiative. We believe this network will provide a powerful platform to share ideas and engage in important dialogue on how we can better support sustainability. All exchanges have a role to play in sustainability. By advocating for stronger performance on ESG issues and creating sustainable investment opportunities, the changes we implement today can have a lasting, positive impact on future generations. We view sustainability not only in the traditional sense, but also in creating financial sustainability. Exchanges empower investors to express their opinion and define their financial futures. We provide trusted, transparent and regulated   marketplaces for enacting trades, empowering global investors of all sizes to make their own investment decisions.  

Our markets continue to become more interconnected; subsequently, the customer base is more global and desires more access to multi-asset, multi-region trading capabilities. Whether it be exposure to key markets and products around the world, critical market data, or links through technology, market participants are looking for efficiencies and a consistent experience trading across asset classes and geographies. At Cboe, we are expanding our global footprint into new regions including Canada, Australia and Japan, and further expanding access to our markets. Most recently, we’ve extended trading hours for our SPX and VIX products to a nearly 24x5 model, making these key U.S. options contracts more available to customers around the world during their local trading hours.  

We are at a critical inflection point in the cryptocurrency space, driven by strong retail demand, institutional interest, market growth and the mainstreaming of digital assets even with traditional financial firms. There is demand for a much more holistic offering beyond tradable contracts – regulation, transparency, technology and clearing infrastructure and data and products are all critical to market participants. As the appetite for ownership in digital assets continues to grow, we believe Cboe can play a guiding role in shaping the trajectory of this revolutionary market.  

What do you see as the biggest challenges and opportunities for your exchange in the year ahead?   

There are opportunities and challenges inherent in the ever-changing retail and regulatory environment. The growing power of the next-gen retail investor is undeniable, and Cboe is well positioned to serve this new group through product innovation, product awareness and best-in-class investor education.   

As regulators work to protect retail investors, it is incumbent upon exchanges to preserve and enhance the investor experience through advancements in technology and innovation, while operating open, fair and orderly markets for all levels of investor. We will continue to work in lockstep with our regulators to ensure the efficient functioning of our capital markets. But we must be prudent in our approach to any market structure reform. One size does not fit all – what works well for equities may not work as well for options. Cboe’s longstanding view is to adhere to the “do no harm” principle. Potential modifications should be made to improve market quality without incurring the risks and complications of a large-scale market structure overhaul.  Ultimately, we must focus on what will benefit investors and not harm their experience in the market.   

Tell us one thing you think will change in 2022 and one thing that won’t?  

I’ll start by addressing what we believe will not change in 2022 – and that is the new generation of retail investors in our financial markets. With zero cost commissions, the ease of order executions, and the availability of trading tools, educational resources and information, retail investors today have greater ability to take ownership of their financial futures and generate potential returns that were once realized by a smaller segment. The pandemic environment has certainly helped accelerate retail trading in the markets. Cboe is playing a role to ensure these newly empowered investors are here to stay with product, services and educational offerings suited to their investment objectives.   

We believe the rise of retail investors will further transform how the industry thinks about market access and innovation. Significantly, the “minification” of things will be a new and growing focus for many market participants in 2022, and we will see these outcomes defined in the years to come.  The increase of resources and information available today has benefitted many individual investors, but the lack of accessibility – created by high notional values and costs of entering the market – remains a barrier to entry for some retail investors. Cboe is focused on broadening market access for investors of all sizes, and will be expanding our suite of small-sized products to make trading in our products even more affordable for all investors.   

The pandemic has brought many changes to the way we work. In your view, what changes are here to stay that will shape the workplace of the future? 

We are still defining the future of work at Cboe. Many new efficiencies became commonplace during the pandemic, including seamless global communications and reduction in business travel. As we look ahead to the ultimate end of this pandemic, we know the workplace of the future is one that embraces greater flexibility and at Cboe, we want to be leaders in defining what this looks like for our industry.   

We are working diligently to determine what makes the most sense for our associates and our business, keeping people at the center of it all. Our workplace of the future will be shaped by even greater flexibility, enabling people to choose which work environment makes the most sense for them on any given day and making work/life balance more attainable. I also believe our enhanced communications, internally, as well as with industry peers around the world, will remain. We are more connected than ever, which has been a silver lining of the pandemic and a fixture of our current workplace that I would like to hold on to going forward.  

What was your most memorable moment this year as a leader? 

There were certainly many memorable moments throughout 2021 but reopening many of our offices around the globe will stand out in my mind for years to come. We reopened many of our offices in July, so long as it was safe to do so and in line with local health mandates, and the decision to return was, and still is, completely up to associates. Reopening our offices was a huge endeavor, one in which none of us had any experience. However, as I was reminded so many times through the pandemic, the Cboe team is a highly resilient group of outstanding problem-solvers. Our associates across almost every department worked together seamlessly to develop a plan that would keep us safe while still allowing the in-person connection many of us had missed so much.   

Personally, I was very excited to return to hallway conversations that lead to great ideas, and to worry a little less about whether or not I’m on mute! Plus, reopening our offices meant opening our new Chicago headquarters to associates for the very first time. It's an incredible space that was built to foster connection and it has been wonderful to see associates begin to use it in the way we envisioned. When we are officially on the other side of the pandemic, it will serve as a hub for our global teams to connect with each other, customers and partners.   

While it was a long, challenging road to get to that point, I found the teamwork and collaboration through a completely new and ever-changing situation inspiring. Finally returning to the office and seeing people in-person after nearly a year-and-a-half apart was even better.