Cboe’s response to Covid-19

Published by: Ed Tilly, Chairman, President & CEO, Cboe Global Markets Apr 2020

The devastation of Covid-19 is all-too-vividly playing out in the cities and communities in which we work and live. From navigating a changing risk environment, to ensuring a stable market in a time of extreme volatility, Cboe Global Markets, alongside the rest of our industry, adapted quickly. As we all continue to navigate through this challenging environment, Cboe remains steadfast in supporting our customers, marketplace and global community.  

Working for our customers 

Since the onset of the outbreak, the well-being and safety of Cboe’s associates, customers and broader community has remained our top priority. As a global exchange operator, and being in the business of risk management, we spend extensive time and resources to run back-up facilities, design operational redundancies and test regularly. It is because of this contingency planning that Cboe was able to shift our entire operations in a moment’s notice – from mobilising our global team to working remotely, to making the difficult but necessary decision to temporarily close our Chicago trading floor and transition Cboe Options Exchange to an all-electronic trading mode for the first time in our 47-year history.

This has enabled us to continue doing what we do each and every day: operate fair and orderly markets through any environment and circumstance, and provide a forum for investors to express their views on the market and manage their risk. Overall, our exchanges are well equipped to handle significant volumes and have demonstrated remarkable resiliency during this unprecedented market turbulence.

Working with our regulators 

The resiliency of our markets is not by happenstance. It is the result of years of collaboration between exchanges and our regulators. This collaboration has never been more critical than during this crisis, and we thank our regulators for working with us to ensure that we can continue to serve the needs of the millions of investors that rely on our markets.

Cboe worked in close consultation with the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to facilitate emergency rule relief, receiving approval for several rule filings within 48 hours of initial submission. We are grateful for the industrywide acknowledgement of financial markets as critical infrastructure for the American economy after Cboe joined other industry organisations in issuing a joint letter urging the Federal Reserve, Treasury Department, SEC and CFTC to keep markets open.

Cboe has always been a leading advocate for policies and regulations that promote capital efficiency. Over the last several years, we tirelessly championed for the Standardized Approach to Counterparty Credit Risk (SA-CCR). Beginning in April, the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency authorised the early adoption of SA-CCR by banking organisations. The agencies’ decisive action signals how important the options markets are to our broader economy and, in turn, how important professional liquidity provision is to maintaining optimal markets. The early adoption of SA-CCR on a best efforts basis is an important step to ameliorate the effects of the Current Exposure Method (CEM) and strengthen liquidity in our marketplace at a time when it is needed most.

Working in our communities 

Covid-19 has prompted historic reaction in both the private and public sectors. As the nation continues to work through the current pandemic, we are committed to doing our part to stem the flow of this virus and serve our communities during this time of need. To that end, Cboe has donated Patient Isolation Units (PIUs), which protect healthcare workers by containing and isolating infected individuals, to healthcare facilities in our U.S. and UK communities, including Chicago, New York, Kansas City and London. We have also expanded our corporate matching gift programme to increase the support of our associates donating to local, national and international organisations providing relief to those suffering from this crisis and containing its spread.

Though this period of uncertainty has demonstrated that the most unpredictable times and events are possible, Cboe remains deeply committed to the fair and orderly operation and oversight of our markets to help ensure investors are able to execute their trading activities. I have full confidence that the Cboe team will continue to meet any challenge with flexibility and creativity, bringing innovative solutions to customers and serving our marketplace and global community. We look forward to defining our new normal now and in the future, together.