We hear 2018 perspectives from Ed Tilly, CEO & Chairman, Cboe Global Markets, and WFE Working Committee Chair.
Looking ahead to 2018, what are the most important regional and global trends shaping your exchange or CCP?
There are many. From the customer perspective, customers are increasingly demanding trading system stability and resiliency.
For us, customer input firmed our resolve to provide the best-in-class trading engine, one that is consistent and reliable. We’re in the process of migrating our trading platforms to that system in 2018, and it will power all of our markets.
Another trend of keen interest involves the aggregation of data and the utilisation of that data to provide customers with solutions to problems. Our industry, like many others, suffers from information overload, but there is a thirst for essential data that’s relevant for research and trading, nevertheless. Customers want data, but they want it packaged in a usable format – not a broad fire-hose approach that customers have to wade through.
To that end, we added more data series to Cboe DataShop in 2017, including historical spot foreign exchange data from Cboe FX, making it available for market participants and academics who want the opportunity to use it to simplify and streamline back-testing and analysis, as well as the potential to increase and improve trading opportunities. We also added historical data for our new bitcoin futures product.
Are there any significant regulatory changes on the horizon that may impact the way you do business?
Preparing for MiFID II was certainly a heavy lift for us and required a lot of time and resources, but we were ready and compliant well before it came into force on 3 January 2018.
Our MiFID II preparation strategy entailed looking at what we needed to do from an operational perspective to become compliant with the new regulation. We also looked at MiFID II through the lens of opportunity, assessing what we could do from a business development perspective to bring new products and services to market to help participants comply with some of the changes the new regulation will bring.
Our commitment to driving growth through product innovation has never been greater, nor has our ability to bring new innovations to market.
To that end, we created some really interesting solutions to some of the challenges MiFID II presents for many firms. Some of these new offerings include our new block trading platform, Cboe LIS, and our Periodic Auctions book, which provide market participants with new ways to trade in larger size - important given that dark pools will be capped and broker crossing networks will be closed.
In the U.S., our exchange had a major win when the SEC approved Cboe Market Close, an initiative that was created in response to industry frustration with existing closing auctions and was reviewed in a robust comment period. We look forward to introducing this beneficial offering to the equities marketplace as a result of the approval.
What are your key strategic priorities for the coming year?
Our commitment to driving growth through product innovation has never been greater, nor has our ability to bring new innovations to market. Cboe’s diversified product line allows us to shape every aspect of the product development cycle, from designing, listing and trading products, to generating and packaging market data, to educating customers, and our new asset classes represent new building blocks for innovation.
Additionally, we are continuing to tap the potential of long-standing proprietary products, such as our flagship S&P 500 options franchise. For example, we plan to launch options on 10 S&P Select Sector Indices designed to provide market exposure to widely followed U.S. equity sectors represented in the S&P 500. Once launched, the new options will allow European investors who cannot currently hold options on ETFs due to certain European regulations to target U.S. equity exposure.
We will continue to push aggressively in all 15 trading venues in which we operate in 2018, offering innovative products and trading tools, competitive pricing and leading customer service. We also continue to look at opportunities to expand our 2017 initiatives, such as in the developing cryptocurrency space, building on the participation in our Global Trading Hours and in our growing U.S. listings business.
In addition, we’ve continued to enhance our suite of equity trading services to provide a variety of execution venues that allow participants to implement their trading strategies in the new MiFID II regulatory environment.
While we are laying the groundwork to trade every aspect of the product cycle, Cboe also is migrating its trading technology onto Bats’ proven platform to provide streamlined and more efficient access for our customers. As I mentioned earlier, our planned technology integration is our biggest priority for us right now - we believe it will differentiate our company with leading-edge, state-of-the-art technology.
The migration is entering a critical phase as we prepare for the planned migrations of our Cboe Futures Exchange (CFE) and C2 Options Exchange to Bats technology on February 25 and May 14, respectively. Our flagship Cboe Options Exchange will be last. When the migrations are completed, all of our markets will be operating on the Bats cutting-edge technology.
How do you feel the social role of financial market infrastructures is changing?
Cboe is a global company with a rapidly growing footprint, which makes us even more accountable. We take our social role, our citizenship, very seriously in all the markets in which we operate.
As a publicly traded S&P 500 company, our mission is to create value for our shareholders. But we also have a strong responsibility to serve our customers and our industry. We’re looking to create products to solve problems for our customers, to help them manage risk. We’re trying to make the financial markets even healthier as we go forward in the year ahead.