The London Stock Exchange and Chicago Board Options Exchange have announced they are to work together on a set of new index options products as part of a wider partnership deal.
The LSE Group today confirmed it has penned a licensing agreement with CBOE to develop and list options based on existing FTSE and Russell Indices.
In a statement to the market, the LSE confirmed cash-settled options on these indices will be available to trade in the US on the CBOE ‘within the coming months’, although a fixed date has not yet been announced.
Xavier Rolet, chief executive officer at the LSE Group, said: “Both firms have a large and growing US client base using domestic US and international benchmarks and partnering with a global leader like CBOE will provide significant benefits for market participants.”
The deal builds upon an existing working relationship between CBOE and Russell, which has been in existence since 1992.
Speaking to The TRADE, Ron Bundy, chief executive officer of Russell Index Group, said: “The other thing you will see as part of this agreement is that the research teams are going to come together.
“Smart beta is definitely an area the research teams are working on for product development. As we take a look at what products might bring to market, there are some clear opportunities in that space. Clients are using passive vehicles to make active decisions every day. ETFs are part of that. Index options are part of that.”
Bill Brodsky, board chairman of CBOE Holdings, added: “Where CBOE has excelled much in the past few years is developing the volatility suite of products. The potential to me is unlimited in what we can do here.”
The news comes three weeks after the LSE Group confirmed it would be seeking a buyer for Russell Investments – the asset management arm of Frank Russell Co – which it bought for US $2.7 billion in 2014.
It is thought the investment unit could fetch around US $1.4 billion once the sale process is completed.