MSCI and Cboe Global Markets enter into a strategic collaboration

The two businesses are set to jointly focus on new index options and volatility indices; new options are set to begin trading on 18 March.

Cboe Global Markets has entered into a strategic collaboration with MSCI in a bid to leverage their combined expertise and develop innovative solutions for investors.

Catherine Clay

Specifically, the initiative will expand Cboe’s suite of Cboe-MSCI index options and volatility indices, introducing five new products.

Three are based on additional MSCI global indices: Cboe MSCI World Index Options (MXWLD), Cboe MSCI USA Index Options (MXUSA), and Cboe MSCI ACWI Index Options (MXACW), while two others will broaden its volatility index suite with new Cboe MSCI volatility indices: Cboe MSCI EAFE Volatility Index (VXMXEA) and the Cboe MSCI Emerging Markets Volatility Index (VXMXEF).

The volatility indices are designed “to provide a transparent measure of the market’s expectation of 30-day implied volatility by these respective MSCI index option classes”. 

The new three new options tied to MSCI’s international, developed, emerging and US markets benchmark indices are set to begin trading on 18 March, pending regulatory approval, and have been integrated into Cboe’s existing infrastructure and will be traded and settled via the same exchange connections and clearinghouse as the current Cboe MSCI index options. 

Read more: Cboe and MSCI plan options growth following partnership extension 

Catherine Clay, global head of derivatives at Cboe, asserted: “In today’s rapidly evolving landscape, investors require sophisticated tools to navigate the markets with confidence. Our ongoing collaboration with MSCI reflects our shared commitment to fostering innovation and providing solutions that empower investors to better manage risk and seize potential opportunities in the global marketplace.

“[…] Crucially, the three new index options, which cover developed and emerging markets, are expected to also give investors comprehensive access to gain a variety of different exposures around the globe.”

The new options will be based on the MSCI World Index, the MSCI ACWI Index and the MSCI USA Index. In addition, both the MXWLD and MXUSA options are set to be based on 1/100th of the value of their underlying index.

On the third Friday of the month, MXACW, MXUSA, and MXWLD standard options will expire, while Cboe is also planning to list five end-of-week expirations, expected to begin trading on 21 March 2024.

George Harrington, global head of derivatives licensing at MSCI, highlighted how the expansion of the strategic relationship with Cboe will assist investors around the world with managing risk and exposure.

“The launch of the Cboe MSCI EAFE Volatility Index (VXMXEA) and Cboe MSCI Emerging Markets Volatility Index (VXMXEF) provides the investment community with benchmarks for option investing, and Cboe’s launch of options linked to the MSCI World Index, MSCI ACWI Index and MSCI USA Index further develops the ecosystem of tradable products.”