London Stock Exchange Group (LSEG) has entered into a licensing agreement with CBOE Holdings, to develop and list options based on more than two dozen FTSE and Russell indices.
Under the agreement, cash-settled options on these indices will now be available to trade in the United States on the Chicago Board Options Exchange (CBOE). In addition, as part of the agreement, CBOE and LSEG will collaborate on new index options products and investor education globally. The trading in FTSE and Russell index-based options on the CBOE will begin in the coming months.
LSEG’s leading global index franchises, FTSE and Russell indices, represent a diverse group of domestic and global equities with international appeal: the Russell indices include widely followed benchmarks of US-based stocks while the FTSE indices focus primarily on global and emerging equity benchmarks that are widely used in US market.
Xavier Rolet, CEO, London Stock Exchange Group, says: “This is a very exciting development for LSEG’s global index franchise business through FTSE and Russell indices. 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 in the years to come.”
Edward Tilly, CEO, CBOE Holdings, says: “We are thrilled to embark on an agreement that pairs LSEG’s premier FTSE and Russell indices with CBOE options and volatility trading expertise. This collaborative partnership will significantly expand CBOE’s product line across new asset classes and markets, and create new trading opportunities for our customers. CBOE and LSEG share a passion and vision for expanding the index space through product development and investor education. This agreement enables us to leverage complementary strengths.”
FTSE and Russell indices are among the largest and most widely used by investors in the US, and US ETFs tracking FTSE and Russell comprise some of the most actively traded globally. CBOE offers the widest array of index option and volatility products in the world. While CBOE and Russell have worked closely since 1992, the CBOE license to trade options on the FTSE and Russell indices further expands and strengthens the company’s product offering into new asset classes and global markets.
The deal includes the bellwether FTSE and Russell indices: the FTSE GEIS (Global Equity Index Series), which covers 98% of the world’s investable market capitalization; FTSE EPRA/NAREIT; FTSE China 50; the Russell 2000® Index, which measures performance of the small-cap segment of the US equity market; the Russell 1000® Index, which comprises a broad large-cap equity segment; the Russell 1000® Value Index, which measures the large-cap equities with lower price-to-book ratios and expected growth values; and the Russell 1000® Growth Index, which measures large-cap stocks with higher price-to-book ratios and anticipated growth.
The partnership with CBOE not only seeks to extend the range of these indices but to introduce new options for US investors. CBOE intends to launch a significant new co-branded product every year for the full duration of the agreement, including the opportunity to list cash-settled index options. CBOE intends to develop options based on other FTSE and Russell index products globally as well. Both firms will also combine their significant global resources toward investor education on index-based options.
