CBOE Holdings will roll out options on the MSCI Emerging Markets and MSCI EAFE Indexes on April 21, following an agreement with MSCI.
Under the agreement, options on the MSCI benchmarks will be listed for trading in the US solely on the Chicago Board Options Exchange (CBOE). IMC Financial Markets will serve as the electronic designated primary market-maker for the new MSCI options contracts.
The launch of these European-style options on MSCI indices will enable CBOE to better respond to the needs of institutional customers who wish to trade them, according to Edward Tilly, chief executive officer of CBOE Holdings. The settlement times for the options will match the futures on these products, creating still more trading opportunities for investors, said Tilly in a statement.
Options on the MSCI Emerging Markets Index and the MSCI EAFE Index are designed to enable investors to efficiently hedge their non-US equity portfolio exposures or to diversify their portfolios.
The Emerging Markets Index captures large- and mid-cap representation across 23 emerging markets countries. With over 800 constituents, the index covers approximately 85% of the free-float-adjusted market capitalisation in each country; the EAFE Index comprises MSCI country indices that represent developed markets outside of North America: Europe, Australasia and the Far East. The EAFE Index is calculated in US dollars on a real-time basis and its values are disseminated every 60 seconds during market trading hours.
Options on the Emerging Markets and EAFE indices are the first of six MSCI indices expected to launch in 2015. CBOE has also plans to offer options on the MSCI’s ACWI, USA, World and ACWI ex-USA indices later this year, subject to regulatory approval.
CBOE lists nearly 20 broad-based index options and is the exclusive home for options on the S&P 500 index, the S&P 100 index and the Dow Jones Industrial Average, and lists options on the Nasdaq 100, as well as options on its CBOE Volatility Index and other volatility-related indices.
In total, all of MSCI’s indices have more than an estimated $9.5tr benchmarked to them on a worldwide basis. SRP data shows over 12,000 products featuring MSCI benchmarks across jurisdictions of which 3,673 are still live products. The US market, with 1591 live products, is the country with more products linked to MSCI indices followed by Sweden (908), Finland (214), the UK market (125), and Germany (107).
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