CME to buy CBOE for $16bn?

• FT:  CME, the world’s largest futures exchange operator, has offered 0.75 of its own shares for every Cboe share, according to three people familiar with the talks. The price would value Cboe at around $150 per share, around 20 per cent above its current price of $123.
• CME denies report of buyout bid for Cboe, saying 'inaccurate' report needed 'correction'
• All-share deal would combine futures and equity options specialists

  

A takeover would bring together two of the most important names in global financial derivatives. CME would diversify its product lines far beyond futures and options contracts related to such commodity markets as oil and wheat as well as US interest rates.

Cboe, formed out of a predecessor of CME in 1973, owns the Vix indices and contracts, as well as equity options exchanges, three stock exchanges and an extensive share trading and clearing business in Europe.

OCC, the US’s main options clearing house, said last month it had seen a record July, with nearly 800m contracts cleared, up 29 per cent on the same month a year before. Average daily volumes for the year are up 42 per cent at 37m contracts per day, the clearing house said.

If a deal is struck, it would extend the dealmaking spree among the world’s largest exchange groups, which are scaling up and concentrating the trading data and information that underpin financial markets among a handful of large players.

In 2019 just over half of the $35bn in revenues the industry generated came from just five exchange operators — CME, Intercontinental Exchange, London Stock Exchange Group, Deutsche Börse and Nasdaq.

In recent years LSE Group bought data and trading provider Refinitiv for $27bn while ICE snapped up mortgage software provider Ellie Mae for $11bn. It would also be the CME’s largest acquisition since its $7.9bn cash-and-shares purchase of the New York Mercantile Exchange in 2008. 

-=Cboe Global Markets (CBOE) to extend global trading hours for S&P 500 Index (SPX) options and Cboe Volatility Index (VIX) options

 

Cboe Global Markets to extend global trading hours for S&P 500 Index (SPX) options and Cboe Volatility Index (VIX) options beginning November 21

The planned extension of Cboe's Global Trading Hours session aims to cater to growing customer demand globally for expanded access to trade Cboe's flagship SPX and VIX options, which are designed to help enable investors to hedge or gain exposure to the broad U.S. market and global equity volatility. SPX and VIX options are currently available in a GTH session that runs from 3:00 a.m. ET to 9:15 a.m. ET. The planned expanded GTH session would begin at 8:15 p.m. ET and run until 9:15 a.m. ET the following morning. Regular trading hours (RTH) then run from the U.S. market open at 9:30 a.m. ET until the market close at 4:15 p.m. ET. For each Monday business day, trading in GTH would begin Sunday evening.

In addition, the Regular trading hours session will be followed by a new curb session -- an extra half hour session for electronic trading beginning at 4:30 p.m. ET, Monday through Friday -- beginning September 27, 2021, subject to regulatory review. The curb session will be limited to SPX and VIX products and is intended to maximize the overlap in time that SPX and VIX options are open alongside the related futures contracts. Certification to the curb session will be available for customers beginning August 2, 2021, with test symbols available in the production environment beginning August 30, 2021.

-=Cboe Global Markets (CBOE) reported earnings on Fri 1 Nov 2019 (b/o)

Cboe Global Markets beats by $0.14, beats on revs 

Reports Q3 (Sep) earnings of $1.29 per share, $0.14 better than the S&P Capital IQ Consensus of $1.15; revenues rose 8.7% year/year to $294 mln vs the $290.44 mln S&P Capital IQ Consensus.

FY19 Outlook - The company updated or reaffirmed its financial guidance for the 2019 fiscal year as follows:

• Adjusted operating expenses are now expected to be in the range of $390 to $395 million, down from the previous range of $405 to $413 million. The guidance excludes the expected amortization of acquired intangible assets of $138 million, which the company plans to include in its non-GAAP reconciliation.
• Reaffirmed that depreciation and amortization expense, which is included in adjusted operating expenses above, are expected to be in the range of $35 to $40 million, excluding the expected amortization of acquired intangible assets of $138 million.
• The company now expects the effective tax rate on adjusted earnings for the full year to be in the range of 25.5 to 27.5 percent, down from the previous range of 27 to 29 percent. Significant changes in trading volume, expenses, federal, state and local tax laws or rates and other items could materially impact this expectation. 
• Capital expenditures are now expected to be in the range of $35 to $40 million, down compared to the previous range of $50 to $55 million, reflecting a shift in the timing of expenditures associated with the company's Chicago headquarters relocation.

=Executive shake-up at Cboe (CBOE)

• Cboe Global Markets, Inc. (CBOE)'s president and COO, Chris Concannon, 51, is leaving next week, obliterating expectations that he might have eventually become CEO.
• Marketaxess (MKTX) appoints Chris Concannon as President and Chief Operating Officer, effective as of January 22, 2019. MarketAxess was founded in 2000 and is headquartered in New York, New York.

Ed Tilly, chairman and CEO, will add the role of president, effective Jan. 14. Tilly, 55, previously served as president from 2011 to 2013.

Cboe Global Markets, Inc. (CBOE) announced that Chris Isaacson, 40, Executive Vice President and Chief Information Officer, will become Executive Vice President and Chief Operating Officer, reporting to Chairman and Chief Executive Officer Ed Tilly.
Eric Crampton, Senior Vice President and Global Head of Software Engineering, will become Senior Vice President and Chief Technology Officer, reporting to Chris Isaacson.

Chris Concannon is President and Chief Operating Officer of Cboe Global Markets, Inc. (Cboe), joining the firm in 2017 as part Cboe’s acquisition of Bats Global Markets (Bats). He is responsible for Cboe’s transaction businesses, including Global Derivatives, U.S. and European Equities, and Global Foreign Exchange – as well as overseeing the company’s Technology, Operations, Risk, and Marketing divisions.

As CEO of Bats, Mr. Concannon led that company’s initial public offering in 2016, as well as the acquisition by Cboe in February 2017, creating one of the world’s largest exchange holding companies.

Under Mr. Concannon’s guidance, Bats operated the largest stock exchange by value traded in Europe, the second-largest stock exchange in the U.S., and growing exchange-traded products and U.S. options businesses.

=Cboe Global Markets (CBOE) reported earnings on Fri 2 Nov 2018 (b/o)

Cboe Global Markets beats by $0.04; revs in-line; reaffirms guidance 

Reports Q3 Adusted EPS of $1.06 vs $1.02 Capital IQ consensus; revs of $270.5 mln vs $271.4 mln consensus

Outlook: Co reaffirmed its financial guidance for the 2018 fiscal year as follows:

• Adjusted operating expenses are expected to be in a range of $420 to $428 million. The guidance excludes the amortization of acquired intangible assets of $157 million, which the company plans to include in its non-GAAP reconciliation.
• Depreciation and amortization expense, which is included in adjusted operating expenses above, is expected to be in the range of $43 to $48 million, excluding the amortization of acquired intangible assets of $157 million.
• Capital expenditures are expected to be in the range of $35 to $40 million. This includes the company's ongoing investments in technology, including Cboe's migration to Bats technology.

-=Cboe Global Markets (CBOE) reported earnings on Fri 3 Aug 2018 (b/o)

Cboe Global Markets beats by $0.02, beats on revs 

• Reports Q2 (Jun) earnings of $1.05 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $1.03; revenues rose 6.2% year/year to $283.5 mln vs the $278.57 mln Capital IQ Consensus.
• "We are pleased to report another strong quarter of year-over-year top-line growth despite some headwinds following a dramatic shift in market volatility. While trading in VIX options and futures were down year-over-year in the second quarter, SPX options trading grew by 18 percent and we continued to demonstrate strong growth in our European Equities and FX businesses,"
• Outlook:
  • Depreciation and amortization expense, which is included in adjusted operating expenses below, is now expected to be in the range of $43 to $48 million, excluding the amortization of acquired intangible assets of $157 million, a decrease from the previous guidance of $53 to $58 million.
  • Capital expenditures are now expected to be in the range of $35 to $40 million, a decrease from the previous guidance of $45 to $50 million. This includes the company's ongoing investments in technology, including Cboe's migration to Bats technology.
  • Reaffirmed that adjusted operating expenses are expected to be in a range of $420 to $428 million. The guidance excludes the amortization of acquired intangible assets of $157 million, which the company plans to include in its non-GAAP reconciliation.

This week's biggest % winners & losers : Feb 5 - 9, 18 (wk 6)

The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

This week's top 20 % gainers

• Healthcare: ATRA (41.70 +26.17%), ARRY (17.15 +15.26%), TBPH (28.15 +14.06%), ENSG (25.69 +14.03%), BCRX (4.95 +13.79%)
• Materials: NAK (1.05 +22.22%)
• Consumer Discretionary: LTRPA (10.05 +18.24%), FOSL (8.47 +13.24%), TRIP (38.58 +12.31%)
• Information Technology: INFN (9.41 +45.44%), LITE (57.4 +27.98%), TWTR (31.51 +21.57%), GRUB (85.54 +21.08%), UIS (9.9 +18.56%), FN (29.53 +18.12%), PRO (31.83 +14.54%), OCLR (6.75 +13.36%)
• Financials: VIRT (28.15 +45.1%), SQQQ (20.45 +12.98%)
• Energy: REI (15.13 +16.12%)

This week's top 20 % losers

• Healthcare: CORT (14.73 -37.21%), PRTA (28.58 -27.83%), NLNK (6.87 -18.7%)
• Materials: KLDX (1.57 -19.49%)
• Consumer Discretionary: IRBT (58.16 -34.37%)
• Information Technology: MTSI (19.01 -37.69%), NQ (2.02 -35.46%), EXTR (10.66 -25.45%), ICHR (21.54 -24.42%), JKS (17.18 -19.98%), IPHI (24.51 -18.3%), MANH (41.5 -18.15%)
• Financials: CBOE (107.19 -20.4%)
• Energy: FET (11.75 -28.13%), NS (24.29 -24.66%), PTEN (18.01 -21.85%), SPN (8.32 -19.77%), NGL (12.75 -19.05%), DNR (1.86 -18.42%)

=Cboe Global Markets (CBOE) reported earnings on Fri 9 Feb 2018 (b/o)

Cboe Global Markets misses by $0.01, reports revs in-line

• Reports Q4 (Dec) earnings of $0.87 per share, excluding non-recurring items, $0.01 worse thanthe Capital IQ Consensus of $0.88; revenues rose 85.7% year/year to $265.6 mln vs the $267.25 mln Capital IQ Consensus, driven primarily by a $111.5 million net revenue contribution from legacy Bats for the fourth quarter of 2017 and an increase in net transaction fees. Excluding legacy Bats' net revenue contribution, the company's organic net revenue was $154.1 million, up $11.1 million or 8 percent, compared to fourth quarter 2016. The increase is primarily attributable to stronger trading volume and higher revenue contributed from VIX futures and proprietary index options.
• Options net revenue of $130.0 million was up $3.2 million or 3 percent, reflecting increases in net transaction fees, offset somewhat by higher royalty fees and lower regulatory fees. Net transaction fees for options increased $10.2 million or 11 percent, primarily driven by higher net transaction fees from index options. Total options average daily volume (ADV) increased 9 percent and the average revenue per contract (RPC) increased 2 percent for the fourth quarter, primarily due to a shift in the mix of trading volume towards higher RPC index options. Net transaction fees generated by Cboe's proprietary index options accounted for 83 percent of options net transaction fees and were up $10.3 million or 13 percent versus the fourth quarter of 2016 combined. The increase resulted from an 18 percent increase in index options ADV, driven by increases of 24 percent and 18 percent in VIX and SPX options, respectively.
• FY18: Adjusted operating expenses are expected to be in a range of $420 million to $428 million, representing a projected increase of 1 to 3 percent compared to combined adjusted operating expenses of $415.3 million for 2017. The guidance excludes the amortization of acquired intangible assets of $157 million, which the company plans to include in its non-GAAP reconciliation. 

-=CBOE: Shares under pressure as proprietary VIX futures rattle market sentiment

• CBOE Global Markets (CBOE) gets a quarter of its revenue from trading in options and future on the VIX volatility index (which is the Chicago Board Options Exchange's measure of the stock market's expectations for volatility, as implied by S&P 500 index options). 
• The CBOE Volatility Index (VIX 49.21, +11.89) has spiked 265% since last Thursday, hitting its highest level since March 2009.

Cboe is home to the Cboe Volatility Index (VIX), which is seen as a key psychological indicator on fear in the markets. It serves as a measure of the S&P 500's future volatility, and its popularity led to the launch of products which hedged against it.

And while the major averages rallied off intraday lows Tuesday following the worst percentage loss (4.6%) for the Dow Jones Industrial Average since 2011, Cboe was the worst-performing stock on the S&P 500 index.

Cboe's plunge came as trading in VelocityShares Inverse Vix Short-Term (XIV), ProShares Short VIX Short-Term Futures and VelocityShares Daily Inverse VIX Medium-Term (ZIV) was halted. Sales restrictions were also placed on all three products.

While the VIX enjoyed a record rise in the past two trading days, the forced closure of short volatility ETNs means traders do not have to hedge these trades with Cboe's VIX futures any more. Quantitative analysis trading strategies have taken advantage of volatility products, with the risk being hedged with futures contracts.

Swiss-multinational banking giant Credit Suisse (CS) holds a 32% stake in the VelocityShares Inverse Vix, which launched 2010, and issues its exchange-traded note.

The bank said Tuesday it will terminate the product and redeem the notes, which were worth a combined $1.6 billion on Friday. The acceleration date is expected to be Feb. 21, with trading to end the day before.

Bats Global Markets (BATS) to be acquired by CBOE for $3.2 billion

Bats Global Markets (BATS) to be acquired by Chicago Board Option Exchange (CBOE) for $3.2 billion or $32.50 per share.  (9/26/16)

  

CBOE, the operator of the largest options exchange in the United States by volume, said it would buy Bats Global Markets for about $3.2 billion, just over five months after BATS made its market debut.

CBOE's cash-and stock offer values BATS, the No. 2 stock exchange operator in the United States, at about $32.50 per share, a premium of 2.2 percent to BATS closing price on Friday.

Next trading day, 9/26/16

CBOE Chief Executive Edward Tilly will lead the combined company, CBOE said on Monday.

The 43-year-old Chicago Board Options Exchange runs pits where humans trade contracts, while Bats Global Markets is a fully electronic stock market.

Bats went public in April at $19.
Bats has quickly become a major player in the ETF-listings business.

Chicago-based CBOE was founded in 1973

Buying Bats would push CBOE beyond options and related futures contracts, a niche -- albeit a profitable one for the company -- compared with the areas where Bats does business. Bats is the second-biggest exchange operator in U.S. stocks, the largest in European equities and last year got into the $5.1-trillion-a-day currencies industry.

The two companies have vastly different roots. Lenexa, Kansas-based Bats was founded in 2005 by high-speed trader David Cummings of Tradebot Systems Inc., and its trading software is regarded as among the industry’s best. CBOE still runs open-outcry pits in Chicago, a throwback to an era when humans instead of computers drove trading -- though it does run the all-electronic C2 exchange, too. Bats runs a relatively lean operation because it operates in commoditized businesses, whereas CBOE enjoys monopolies in two key products: S&P 500 and VIX options.

The talks between CBOE and Bats come as two of the world’s biggest exchanges, Deutsche Boerse and London Stock Exchange Group Plc, try to combine.

Organization and Leadership 
Following the close of the transaction, Edward T. Tilly, CBOE Holdings CEO, will remain CEO of the combined company.  Chris Concannon, Bats CEO, will become President and COO, succeeding Edward L. Provost, CBOE Holdings President and COO, who plans to retire at that time.  Chris Isaacson, Bats CIO, will succeed Gerald T. O'Connell as CIO, who also plans to retire at that time.  CBOE Holdings CFO Alan J. Dean will remain as CFO of the combined company.

Following the close of the transaction, the Board of Directors of the combined company will consist of 14 directors, 11 of the 14 members currently serving on the CBOE Holdings board, plus three members from the Bats Board of Directors.  These changes will be effective immediately upon closing.

The combined company's corporate headquarters will be located in Chicago, with business offices in Kansas City, New York and London, as well as presences in San Francisco, Singapore and Quito, Ecuador.

Q : What's a better buy - CBOE or DVA ?

(answer & analysis emailed 4/2/11)