CME Group, the world's leading and most diverse derivatives marketplace, today announced it has entered into a seven-year license agreement with the Chicago Board Options Exchange (CBOE) that will allow CME Group to list futures and options on futures for volatility indexes on a variety of asset classes.
These contracts will be listed with, and subject to, the rules and regulations of the particular exchange where the products will be traded (CME, CBOT or NYMEX).
"Our liquid and transparent commodity and financial markets are the foundation for the creation of new indexes that customers can use to gain a view on volatility across a wide array of asset classes," said Scot Warren, CME Group Managing Director of Equity Index Products and Services. "We believe that a reliable benchmark index for volatility sentiment on contracts such as WTI Crude Oil, Corn, Soybeans and Gold will help market participants make more effective investment and hedging decisions based on their exposure to market volatility."
Terms of the license agreement between the exchanges include the following:
- CBOE will create, own and calculate the benchmark indexes using its established CBOE Volatility Index (VIX) methodology and license use of the indexes to CME Group.
- The benchmark indexes are scheduled to begin publishing data during the third quarter of 2010.
- Prices used in the calculations will originate from CME Group options on futures contracts. The data will use the most active electronically traded front and nearby contracts across commodity and financial products.
- CBOE will be the initial market disseminator of prices for the volatility indexes.