CBOE Holdings, Inc. (CBOE) and Eris Exchange, LLC (Eris) announced today that CBOE Holdings has made a minority equity investment in its parent, Eris Exchange Holdings, LLC.
Eris is a U.S.-based futures exchange group offering swap futures as a capital-efficient alternative to over-the-counter (OTC) swaps. Concurrent with this investment, CBOE will join Eris' board of directors.
CBOE and Eris are launching this strategic partnership to develop product solutions that are expected to address the impact of international regulatory reforms, including Basel III, European swap clearing and trading mandates, and margin for un-cleared swaps. The CBOE S&P 500 Variance Futures currently listed for trading at CBOE Futures Exchange (CFE) are based on the Eris Methodology™, and the CBOE and Eris partnership will allow the two companies to develop new proprietary products and indexes across asset classes. The companies also plan to collaborate to enhance distribution of Eris Interest Rate Swap Futures and related market data.
"We are pleased to partner with Eris, which has established itself as a global leader in providing innovative, futurized product solutions that respond to today's regulatory and market challenges," said Edward T. Tilly, CEO of CBOE Holdings. "Our partnership with Eris demonstrates CBOE's ongoing focus on leveraging our product innovation expertise to capitalize on the continuing convergence of the OTC and listed marketplaces. Our partnership with Eris, like our partnership in CurveGlobal, positions CBOE to tap into that opportunity by bringing new capital efficiencies and exchange-traded products to the interest rate marketplace."
"Our alliance with CBOE provides Eris with growth capital for strategic initiatives and aggressive product expansion," said Neal Brady, CEO and co-founder of Eris. "CBOE is globally recognized as a leading exchange for proprietary derivative products and indexes, with a rich history of cultivating new risk management tools across a variety of asset classes. We're thrilled to collaborate with CBOE on new product, market data and index initiatives, and to provide access to Eris products to CBOE's global trading community."
Since creating the listed-options industry in 1973, CBOE has created nearly every options product innovation of note including equity and index options, FLEX® options and WeeklysSM options, as well as the CBOE Volatility Index® (VIX® Index) and VIX options and futures. The Eris partnership adds to a series of innovative partnership announcements in recent months, including CBOE's majority equity investment in Vest Financial, an asset management firm that provides options-based investments through structured protective strategies and innovative technology solutions; its partnership with Environmental Financial Products (EFP) to create the American Financial Exchange (AFX), an electronic marketplace for small and mid-sized banks to lend and borrow short-term funds; and its minority investment in CurveGlobal, a new European futures exchange focused on delivering capital efficiencies between interest rates futures and cleared OTC swaps.
Financial terms of CBOE Holdings' investment were not disclosed. Near term, CBOE considers its investment in Eris to be immaterial from a financial perspective; however, CBOE is very optimistic about the potential for growth longer term.