On Monday, the?CBOE Futures Exchange, LLC (CFE) announced it will launch trading in S&P 500 Variance futures on Monday, December 10.
According to CFE’s press release, the S&P 500 Variance futures contract–similar to over-the-counter (OTC) variance swaps–enables users to trade the difference between the implied and realized variance of the S&P 500 Index. CFE’s variance futures contract will offer the same quoting conventions and economic performance of OTC variance swaps.
It will also provide the advantages of exchange-traded contracts such as transparency, price discovery and counterparty clearing guarantees.
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In addition, the new S&P 500 Variance futures contract will offer benefits to both existing OTC users and to customers who have not traditionally participated in the OTC variance swap market.
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CBOE Holdings President and COO Edward T. Tilly said via the press release,?”The S&P 500 Variance futures contract is our latest effort to attract over-the-counter participants to our marketplace by customizing our proprietary products and services to fit their needs. We’re seeing OTC market participants increasingly look to exchange-traded products to mitigate risk, and S&P 500 Variance futures will be an appealing addition to our line of OTC-like products.”
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In other news, CFE will also start a Lead Market Maker Program (LMM) for S&P 500 Variance futures; a DRW Trading Group affilate has been approved as an LMM.
DRW Trading Group is a principal trading organization that trades across a wide range of asset classes for its own account.
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