Cboe Europe Derivatives Q1 Update

Iouri Saroukhanov
April 16, 2024

Here at Cboe Europe Derivatives (CEDX), the first quarter flew by as we expanded our equity options franchise, achieved record index derivatives volumes and prepared for the launch of new Liquidity Provider Programmes across all our products at the start of April. Find out more below!

Equity Options Expansion

CEDX began offering equity options in November last year and broadened its universe of these products from 25 March. CEDX now offers more than 300 options on companies from 14 countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland and the UK). You can view the complete list of underlying stocks here.

On 1 April, we initiated the first LPP for these products – which also applies to our index options contracts. The timing for this LPP was to align with client readiness and a number of firms have already signed up for the programme. The LPP is designed to encourage competitive prices during all trading sessions and includes access to two additional bonus pools:

  • A wide coverage bonus (paid if an LP meets obligations in at least 85% of equity options);
  • Index Options bonus (paid if an LP meets obligations in at least 65% of equity options and six out of ten CEDX index options)

The expansion of the product universe and commencement of a LPP are major milestones for our equity options initiative. We couldn’t be more excited to build a more efficient and competitive European options marketplace, through a simpler, lower cost, pan-European approach to trading, which is lowering barriers to entry for institutional and retail investors.

Record Index Derivatives Volumes

Our index derivatives product suite, which includes futures and options on ten Cboe Europe single-country and pan-European indices, continued to build momentum during Q1. CEDX traded over 8,300 index derivatives in March, the highest month on record (see Chart 1). This was driven by index futures volume, with 8,303 lots traded during the month, an all-time high and beating the previous record of 5,971 set in March 2023. Total volumes during Q1 2024 were 15,578 lots, an increase of 13% versus Q1 2023 volumes.

Chart 1 – CEDX Total Monthly Index Derivatives Volumes Since Launch

Other Q1 index highlights included:

  • Along with the initiation of the LPP for equity and index options, enhancements were made to the index futures LPP at the start of April. The new version differs from the original programme in a number of ways, with LPs paid based on performance in each product in each trading segment. A bonus is paid to LPs meeting requirements in all segments in at least nine out of ten products.
  • We extended the Volume Incentive Programme for index futures through to the end of March 2025.
  • Finally, a new strike creation policy was initiated for index products.

Acuiti Research

Finally, we also wanted to share research published during March by Acuiti, in association with CEDX, titled, 'Optimising European Listed Derivatives Market Structure'. Click here to download the report.

The research explores why volumes in European derivatives, particularly options, have stagnated in recent years and what can be done to ignite growth in the future. It is based on a survey and series of interviews with senior executives and trading heads at 57 firms operational in European and US listed derivatives markets across the hedge fund and proprietary trading markets.

Respondents to the survey said that a relative lack of retail trading and the fragmentation of market structure were the key reasons why growth was slower in Europe when compared to the US.

Other key findings include:

  • 62% said Europe’s fragmented market structure had impacted their trading strategies in European options, with 50% allocating more to other regions as a result
  • 88% said US options were significantly or somewhat cheaper than European options due to wider spreads associated with European options
  • 71% of respondents say they would prefer to execute their options trades on-screen but are prevented from doing so due to prevalence of liquidity in OTC markets 

CEDX has been designed to tackle many of the weaknesses the research identified. We’re aiming to grow European derivatives volumes again by promoting on-screen trading and a pan-European ecosystem, that simplifies access to and dramatically reduces costs for those wishing to access this market.

Click here to find out more about CEDX.

Disclaimer: This information is not being provided as part of an offer or sale of any futures or options products to any persons located within the United States.