Opportunity Knocks: Industry Collaboration on New Ideas with Cboe® Labs

Innovation hubs, startup accelerators, corporate venturing – these practices all can pay homage to the older school ‘research and development’ departments focused on diversifying and iterating on successful products, ventures and initiatives (or pivoting away from unsuccessful endeavors).  

Texas Instruments, founded in 1930, didn’t get into the pocket calculator game until 1967. Play-Doh was initially marketed as a cleaning product to remove coal soot from walls. Richard Montañez, then a janitor at Frito Lay, invented Flaming Hot Cheetos when he seized upon a broken assembly line that spat out plain Cheetos (sans cheese dust), and then proceeded to add his own spicy spin.

There is always room for improvement and expansion. But the question for every business is, “What is the best approach to foster innovation?” Our answer to that question came to fruition at the end of last year, when we launched Cboe Labs.  

Many large corporations have some sort of division dedicated to nurturing new ideas, but frequently those groups are solely internal – closed to broader industry access. That is not how we wanted our innovation arm to exist.  

Cboe Labs is dedicated to the development and implementation of new ideas across markets with the input and collaboration of industry participants. We’re building an environment where we can collaborate and iterate as rapidly as possible to create value-add, disruptive, tradable products and services.  

Industry feedback has been tremendous. Born out of our derivatives strategy team, Cboe Labs has been 50 years in the making. And we believe that it will play an integral role in markets for the next 50 years.  

Cboe is a collaborative organization, and Cboe Labs will leverage already existing inter-departmental cross-collaboration and the unique skillsets of our associates, while employing a range of methods to experiment and develop solutions to improve customers’ experiences in markets.  

But as we mentioned, this isn’t just Cboe’s skunkworks – it's for all market participants. We are actively accepting new ideas from external market stakeholders – from traders to academics.  

Our methodology is simple: 1) evaluate an idea for scalability and viability. If it meets those thresholds, then 2) internal stakeholders are identified to put together the product strategy and business case that is presented to the C-suite. If approved, then 3) all stakeholders meet to prioritize work and build the detailed analysis that will go into the business plan that will be presented to the executive management group. If approved, then 4) stakeholders complete the work outlined in the business plan and the product is launched. 

We realize trusting a third party with your latest and greatest concept isn’t the easiest, which is why we’ve put intellectual property protection as a core value of Labs. We believe our reputation as trusted innovators who’ve been partnering with market participants for the past 50 years helps validate this core tenet.  

We look forward to hearing from you as we work to create superior risk management solutions that drive value to capital market participants through transparency, access and utility. 

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