CBOE Holdings, Inc. (Nasdaq: CBOE) announced plans today to list on C2, the company's new alternative exchange, an electronically-traded version of its flagship S&P 500 Index option (SPX), which it is calling "SPXpm." The Company submitted a rule filing to the Securities and Exchange Commission (SEC) today and plans to list SPXpm upon SEC approval.
Under the proposed rule change filed with the SEC, SPXpm will be identical in structure to CBOE's traditional SPX index option product, except it will have "p.m." settlement.
The company intends to broaden its customer reach by providing this "point-and-click," "p.m." settled version of its most actively traded index product. As proposed, SPXpm will enable customers to trade SPX options with a settlement convention found in the OTC market, without having to sacrifice the benefits and safeguards of exchange trading and clearing.
"We worked very closely with our customers to determine how best to design and roll out an electronic version of this very popular product," said William J. Brodsky, CBOE Holdings Chairman and CEO. "Feedback from market participants indicated that p.m. settlement could bring new users into our market."
"We are very pleased, of course, to continue to offer our traditional SPX product in open outcry to customers who prefer that method," Brodsky said. "We expect to provide our customers with two very deep pools of liquidity, one that favors point-and-click access and one that favors the flexibility and negotiation available in open outcry."
CBOE's traditional SPX options product is a cash-settled contract with "a.m." settlement. The electronic version of the SPX contract also will be cash settled, but will feature "p.m." settlement. Both feature European-style expiration.
An "a.m." settlement value is based on the reported level of the index derived from the opening prices of the component securities on the day of exercise, while a "p.m." settlement value is based on the reported level of the index derived from the last reported prices of the component securities of the index at the close of market hours on the day of exercise.