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CBOE Holdings, Inc. (NASDAQ: CBOE) and S&P Dow Jones Indices announced today that they have finalized an amendment to their license agreement that extends Chicago Board Options Exchange's (CBOE) exclusive rights to list security options contracts based on certain indices calculated and published by S&P Dow Jones Indices through 2032, and non-exclusive rights through 2033.
Pursuant to the amendment, CBOE will continue to have the rights to offer trading in the exchange's flagship S&P 500® index options contract (SPX) -- the most-active U.S index option -- which in 2012 averaged nearly 700,000 contracts traded daily.
"This year marks 30 years since CBOE introduced the world's first index options contract and shortly thereafter partnered with S&P Dow Jones Indices to launch trading in S&P 500 index options. For the first time, investors could use index options to gain exposure to the broader stock market with a single transaction -- a groundbreaking concept that investors now take for granted," CBOE Holdings Chairman and CEO William J. Brodsky said. "Our partnership with S&P Dow Jones Indices has deepened over the years, with new business opportunities we never dreamed of back in 1983, including creating new products, benchmarks, and strategy indexes. Thirty years after we completed our first agreement, we continue to enjoy a strong, mutually beneficial relationship."
"The launch of S&P 500 index options 30 years ago, along with other index derivatives, marked a dramatic change in how investors could diversify their holdings and trade the large-cap segment of the U.S. stock market," said Alexander Matturri, CEO of S&P Dow Jones Indices. "We are excited to extend our licensing agreement with our long-time exchange partner, CBOE, to list options on our growing family of leading stock market indices. Our partnership with CBOE over the last three decades has changed how investors measure and view the financial markets."
"The extension of this contract is significant for CBOE Holdings and its stockholders and for S&P Dow Jones," CBOE Holdings President and COO Edward T. Tilly, said. "S&P index options products and our highly successful VIX® complex, which uses S&P 500 options for index calculation, contribute substantially to our revenues. We are pleased that we will continue to partner with S&P Dow Jones Indices for many years to come to expand the use of CBOE's S&P product line and to collaborate on new product opportunities."
Under the agreement:
- CBOE has exclusive rights to use the S&P 500 and the S&P 100® to create exchange-traded standardized options on those indexes and on other derivative indexes. Currently, CBOE lists options on indexes related to the S&P 500, and lists benchmark and strategy indexes such as the CBOE S&P 500 BuyWrite Index, CBOE S&P 500 PutWrite Index and CBOE S&P 500 SKEW Index.
- CBOE grants S&P Dow Jones Indices the exclusive rights -- and shares revenues with S&P Dow Jones Indices -- to license third parties to use CBOE's indexes, proprietary index methodologies, related marks and data, such as in connection with structured products based on the CBOE Volatility Index® (the VIX Index).
- CBOE pays S&P Dow Jones Indices royalties on S&P 500 options and on CBOE Volatility Index options and futures, based on contracts traded.
Before the amendment, the license agreement between CBOE and S&P Dow Jones Indices was set to expire in 2022. Financial terms of the license are not public.
For more information, see the CBOE Holdings 8-K in the Investor Relations section of CBOE's website at http://ir.cboe.com/. A handout related to the license renewal agreement with S&P Dow Jones Indices, provided at a press briefing held today at a Futures Industry Association conference, is available in the Investor Relations section of the website, as well, under Events and Presentations.
