CBOE Futures Exchange, LLC (CFE) today announced that it will launch trading in S&P 500 Variance futures on Thursday, October 4, pending regulatory approval.
The S&P 500 Variance futures contract, like over-the-counter (OTC) variance swaps, allows users to trade the difference between the implied and realized variance of the S&P 500 Index. CFE's futures contract will offer the same quoting conventions and economic performance of OTC variance swaps, while providing the advantages of exchange-traded contracts -- transparency, price discovery and counterparty clearing guarantees.
The new S&P 500 Variance futures contract is designed to offer benefits to both current OTC users as well as to customers who have not traditionally participated in the OTC variance swap market.
"The S&P 500 Variance futures contract is our latest effort to attract OTC participants to our marketplace by customizing our proprietary products and services to fit their needs," CBOE Holdings President and COO Edward T. Tilly said. "We're seeing OTC market participants increasingly turn to exchange-traded products, and S&P 500 Variance futures will be an appealing addition to our line of OTC-like products."
CFE also plans to begin a Lead Market Maker Program (LMM) for S&P 500 Variance futures, and an affiliate of DRW Trading Group 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.
For more information on S&P 500 Variance futures: www.cfe.cboe.com/Products/Products_VA.aspx.
