01—Abstract
Summary
Summary of the 8-K filed March 13, 2013. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. (CBOE) announced a significant amendment to its licensing agreement with S&P OPCO LLC, extending the crucial rights to list options on key S&P indexes.
This amendment, effective March 9, 2013, pushes the agreement's term out to December 31, 2033, providing substantial long-term visibility for CBOE's options trading business. Notably, the license for options on the S&P 500 Index will remain exclusive to CBOE until December 31, 2032, reinforcing its market position for this highly traded index. Beyond the extended term, the amendment introduces new and revised pricing structures for both options and futures trading on CBOE and its affiliates, impacting fees paid to S&P.
While the agreement is strengthened, it also includes provisions for termination if trading volume on S&P 500 Index options falls below certain thresholds for three consecutive quarters, offering a mutual exit if performance falters. This filing provides investors with important details regarding the long-term strategic partnership between CBOE and S&P.
02—Key points
Key Highlights
- CBOE has amended its license agreement with S&P OPCO LLC, extending the term to December 31, 2033.
- The agreement grants CBOE exclusive rights to list options on the S&P 500 Index until December 31, 2032.
- The amendment includes revised pricing terms for options and futures trading on S&P Indexes and the VIX Index.
- New pricing structures for CBOE's trading activities on S&P Indexes and the VIX Index have been implemented.
- The agreement includes termination clauses triggered by sustained low trading volumes in S&P 500 Index options.
- The amendment was entered into on March 9, 2013, and filed on March 13, 2013.
- This extension secures CBOE's access to lucrative S&P Index options, a core part of its business.
03—Questions
Frequently Asked Questions
What is the primary impact of this 8-K filing for Cboe Global Markets investors?
The primary impact is the significant extension of CBOE's license to trade options on key S&P indexes, including exclusive rights for the S&P 500 Index until 2032. This provides long-term revenue visibility and reinforces CBOE's market position in a critical segment of the options trading landscape.
How does the amended agreement affect CBOE's costs or revenue streams?
The amendment introduces new pricing terms which will impact the fees CBOE pays to S&P. While specific details are in the full amendment, these changes are effective immediately and will influence CBOE's cost structure related to licensing these index products.
Are there any risks associated with this extended agreement?
Yes, the agreement includes termination provisions if trading volume in S&P 500 Index options fails to meet certain thresholds for three consecutive quarters. This means sustained underperformance in trading activity could lead to the termination of the agreement, although CBOE has an option to terminate under specific conditions and S&P has its own termination rights.
What is the CBOE Volatility Index (VIX Index)?
The VIX Index, often referred to as the 'fear index,' is a key measure of the stock market's expectation of volatility based on S&P 500 index options. The amended agreement includes provisions related to trading on this index, which is highly significant for market sentiment and trading activity.
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