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Bringing competition to Europe ’ s equity derivatives market
The TRADE speaks with Cboe Europe president , David Howson , and Ade Cordell , president of Cboe NL , about the exchange ’ s plans to launch a new market for European equity derivatives .
Can you provide an overview of your plans in European derivatives ? David Howson ( DH ): We ’ re planning to launch a new European equity derivatives venue , called Cboe Europe Derivatives , in the first half of 2021 , subject to regulatory approvals . This market will form part of our existing exchange in Amsterdam , Cboe NL , and will initially offer trading in futures and options based on six Cboe Europe equity indices : the Cboe Eurozone 50 ; Cboe UK 100 ; Cboe Netherlands 25 ; Cboe Switzerland 20 ; Cboe Germany 30 ; and Cboe France 40 . We plan to add futures and options on additional European benchmarks at a later date , based on customer demand . Ade Cordell , who joined us earlier this year , is overseeing our expansion into European derivatives and was appointed president of Cboe NL in July .
Our mission is to bring a modern , vibrant pan-European model to the region ’ s derivatives markets by leveraging Cboe ’ s global derivatives expertise , European equities footprint , and world-class technology . We think it is a market that is ripe for growth : We are not simply aiming to take market share from the existing exchanges . Our aim is to grow the overall derivatives market in Europe through an improved market design based on our successful US trading constructs , which existing and new participants are asking for .
It is notoriously challenging to build a new derivatives market from scratch . Why do you think Cboe will be successful ? DH : Having worked at Cboe Europe and its previous incarnations for many years , diversifying into the derivatives market is something we ’ ve always been working towards . We now have all the ingredients necessary to make that move with a unique proposition .
First , our pan-European cash equities business is well-established and highly successful . We continue to be Europe ’ s largest truly pan-European equities exchange by value traded , accounting for close to 20 % of all activity on any given day . What this business has given us is robust market data , not just for one country but across all of Europe ’ s major markets – something no other European exchange can offer . We ’ ve used that data to calculate our own pan-European indices , which are highly correlated with comparable benchmarks . They serve as the foundation for our derivatives business , enabling us to create a suite of high-quality , proprietary equity index contracts
14 // TheTRADE // Fall 2020