CBOE Eyes New Futures On Equities, Bond Yields, Commodities

The parent of the Chicago Board Options Exchange is exploring ways to broaden its small U.S. futures market with contracts linked to stocks, bond yields and commodities, according to an executive.

CBOE Holdings Inc. (CBOE), which runs the largest U.S. options exchange by contract volume, is looking for ways to bulk up in proprietary futures contracts that carry higher trading fees than stock options.

The eight-year-old CBOE Futures Exchange does most of its business in futures linked to the CBOE Volatility Index, or VIX, the so-called "fear gauge" that reflects anticipated gyrations in the Standard & Poor's 500 stock index.

Any new contracts tied to stocks, interest rates and commodities launched on the CBOE Futures Exchange are unlikely to be copycat versions of products already offered by larger futures market operators like CME Group Inc. (CME) and IntercontinentalExchange Inc. (ICE), said James Lubin, managing director of the platform for CBOE.

"It's hard to displace an established franchise," said Lubin, speaking at a CBOE event Tuesday. The potential new contracts are under discussion, he said, but no decisions have been made on which ones to pursue.

About 48,000 VIX futures traded on CBOE's futures market on an average day in 2011, according to CBOE figures, 174% higher than the 2010 average. Business has been boosted by growth in exchange-traded products linked to the VIX, which buy and sell the futures to manage exposure. About $2.8 billion in assets are now managed by such vehicles, according to CBOE.

The Chicago-based firm late last year sought to expand beyond volatility contracts with plans to introduce futures contracts linked to indexes tracking real estate prices, and this week listed futures tied to volatility in emerging-market stocks.

-By Jacob Bunge, Dow Jones Newswires; 312 750 4117; jacob.bunge@dowjones.com

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