Exchange Operator Cboe Global Markets Beats Q3 Profit Estimates

Exchange Operator Cboe Global Markets Exceeds Q3 Profit Estimates

Exchange operator Cboe Global Markets reported better-than-expected third-quarter profits as transaction volumes surged amid increased volatility in global markets across asset classes. The company experienced strong demand for its options products as investors sought to manage risk in an uncertain economy. Revenue from the options segment rose 14%, driven by growth in the index options business and higher revenue per contracts. CBOE’s total average daily volume in options increased by 8%, while revenue per contract grew by 12%. The Chicago-based group’s total revenue increased by 9% to $480.5 million.

Cboe’s CEO Emphasizes the Importance of Risk Management

Cboe’s Chief Executive Officer, Fredric Tomczyk, highlighted the role of the company’s suite of index options and volatility products in helping investors and traders manage risk in a challenging macro and geopolitical environment. Tomczyk, who assumed the CEO position in September, also emphasized the importance of talent development and succession planning as key priorities for the company.

Cboe Expects Strong Organic Net Revenue Growth

Cboe anticipates organic net revenue growth to be at the high end of its target range of 7% to 9% in 2023. The exchange saw a 21% increase in volumes, reaching a record average daily volume of 2.9 million contracts in the third quarter. Demand for options contracts that expire on the same day they are opened, known as 0DTE (zero-days-to-expiry), grew by 33% compared to the previous year and accounted for 48% of SPX volume. Options linked to the volatility index saw a substantial increase of 60% as investors shifted away from using bonds as a diversifier of equity risk.

Positive Outlook for Cboe and Peers

Following the conference call, Cboe’s shares rose by 3.7% to $168.87. Analysts are optimistic about Cboe’s future, as well as that of its peers, CME Group, Nasdaq, and Intercontinental Exchange. The extreme levels of volatility in the equity and bond markets are expected to continue driving momentum for these companies. Nasdaq and ICE, in particular, are projected to experience consistent gains due to reduced reliance on commissions.

Conclusion

Cboe Global Markets’ strong performance in the third quarter, driven by increased transaction volumes and demand for options products, exceeded analysts’ profit estimates. The company’s focus on risk management and talent development, along with its positive outlook for organic net revenue growth, positions it well for the future. As market volatility persists, Cboe and its peers are expected to benefit from the ongoing demand for their services.