Cboe readies SEC-regulated event contracts as it exits smaller global markets
Cboe Global Markets is betting big that tightly regulated event contracts can turn today’s volatility into tomorrow’s growth engine.
According to Reuters, elevated market volatility recently drove a 24 percent jump in total average daily options volume at Cboe, pushing net revenue from its options arm up 34 percent to US$433m and lifting total net revenue to a record US$671.1m, above expectations of about US$660m.
Adjusted profit hit US$3.06 per share, beating the US$2.94 analyst consensus based on LSEG data, even as Cboe’s total options market share eased to 29.2 percent from 30.9 percent.
Cboe’s leadership framed this as the culmination of a record year rather than a one-off volatility trade.
In its earnings release, chief executive Craig Donohue said Cboe “delivered an exceptional fourth quarter,” capping a year of “record growth” that included 17 percent net revenue growth, 45 percent diluted EPS growth, and 24 percent adjusted diluted EPS1 growth.
He linked that performance to a “recent strategic realignment” that is channelling resources toward growth and value creation in core businesses.
Derivatives sit at the centre of that strategy.
Executive vice-president and chief financial officer Jill Griebenow said “record volumes across our index and multi-listed options products drove robust net revenue growth of 38 percent versus the fourth quarter of 2024” in the Derivatives business.
Cash and Spot Markets net revenue rose 27 percent and Data Vantage net revenue increased 9 percent year over year, according to the press release.
She guided for 2026 total organic net revenue growth in the “mid single-digit” range and 2026 Data Vantage organic net revenue growth in the “mid to high single-digit” range, and set adjusted operating expense guidance at US$864m to US$879m.
The next leg is event-based products.
Reuters reported that Cboe “is in the early stages of exploring a product that would use an options structure to offer all-or-none payouts, a move that would position it to compete with fast-growing prediction market platforms.”
As per Bloomberg, Cboe plans to list options contracts that “will enable binary bets on event outcomes,” with Donohue telling analysts the exchange wants to list event contracts on the S&P 500 by the end of June.
He said, “It will be the all-or-none style combined with what we feel is a way to intertwine some of the spread trading that we see going on today in SPX.”
Cboe will run these products through the US Securities and Exchange Commission, not the US futures regulator, the Commodity Futures Trading Commission, which currently oversees many prediction markets that “self-certify” new contracts with limited upfront scrutiny.
That securities route requires a more onerous listing process but, as Bloomberg noted, could help insulate Cboe from “the avalanche of litigation facing the event contract market.”
On the earnings call, Cboe’s global head of derivatives Rob Hocking said the firm’s “first initial offerings will be securities products,” which he called “the best way to reach the broadest set of end users.”
He said this approach clearly differentiates Cboe from “a lot of the non-security based platforms already in the market.”
Cboe has tried binary-style products before. It listed binary options on the S&P 500 and on the Cboe Volatility Index in 2008, but “the products were quietly delisted in 2017” after limited uptake.
Donohue said in November that this time the exchange will avoid sports contracts and “stick to offering yes or no bets on financial, corporate and economic data points.”
That product push comes alongside a slimmer geographic footprint.
Reuters said Cboe “is also narrowing its focus on core offerings with the recent plans to exit its businesses in Australia and Canada,” after earlier deciding to wind down its Japanese equities business.
The company is streamlining to focus on “high-growth areas like prediction markets and crypto amid increasing competition for market share.”
Despite the earnings beat and record net revenue, Cboe’s shares traded about 2.3 percent lower in morning trading after the results.
Bloomberg separately reported that adjusted Ebitda rose 40 percent in the fourth quarter to US$464m, while net revenue increased 28 percent to US$671m.
