Cboe Global Markets has launched options on three new MSCI indices as it furthers its partnership with support tools and services provider MSCI, responding to investor demand for global equity exposure.
Cboe MSCI World Index Options (MXWLD), Cboe MSCI ACWI Index Options (MXACW), and Cboe MSCI USA Index Options (MXUSA) are now available for trading on the Cboe Options Exchange.
“We have seen heightened interest in the optionality derivatives can provide. These new
index options,” commented Catherine Clay, head of global derivatives at Cboe Global Markets. “The MSCI volatility benchmark indices will provide important tools in helping investors manage their global exposures.”
The index options are intended to grant investors exposure to international, developed and emerging markets and US equity market performance, Cboe said, providing comparable measures for market volatility.
Institutional investors including pension funds and insurance companies will be able to more efficiently hedge global equity exposure thanks to the index options, the company stated, while minimising the potential for tracking error and currency risk.
The index options include European-style cash settlement, which the Cboe noted will eliminate the risk of early exercise and physical settlement—key pain points in yield enhancement strategies.
Cboe added that portfolio managers running opinions overlay strategies will be able to allow investors to overlay programmes to their global portfolios. Additionally, as MXWLD and MXUSA are based on 1/100th of their underlying index’s value, these options are more accessible for retail investors, the firm said.
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