“Refocusing our digital asset business enables us to refine our strategy, leveraging our core strengths in derivatives, technology excellence and product innovation to help maximize opportunities for our business and deliver efficiencies for Cboe and our clients.”
Cboe announced a realignment of its digital asset business in Q3 2024 after a strategic review that took into consideration the lack of regulatory clarity in the digital space.
The company plans to transition and fully integrate its digital asset derivatives, currently offered by Cboe Digital, into its existing Global Derivatives and Clearing businesses.
In addition, Cboe will wind down operations of the Cboe Digital Spot Market, the company’s spot digital asset trading platform, in the third quarter of 2024.
As part of the transition, John Palmer, President of Cboe Digital, will become Head of U.S. Derivatives Market Development, under the leadership of Cathy Clay, EVP, Head of Global Derivatives.
Cboe will transition its cash-settled bitcoin and ether futures contracts
According to the plans, Cboe will transition its cash-settled bitcoin and ether futures contracts, currently available for trading on the Cboe Digital Exchange to the Cboe Futures Exchange (CFE) in the first half of 2025, thereby consolidating all Cboe U.S. futures products onto one exchange.
Digital asset derivatives will be under the umbrella of the Cboe Global Derivatives business, which supports global derivatives sales and distribution, product development, market structure, and investor education expertise.
Cboe will maintain ownership and operation of Cboe Clear Digital, the clearing arm of Cboe Digital which facilitates the clearing of bitcoin and ether futures, and plans to align Cboe Clear Digital with Cboe Clear Europe, the pan-European central clearing party (CCP) for Cboe’s European equities and derivatives exchanges across the EU, UK and Switzerland.
As part of this newly unified leadership, Vikesh Patel, the current President of Cboe Clear Europe, will now also oversee U.S. clearing.
Strategic review took lack of regulatory clarity into consideration
Additionally, Cboe Digital Spot Market operations will be shut down. Expense savings are expected to be in the range of $2 million to $4 million in 2024, with savings expected to be in the $11 million to $15 million range on a normalized annual basis.
Fred Tomczyk, Chief Executive Officer of Cboe Global Markets, said: “Refocusing our digital asset business enables us to refine our strategy, leveraging our core strengths in derivatives, technology excellence and product innovation to help maximize opportunities for our business and deliver efficiencies for Cboe and our clients. We believe these changes enable greater optimization and strategic alignment for our business across geographies and asset classes, further supporting our long-term growth strategy.”
David Howson, Global President of Cboe, said: “Bringing digital asset derivatives and clearing into our existing business lines enables us to leverage the full breadth of our global derivatives team and unlock the full value of Cboe to our clients around the world. We expect to continue to see greater demand for exchange-traded derivatives to help manage crypto exposures, hedge risk and enhance capital and operational efficiencies. Optimizing our derivatives and clearing business operations and product development across borders and asset classes enables us to better serve our diverse client base and sharpen our strategic focus.”
