By Doris Frankel
CHICAGO (Reuters) - The Chicago Board Options Exchange said on Tuesday that it is partnering with Standard & Poor's to license the methodology on its popular volatility index, known as the VIX .VIX, to exchanges worldwide.
CBOE's product offerings, anchored by its proprietary index contracts such as the VIX and the addition of a futures and a cash equities exchange, puts it in a strong position.
The CBOE earned $30.6 million in the first quarter, helped by expanded product offerings, particularly in its suite of volatility and variance products.
"The Indian exchange, the NSE in India, recently took up a license from us," CBOE Chief Executive William Brodsky said at the Reuters Exchanges and Trading summit in Chicago. "This is a new and growing source of revenue for us as well."
The move would eventually help Indian investors understand and trade volatility as an asset in the U.S. market.
"It's something that helps solidify our brand and get more attention to the products," Brodsky said. "So people understanding volatility in India, they're certainly going to want to trade volatility in the U.S. and that will rebound to us."
Brodsky said he plans to attend the annual general assembly of the International Option Market Association this week where he already has people lined up who are interested in CBOE's volatility products.
The VIX, often called Wall Street's fear gauge, measures near term projected stock market volatility based on Standard & Poor's 500 index .SPX option prices. McGraw-Hill Cos (MHP.N: Quote, Profile, Research, Stock Buzz) owns Standard & Poor's.
Futures and options are now actively traded on the VIX, an index created in 1993. CBOE's suite of volatility and variance products also includes indexes based on the Dow Jones industrial average .DJI, the Russell 2000 and the Nasdaq Composite Index .IXIC.
"I actually think that the Russell 2000 has the greatest promise of growth among the three," Brodsky said.
(For summit blog: summitnotebook.reuters.com/ )
(Editing by Phil Berlowitz)
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