CBOE Holdings' fourth-quarter outpaced the Zacks Consensus Estimate
on the back of improved volumes and lower operating expenses,
partially offset by lower rate per contract, overall resulting in
margin expansion and higher operating cash flow. A controlled
expense guidance further raises optimism. The absence of long-term
debt and low capital requirements also paves the way for strong
liquidity and capital, deployment and limits balance-sheet risks.
However, industry volatility and sluggish credit quality, amid
intense competition, and challenging regulations adversely affects
the trading volumes. We believe the company's leading market
position in the options and futures businesses, diversified product
portfolio and core competencies have the potential to drive valued
upsides in the stock in the future, justifying our Neutral
Based in Chicago, Illinois, and founded in 1973, CBOE Holdings
Inc. is a leading derivative exchange in the U.S. trading in stock
or equity options, index options, exchange traded-products (ETP)
including exchange traded- funds and notes (ETF and ETN) options
and futures products.
CBOE Holdings became a Delaware corporation in 2006 and went
public in Jun 2010. The demutualization in Jun 2010 brought into
effect three stand-alone exchanges with CBOE Holdings as the
parent. These include:
Chicago Board Options Exchange Inc. (CBOE): This is the primary
exchange for trading of listed options through both electronic
trading and open outcry under a hybrid trading model.
C2 Options Exchange Inc.: This is the all-electronic exchange
for trading options executed on a separate fee model. C2 became
functional in 2010.
CBOE Futures Exchange LLC (CFE): This is the all-electronic
futures exchange regulated by the Commodity Futures Trading
Commission (CFTC), while all trades are cleared by the Options
Clearing Corp. (OCC). It is operational since 2004.
Particularly, CFE trades in the CBOE Volatility Index (VIX
Index) futures (VX), Mini-VIX (VM) futures, S&P 500 Variance
(VA) futures, CBOE Nasdaq-100 Volatility Index (VXN) futures (VN),
CBOE Gold ETF Volatility Index (GVZ) security futures (GV), CBOE
Crude Oil ETF Volatility Index (OVX) security futures (OV), CBOE
Emerging Markets ETF Volatility Index (VXEEM) security futures
(VXEM) and CBOE Brazil ETF Volatility Index (VXEWZ) security
Overall, CBOE Holdings generates its operating revenues from
transaction fees (70% of total operating revenue in 2012), access
fees (12%), exchange services and other fees (6%), market data fees
(5%), regulatory fees (4%) and other revenue (3%). The company was
armed with staff strength of 605 employees at the end of Dec
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