Chris Isaacson : On divestitures, at this point, I don’t have anything specific in my mind with respect to divestitures. That’s something every management team considers over time. But right now, I would answer, no. Obviously we want to see how our Digital business does. The world has changed since we bought that asset and as we launch our managed futures our margin futures, we want to see how that starts to take. It’s clearly an asset class that doesn’t have the trajectory it used to have. But we still think there’s demand for the market for that particular asset class. And we do believe, given all that’s got on that our strategy is right in terms of turning that asset class into footing a place trusted markets where everybody has an appetite for it.
Ben Budish: Got it. Thanks for the incremental color. Thank you.
Operator: Our next question comes from Craig Siegenthaler with Bank of America. Your line is open.
Craig Siegenthaler: Good morning, everyone and thanks for taking my question. And also want to wish both Fred and Ken a congrats on the new roles. Just starting with index options volume, the long-term trajectory here is obviously very robust. But there has been a deceleration over the near term. So, I wanted to see what you attribute the slowing to in your view? And then also, do you think this Zero Day contribution, which is now in the high 40% rate is close to secular equilibrium? Or do you think Zero Day mix could move higher? Thank you guys.
Fred Tomczyk: Thanks very much for the question. And certainly we had great Q3 with a number of records coming through Q3. Sales of SPX volume $2.9 million, contracts that are significantly over the prior year, VIX options up 60% versus the prior year. And then, as we think about momentum, we think about October as we’ve begun with some record there. And in fact, 2023 has seen nine of the top 10 SPX savings six of those have been in October. So, good momentum coming through that really driven in SPX by three factors, one would be the pick up in hedging as the vectors revisited during the year. The second would be that the vectors catching up with performance through SPX co-buying that. And then thirdly of course, the zero DT complex that you mentioned.
48% as utilization agency quote that of the SPX volume coming from Zero Day to expiry using an increase in the proportion there of institutional engagement as more funds and more strategies have been set up to trade this incredibly balanced ecosystem, where hedging income generation tactical strategy, and systematic trading have all come to life. And so, in terms of the sustainability there, we see that really persisting. And why do we seeing that? We are seeing that because it’s continued over the last 18 months through different market cycles and different volatility regions. And so, as we look forward, we really think about the continued uncertainty in the marketplace, because we think about Fed, we think about inflation, we think about geopolitical issues there and really options, and our volatility toolkit really being replaced to come to manage your risk.
And then, when you think about options themselves, it’s a real durable recurring income stream. Options expire every day, every week, every month, every year and in fact, as we’ll continue to reposition and reengage around that uncertainty that is really forecasted for the rest of next year.
David Howson : Yeah, just to add on that – having seen index options slow down and continue to rise, equity volumes are off as they are relevantly low. But index options continue to grow and into October it continues to grow.
John Deters : And then we just mentioned also the global trading hours in the script you heard us talking about 95% year-over-year growth of SPX index box option volumes, the global trading hours, VIX is growing as well. We still see opportunities for growth and access and distribution around the world and around the clock.
Operator: Our next question comes from Alex Kram with UBS. Your line is open.
Alex Kram: Yes. Hey, good morning, everyone, and Fred good to be talking again. It’s been a few years. But good to have you again. In terms of the topic as you are and maybe this is a continuation from Ben’s question earlier as it comes to divestitures, maybe getting more specific the one area that you didn’t highlight was the European derivative expansion? Now we’ve been at this for a while now and I know there’s some new milestones coming here early next year. But just wondering if you look at an initiative like that where now when we talk to clients we hear limited appetites. Just wondering if maybe your patience with a project like that maybe more limited than than what’s been done before. And then maybe, for Jill, on the same topic, can you just remind us how much the drag is of the European derivatives business today in terms of expenses? Thank you.
Fred Tomczyk: Yeah, maybe I’ll start and I’ll turn it over to Dave for a second. But we just launched European derivatives. So it’s a little early to make a judgment on it. Contrary to it I think there’s two different ways of people look at derivatives in different markets. Sometimes they want access to the US, and if you talk to our clients, our bigger clients, they continue to tell me anyway that there’s a lot of demand for liquidity moving into the US. So that’s one point. And second point, obviously, it’s very early with respect to the multi-list European option expansion here. So I don’t, I wouldn’t pre-judge it at this point. The last thing we have some better perspective on that.
David Howson : Yeah, thanks Fred and thanks, Alex for the question here. When we think about European derivatives, and we’ve always seen this, it’s going to be a journey and not an event – in an event in time, when you’re launching a brand new exchange, a brand new clearing house, and a brand new product, what we need just one of those at a time, they all need time to gain critical mass. And we’re really looking forward to the launch of single stock options in a couple of weeks whereby we’ve got some strong support from industry participants. And when you look at the growth so far, we can see second best quarter for us in Q3 for the index options and futures in Europe with some new participants, new futures and options market makers and some new non-bank FCMs. So, traction, continuing to build there.
And then when we look at the value proposition that that white space to move into for the European derivatives market, it’s significantly still there. 10 years ago, Europe and the US had market sizes around about the same. Now, it’s 8 to 10 times different in those market sizes, clearly a number of factors there when we see roots of growth expand the European market by bringing that US market structure to that. And with regards to the project itself and the build cost and the build effort going forward, it’s purely incremental. We already have the largest PAN European equity exchange in Europe. We already have the largest cash equity clearing house in Europe and the staff to run them. So, by leveraging our global technology platform and re-using this, the functionality from US, it was a marginal incremental effort for them.
So for others it’s not a significant burn that concerns us well. We really look to take advantage of this real gap in the market that we think over time, we can move into. We can move into with the great cost development and great partnerships with our customers there. So certainly we remain committed and committed to this process.
Alex Kram: Very Good. Thanks for the color.
Operator: Our next question comes from Owen Lau with Oppenheimer. Your line is open.
Owen Lau: Good morning, and thank you for taking my question. So massive speculation about the future ownership of Cboe recently. And Fred, you also mentioned the succession planning in your prepared remarks. Could you please elaborate that point a little bit more? Thank you.
Fred Tomczyk: Could you repeat the second part of your question for me for a second, Owen?
Owen Lau: Sorry. You mentioned the succession planning in your prepared remark. Could you please just elaborate that point a little bit more? Thank you.
