Defining Markets with the Power of Data and Analytics

(This article first appeared in the Q3 issue of GlobalTrading.)

The first half of 2020 has been a stunning period in history, with a global pandemic threatening lives, markets and economies. The resulting market uncertainty illustrated that the need to understand risk has never been more important. As investors sought tools to help navigate this challenging environment, the demand for robust datasets and sophisticated analytics soared. This desire for more market intelligence, although heightened during the crisis, is not new — it is a continued and increasing demand for augmented analytics that has been building over time. And, it is a need Cboe Global Markets identified and sought to address beginning several years ago. 

Cboe Information Solutions’ comprehensive product suite of data, analytics, indices and execution services arms market participants with a wide variety of solutions that can simplify the complexities of navigating the derivatives marketplace. This extensive offering is designed to optimize the customer experience throughout the life cycle of a transaction, from pre-trade to at-trade to post-trade, by providing insights, alpha opportunities, portfolio optimizations and seamless workflows. 

“Cboe’s ethos is a deeply held belief that market participants and investors at all levels benefit from asset price stability, protection of principal and capital growth,” said Catherine Clay, Senior Vice President and Global Head of Information Solutions at Cboe. “We’re listening to our customers and providing them with a comprehensive suite of data solutions, analytics and indices, that help them better understand risk and access markets.”

Providing Flexible Solutions 

Catherine Clay, Cboe

Cboe Information Solutions is a result of several strategic acquisitions: LiveVol and DataShop in 2015, Silexx in 2017, and its 2020 hat trick — Hanweck, FT Options and Trade Alert, in addition to its existing Cboe Global Indices business. 

“Each of the acquired firms were best-in-breed companies and collectively, make our Information Solutions offering second to none. We’ve strategically built this team to be able to help our clients gain market insights and better understand their portfolio risk in real-time to ultimately drive better-informed, more confident trading decisions,” Clay said. “Information Solutions’ holistic offering provides transparency, access and ease to customers.” 

“The opaque, inefficient, slow and fragmented workflow that our clients are subjected to is really what drove us to build Information Solutions,” Clay said. “In essence, we created a ‘dream team’ of quantitative, technical and business expertise. Our products reflect this amazing talent and our shared vision about why what we do matters. And our team is highly talented in building information solutions by addressing the pain points clients experience throughout the life cycle of their trades.”

Faster Market Intelligence 

In today’s modern trading environment, speed is king. And one of the greatest challenges for market participants is receiving powerful analytics in as close to real-time as possible. This includes a major shift away from end-of-day analytics, to a much more real-time analytics environment where users are notified of market activity and order flow dynamics relevant to their business. 

And certainly, 2020 has presented its own unique data challenges for trading and investing firms. Chief among them that the ongoing COVID-19 pandemic has dispersed employees to their homes, which caused the vital information flow found on a live trading desk to evaporate. By supplementing an exchange floor experience, Trade Alert’s system is able to fill a critical communications gap that would have otherwise been lost while working from home.

“This drastic shift posed a new opportunity for us, as our platforms were uniquely designed to fill the void created by a remote working environment,” Clay said. “Our platforms help clients understand real-time market color and intelligence through a digital interface. Our acquisition of Trade Alert in June really hits on this point.” 

 Clay also cited trading and investment firms’ immense ongoing headache of data storage and management, plus constraints around access to and quality of data in some markets. Many market participants have various solutions from different vendors layered on top of their own in-house-solutions, which can make for a fragmented, inefficient and slow workflow. Cboe Information Solutions aims to stitch that all together with its complete offering. 

Building for the Future

Going forward, the Cboe Information Solutions team has ambitious plans. “We intend to continue integrating our products and technology stack, with the end goal of expanding our distribution — both across our current client base and globally,” Clay said. 

To harmonize its data and analytics offerings, Information Solutions plans to introduce the Cboe Theoretical Value, or “Cboe Theo,” a necessary step toward achieving a cohesive dataset. This theoretical price is valuable to the end-user as it provides a fair value before trading derivatives, as well as for strategy analysis post-execution. The exchange operator expects to complete what it describes as one of the most foundational data points by the end of September.

“We are on a mission to impact the outcomes in the market for all participants,” Clay concluded. “The capital markets demand greater innovation and solutions that better serve market participants, and 2020 has only accelerated the need to access data and analytics in easier and better ways to ultimately share information more seamlessly. Our team goes to work each day with that ethos.”

Cboe Information Solutions’ holistic offering includes:

  • Trade Alert delivers timely, accurate flow analysis including directional sweep and complex order aggregation, unusual volume alerts, expert commentary, historical data and more.
  • Cboe Hanweck provides margin-risk analytics with a real-time, data-enabled, global, cross-asset, risk-analytics platform. 
  • FT Options combines risk and volatility analytics into a premier portfolio-management platform with what-if scenarios and attribution models. 
  • Cboe Silexx Order Execution Management System (OEMS) provides broker-neutral access, along with robust risk management features and FLEX options trading.
  • Cboe LiveVol provides aggregated equity and derivative market statistics, live vs. historical implied volatilities, trading indicators, alerts and visualizations delivered in both a desktop platform and Application Programming Interfaces (APIs). 
  • Cboe DataShop offers the purchase and delivery of historical and subscription market and reference data in a one-stop shop. Data sets are derived from multiple trading venues and asset classes and are packaged for easy download. 
  • Cboe Global Indices offers independent index calculation services with real-time distribution channels, as well as development of option strategy benchmarks for licensing. Cboe’s proprietary strategy benchmarks include the Cboe Volatility Index® (VIX Index®), BuyWrite and PutWrite indices, and Target Outcome indices.

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