Finance02 October, 20262 min read
Cboe Explores Perpetual VIX Futures, Awaiting Clear U.S. Regulatory Framework
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Cboe evaluating listing perpetual futures tied to the VIX with no expiration. Decision depends on clearer U.S. regulatory framework for perpetual futures.
8 outlets told this the same way.
Cboe studies VIX perps
Cboe Global Markets is exploring perpetual futures tied to the Cboe Volatility Index, or VIX, as the exchange looks to add a structure with no expiration date to its existing VIX futures and options lineup. Rob Hocking, head of Cboe's global derivatives business, said Cboe is considering perpetual futures and that the exchange would move forward only once the U.S. regulatory framework for perpetual futures becomes clearer.
“One of the things that we're looking at, for example, is VIX.”
Hocking told a Bloomberg Intelligence derivatives market structure conference in New York on the 1st (local time), "One of the things that we're looking at, for example, is VIX." Hocking also said, "There's no way to trade spot VIX today," explaining why Cboe has been asked how investors can invest in spot VIX without a direct spot product.
How the product would work
Cboe's proposed perpetual structure would use a funding mechanism to keep the contract price close to the spot level of the VIX, with the VIX measuring expected 30-day volatility of the S&P 500 based on options pricing. CoinDesk described how VIX futures face expiry, the day when contracts cease to exist, while perpetual swaps never expire and instead rely on a funding rate mechanism to anchor the contract price to the spot index.
DWF Labs market insights lead Martin Lee said, "Traders don't have to worry about expiries and decay and just focus on the direction of where they think the underlying is heading." Marex Solutions analysts warned that removing expiry would not remove costs or hedging limits, saying, "Removing expiry does not remove hedge costs or basis risk."
Regulatory and market stakes
Cboe said it is waiting for the United States to clarify how it will supervise perpetual futures, and it did not confirm a launch date for VIX perpetuals. Briefs Finance reported that Hocking urged agencies to spell out how perps will be overseen, saying, "We need regulatory clarity," and adding, "We need to know what are the rules of the game before we can play the game."
“This extension positions us to grow the SPX and VIX franchises well into the future.”
Cboe also extended its exclusive licensing agreement with S&P Dow Jones Indices by 25 years, keeping it in place through 2051, and Craig Donohue said, "This extension positions us to grow the SPX and VIX franchises well into the future." The stakes for investors include leverage and the possibility of magnified losses, because perpetual futures employ leverage and Robinhood said it will offer U.S. customers up to 10x leverage on bitcoin and ether perpetual futures trading, while other crypto perps carry up to 3x leverage.