NEW YORK, Sept 23 (Reuters) - Miami International Securities Exchange (MIAX) and the Minneapolis Grain Exchange (MGEX) said on Monday they plan to launch futures on the SPIKES Volatility Index on Nov. 18, ramping up competition with Cboe Global Markets’ Volatility Index, or VIX.
The futures contracts follow MIAX’s launch of options on SPIKES in February and will allow the exchange operator to offer exchange-traded funds based on the index, which tracks the expected 30-day volatility of the SPDR S&P 500 ETF, the world’s most actively traded ETF.
The futures also provide hedging and could lead to higher demand for SPIKES options.
“The SPIKES future is completing the two products we wanted to launch to go after the monopoly that Cboe has through the VIX in volatility,” Thomas Gallagher, MIAX’s chief executive officer, said.
SPIKES options volumes have picked up in recent months, but so far they have had little success in drawing volatility traders’ business away from the Cboe’s VIX complex of volatility products, generally referred to as Wall Street’s fear gauge.
There have been about 130,000 SPIKES options contracts traded to date. By comparison, Cboe’s VIX options boast an average daily trading volume of more than 500,000 contracts, according to data from options analytics firm Trade Alert.
MGEX will offer the contracts through CME Group Inc’s Globex electronic trading platform.
The move marks the first foray into futures for MIAX, which listed multi-listed options as well as the proprietary SPIKES options. It is also the first financial future to trade on the largely agriculture-focused MGEX.
MIAX said pricing for SPIKES futures will be made available prior to the launch, which is subject to regulatory approval, but that it would be “substantially cheaper” than competing VIX products. (Reporting by John McCrank; Additional reporting by Saqib Ahmed; Editing by Richard Borsuk)