Fred Tomczyk, CEO of Cboe Global Markets Inc. CBOE, was interviewed by Benzinga at the HOOD Summit, presented by Robinhood HOOD.
Cboe Global Markets is the world's leading derivatives and securities exchange network – operating in 27 markets globally – and facilitates trading in options, futures, equities, FX and more for all investors. The company has long been an innovator in financial products.
A year into Mr. Tomczyk's tenure as CEO, the firm appears to be firing on all cylinders. The CEO spoke about his firm’s incredible growth and what he sees as the dominant trends in the upcoming year.
Cboe Global Markets is the world's leading derivatives and securities exchange network – operating in 27 markets globally – and facilitates trading in options, futures, equities, FX and more for all investors. The company has long been an innovator in financial products.
A year into Mr. Tomczyk's tenure as CEO, the firm appears to be firing on all cylinders. The CEO spoke about his firm’s incredible growth and what he sees as the dominant trends in the upcoming year.
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NewsTranscript
00:00Today I have the pleasure of interviewing Fred Tomczyk, who is the CEO of SIBO.
00:11Fred, thank you so much for your time.
00:12It's great to be here.
00:13Let's kind of dive right into it.
00:14It's been over a year since you took on the role of CEO.
00:18What's kind of surprised you the most of this journey?
00:21You know, not a lot has surprised me.
00:22I was on the board at SIBO for the last four years prior to stepping into the CEO role.
00:27So with respect to the company, I had a pretty good perspective on it.
00:30If there's one thing out meeting clients and whatnot that sort of surprised me or opened
00:36my eyes is, number one, the demand for technology and access to data.
00:42Number two would be the growth of the retail investor.
00:44And in particular with Robinhood, I've always known about Robinhood, but I never realized
00:48they were growing so fast.
00:49And that was a bit of an eye opener for me.
00:52And then third, no matter where I go in the world, people want us, you know, because we
00:56run a global securities exchange, you know, they want us to help, you know, bring competition
01:02to that market, introduce options, but they also want access back to the U.S. market.
01:06Yeah.
01:07Well, what's interesting is SIBO has been an innovator in this space, right?
01:09No question about it.
01:10And you've also had rapid growth that you mentioned as well.
01:13Tell us about the announcements that we just heard at this Hood Summit with the partnership
01:16with Robinhood.
01:17You know, there's, I think it was great last night.
01:19You can see what they're trying to do, or Vlad's trying to do.
01:24He's trying to take the place of, you know, the old Ameritrades and E-Trades, the thinkorswims
01:28that were the true innovators and disruptors of what we used to call the full commission
01:32brokerage space.
01:34So I can see that, you know, now with them all consumed into much bigger enterprises,
01:38he's trying to take that place as the innovator and the disruptor.
01:42The big thing was their trading platform, Robinhood Legend, which, you know, when I
01:47look at it, it looks familiar, but, you know, it's a good trading platform and the introduction
01:53of index options and futures and products like that.
01:57So they're really moving into the active trader space in a way I haven't seen that historically.
02:01Yeah.
02:02The platform looks great.
02:03I mean, I was just checking it out.
02:04It made me want to place a few trades.
02:05So it's definitely exciting stuff.
02:06Now, when things are going great, everyone's happy.
02:08You actually have the experience of going through with TD Ameritrade with the 2008 financial
02:12crisis.
02:13Now we face in this world of 2024 with geopolitical risk, election year, things like that.
02:18How are you kind of making sure that SIBO is set up to go through these tumultuous times?
02:21Yeah.
02:22Whenever you run a market-based business, particularly one that has a high percentage
02:27of the revenues in trading, you know you're going to go through ups and downs.
02:31And so the important thing in running these kinds of organizations is two things.
02:35Number one, make sure that you have the products and services available to trade through any
02:40environment.
02:41That's one of the advantage of option trading is you can trade regardless of environment.
02:46The second thing is to keep focused on the long-term and the secular trends that you
02:51see in the market.
02:52And if you stay focused there, yes, you will have your ups and downs, but you'll continue
02:56to grow into what we see as a long-term secular growth trends, which for us, that's option
03:01trading, the growth of the retail investor, those types of things.
03:05You know, a lot of times, I know for me, my family, whenever they think of me in the stock
03:08market, they're like, oh, it's too risky.
03:10And I feel like that's how people see options, like, oh, it's risky, it's volatile.
03:14But it seems like you, along with SIBO, are very big on, like, the education front.
03:17Why is that so important?
03:18Well, first off, I think, try to remind everybody that options, the roots of options, and most
03:24derivatives for that matter, are in risk management, not in sort of big speculative bets.
03:29So it's primarily, in many respects, a risk mitigation tool.
03:34Secondly, when you look at them and you read about them and you hear about them, you obviously
03:39get nervous.
03:40I think it's important you go through the education process.
03:42You understand them, the different styles, whether it's an index option or a single
03:48stock option, the difference between a European style option versus American style, cash settle,
03:54physical settle.
03:55All those types of things are important for you to understand.
03:57So take the education.
03:59And if the broker that you're trading on has what's called paper money, try that first.
04:04So you can see, try your trading strategies before you put money at risk and get yourself
04:08comfortable.
04:09You know, there is also on the education front, like, tax advantage, there's so many different
04:12things that people can learn about.
04:13All right.
04:14One year down, a lot of growth, obviously great partnership so far.
04:18Give me a sneak peek on what folks can expect in the next 12 months and further down.
04:23The next 12 months, I mean, obviously, you're going to see the last quarter here.
04:26Historically, we've had volatility in the markets around election.
04:30I think this one's no different.
04:32In fact, this one, unlike many that you see are kind of predictable, this one's unpredictable.
04:38I do think we have an event where there's a high degree of uncertainty.
04:41I think that's one of the reasons you're seeing the VIX back up at 20, at a 20 level, which
04:46is this long term average, by the way.
04:49But you're seeing that because I think people are January between the geopolitical environment
04:53and an uncertain election, a lot of people will sort of want to mitigate risk.
04:58So you see that in the fourth quarter.
04:59As you look out into the future, you're going to see CBO continue to focus on leveraging
05:04its global platform, investing in the technology, investing in the retail side, the data and
05:10access solutions, and continue to innovate on the derivative side, which is the core
05:14of CBO and what it's known for.
05:16And of course, you know, with the volatility, you guys had a product release around VIX
05:20as well.
05:21We did some webinars as well.
05:22So I think education front, there are a lot of different ways to take advantage of CBO
05:25products, VIX being one of them, because the volatility in the markets, how you trade with
05:29it is key.
05:30One final question before I let you go.
05:31What is your favorite CBO product?
05:33I know it's like asking your favorite child, but a little less, you know, dangerous of
05:37an answer.
05:38What's your favorite CBO product?
05:39I'm not going to pick a product, but I would say index options in particular, because I
05:44mean, I think for myself and for most retail traders, the index option with the advantage
05:49of a European style, which means it can't get called away on you, you made your bet
05:54and expires and expires into cash.
05:57So that's a great product.
05:58And there's favorable tax treatment for most people for an index option.
06:04So I think those three things make me sort of say our index, our proprietary index platform,
06:09the SPX complex in particular, the RUT complex.
06:13Those are great products for a retail investor.
06:16So they would be at the top of my list.
06:17And I'll reiterate, the tax advantage is definitely huge.
06:20Investors should definitely do their own due diligence on that.
06:21Thank you so much for your time here, Fred.
06:24You got it.
06:25That is Fred Tomczyk, who is the CEO of CBO.