CHICAGO - Cboe Global Markets, Inc. (Cboe: NYSE:CBOE), a prominent derivatives and securities exchange network, has announced a strategic shift in its digital asset business. The company is planning to integrate its digital asset derivatives trading and clearing into its current derivatives and clearing operations. This initiative, expected to create operational efficiencies and leverage Cboe's expertise in derivatives and technology, is part of a broader strategic review.
The transition will involve moving digital asset derivatives currently offered by Cboe Digital into the Global Derivatives and Clearing businesses. This includes cash-settled bitcoin and ether futures contracts, which are slated to move from the Cboe Digital Exchange to the Cboe Futures Exchange (CFE) in the first half of 2025, subject to regulatory and corporate approvals. The consolidation aims to streamline processes and utilize Cboe's global technology platform to support the growth of exchange-traded digital asset derivatives.
Concurrently, Cboe plans to cease operations of the Cboe Digital Spot Market, its platform for spot digital asset trading, in the third quarter of 2024, pending regulatory considerations. John Palmer, President of Cboe Digital, will transition to the role of Head of U.S. Derivatives Market Development.
Cboe also intends to maintain and align its clearing operations, with Cboe Clear Digital continuing the clearing of bitcoin and ether futures, under the stewardship of Vikesh Patel, who also oversees Cboe Clear Europe.
Fred Tomczyk, CEO of Cboe Global Markets, expressed confidence that the realignment would optimize the company's strategy and support long-term growth by focusing on core strengths. David Howson, Global President of Cboe, emphasized the anticipated demand for exchange-traded derivatives to manage crypto exposures and enhance efficiencies.
The company anticipates minimal impact on net revenue in 2024 due to the wind-down of the Cboe Digital Spot Market but expects expense savings in the range of $2 million to $4 million for the year, with normalized annual savings projected to be between $11 million and $15 million.
Further details on these strategic changes will be provided during Cboe's first-quarter 2024 earnings call on May 3, 2024. The information is based on a press release statement from Cboe Global Markets.
InvestingPro Insights
As Cboe Global Markets, Inc. (Cboe: CBOE) continues to refine its approach to digital assets and derivatives trading, the company's financial health and strategic decisions remain a focal point for investors. According to InvestingPro data, Cboe is trading at a P/E ratio of 25.1, which, when coupled with a PEG ratio of 0.11, suggests that the company's stock might be undervalued relative to its near-term earnings growth potential. This is especially noteworthy for investors considering the company's strategic shift and potential for operational efficiencies.
Additionally, Cboe's Price / Book value is at 4.75, indicating a premium market valuation, which could be attributed to the company's robust track record in maintaining dividend payments for 15 consecutive years, as highlighted by one of the InvestingPro Tips. This consistency in rewarding shareholders is further reinforced by the fact that Cboe has raised its dividend for 9 consecutive years, underscoring a commitment to returning value to investors.
While the company's revenue has seen a slight decline of 4.67% over the last twelve months as of Q1 2023, Cboe's gross profit margin stands at an impressive 50.83%, reflecting the company's ability to maintain profitability despite revenue fluctuations. This resilience is crucial as Cboe navigates the evolving landscape of digital asset derivatives.
Investors looking for more insights can find additional InvestingPro Tips on Cboe's financial metrics and analyst predictions, such as the anticipated sales decline in the current year and the company's profitability over the last twelve months. For those interested in a deeper dive, InvestingPro offers a total of 9 tips on Cboe, which can be accessed at InvestingPro's CBOE page. To enhance your investment research experience, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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