William J. Brodsky
Mark F. Duffy
Edward J. Joyce
Letter from the Office of the Chairman Mounting competitive pressures, a prolonged bear market in equities and shaken investor confidence combined to make Fiscal Year 2003 extremely demanding for the Chicago Board Options Exchange (CBOE) and its members. In the midst of this very challenging year, CBOE celebrated 30 years of options trading and retained its position as the world’s largest options exchange based on total volume. In addition, CBOE launched a major strategic and tech- nological initiative designed to extend the Exchange’s leadership position into the future.
CBOE remained the leading exchange in overall options volume in FY 2003, garnering a 33% market share. Nearly 270 million contracts were traded, with an average daily volume of 1,071,305 contracts. Total equity options volume in FY 2003 was 159.3 million contracts. Despite a decrease of 2% when compared to FY 2002, the volume in FY 2003 represented the fourth highest fiscal year total in the Exchange’s history.
Impressive growth in CBOE’s options on benchmark indexes drove exchange volume in FY 2003, including: S&P 500® Index options (SPX), up 45%; S&P 100® Index options (OEX®), up 51%; options on the Dow Jones Industrial AverageSM (DJX), up 31%; Russell 2000 Index® options (RUT), up 71%; and options on the Nasdaq-100® Index Tracking Stock (QQQ), up 21%.
Total index options volume was 110.6 million contracts traded, an increase of 43% over FY 2002. From May 2002 through June 2003, index options volume at CBOE posted consecutive gains each month over the same month’s year-ago level.
CBOE remains committed to innovations and strategies that will foster the future growth of the Exchange. The most significant of those in 2003, as we’ve noted in the previous pages, was the launch of CBOEdirect HyTS, our new hybrid trading system.
CBOEdirect HyTS was designed to capitalize on CBOE’s greatest assets—the largest pool of market-making professionals in the options industry and the deep, liquid markets found in