Market Overview

Cboe BZX Exchange Seeks To List New Short Volatility ETF

Cboe BZX Exchange Seeks To List New Short Volatility ETF

Cboe BZX Exchange is seeking permission from the Securities and Exchange Commission (SEC) to list a new short-volatility exchange-traded fund, according to Reuters.

What Happened

The BZX Exchange, one of the four U.S. equities exchanges operated by Cboe Global Markets Inc (BATS: CBOE), has filed an application with the SEC on Dec. 10 to register a new short-volatility ETF.

The Cboe BZX Exchange ETF is made to track the daily move in the Short VIX Futures index .SHORTVOL index, which itself measures a rolling positioning in the first and second-month contracts on the Cboe VIX futures VXc1 VXc2, said the filing, according to Reuters.

Why It Matters

A similar short-volatility Exchange Traded Product (ETP) called the VelocityShares Daily Inverse VIX Short Term ETN (also known as XIV) was introduced to the stock market nearly two years ago. XIV enabled many investors to bet against stock volatility before it collapsed in February 2018, causing billions of dollars in losses for the investors.

Since its inception in the early 2000s, ETPs became very popular among investors, especially after the introduction of two exchange-traded notes linked to indexes composed of futures on the VIX in 2009.


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