CBOE eyes more growth in "Flex" products

By Doris Frankel

NEW YORK (Reuters) - The Chicago Board Options Exchange has pushed to make its so-called Flex products more attractive for off-exchange business, following an almost ten-fold increase in their volume growth over the past year.

"We've taken some very important steps to make our Flex offerings more flexible," CBOE Chief Executive William Brodsky said of the customized products that allow users to select option contract terms.

"We're picking up a lot of volume," Brodsky told the Reuters Exchanges and Trading Summit in New York.

The No. 1 U.S. options exchange created the concept of Flex index options in 1993 and Flex equity options in 1996.

The exchange in 2007 launched the CFLEX trading system, the first Internet-based, fully automated Flex options trading system in the United States, to boost institutional business on CBOE.

Flex products also have the advantage of being cleared by the Options Clearing Corp. They allow users to select options contract terms, including strike prices, and can be based on either indexes or equities.

CBOE received regulatory approval for the Flex contract to be tailored to expire on any day of the month.

Brodsky said the exchange's Flex products have grown to 20,000 contracts a day in April, compared with 2,800 contracts per day a year ago.