William Brodsky will step down as chief executive officer of CBOE Holdings Inc. (CBOE:US) in May, ending his 16-year tenure running the biggest operator of U.S. options markets. He will become executive chairman of the board.
Edward Tilly, the Chicago-based company’s president and chief operating officer, will replace him, the owner of the Chicago Board Options Exchange said in an e-mailed statement today. Brodsky, 68, converted the CBOE to a publicly listed company in 2010 from a mutual ownership structure and came to the exchange after more than a decade as the head of CME Group Inc. (CME:US), the world’s largest futures exchange.
“He’s one of three or four who’ve materially changed the nature of the derivatives industry and a great leader,” Richard Sandor, the founder of the Chicago Climate Exchange who said he’s known Brodsky for more than 30 years, said in a telephone interview. “He is one of the people who took the Chicago model international, an innovator, with an incredible depth of knowledge.”
The Chicago Board Options Exchange, started in 1973 as the first U.S. equity derivatives market, became the last major American bourse to convert to shareholder ownership with its initial public offering. The exchange last month posted third- quarter profit that beat analyst projections as options trading volume surged. Trading volume rose 47 percent to a record 5.48 million contracts per day on average, the company said.
CBOE, the largest of nine American options markets, saw the most trading ever in August for its exclusive options on the so- called VIX gauge of volatility, which accounts for about 10 percent of revenue, according to Macquarie Group Ltd. The VIX measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index.
Brodsky, a lawyer by training, started his career in 1968 as an attorney in the securities industry. He joined the American Stock Exchange in 1974 and became the head of options trading in 1976. He joined the CME in 1982 as chief operating officer, overseeing the launch of its Globex trading system and developing and expanding its stock-index futures business.
Brodsky was chairman of the World Federation of Exchanges from 2008 to 2010 and is a director of Integrys Energy Group, Inc, an S&P 500 company.
“Brodsky was the face of the CBOE and really the face of the broader options industry in the U.S. for a long time,” Edward Ditmire, an analyst at Macquarie Group Ltd. in New York, said in a phone interview today. “It is fair to say that Tilly was groomed for the role for a long time. You wouldn’t expect too many changes because they worked together in strategy for such a long time.”
Tilly was a market maker and CBOE member between 1989 and 2006, according to the company’s website, and was named to his current post in November 2011. Edward Provost, the chief business development officer, will succeed Tilly as president and COO, according to today’s statement.
CBOE shares rose 0.5 percent to $30.06 at 2:16 p.m. in New York, taking the gain in 2012 to 16 percent. They are trading about a dollar above the initial public sale price of $29 in June 2010.
“Over his long tenure at the CBOE, Bill Brodsky has been a strong champion and advocate for the options industry,” Gary Katz, chief executive of the International Securities Exchange, the third-largest market, said in an e-mail. “His experience and dedication have contributed to the exceptional growth achieved by the options industry over the past decade.”
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