Cboe chief resigns over undisclosed relationships with colleagues

Cboe chief resigns over undisclosed relationships with colleagues

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The chief executive of Cboe Global Markets has resigned after the exchange operator said he failed to disclose personal relationships with colleagues.

The Chicago-based group said in a statement on Tuesday that the failure by Edward Tilly to disclose the ties “violated Cboe’s policies and stands in stark contrast to the company’s values”.

Tilly is a veteran of Cboe and its predecessor, the Chicago Board Options Exchange, having started as a clerk on its trading floor in 1987. Cboe operates the largest venue for US equity options, among other businesses.

He is the latest chief to unexpectedly depart over his personal relationships. Last week, BP chief Bernard Looney resigned over his failure to disclose the extent of past personal relationships inside the company.

Cboe said Tilly resigned after an investigation by Cboe’s board and external lawyers that began last month. The conduct at issue “was not related to and does not impact the company’s strategy, financial performance, technology and market operations, reporting, or internal controls,” the company said.

Fredric Tomczyk, a Cboe board member, will take over as chief. Tomczyk joined the board in 2019, having been chief of broker TD Ameritrade for eight years until 2016.

“Fred’s familiarity with Cboe’s business, combined with his multi-decade experience in the financial services industry, will provide stability and reinforce the company’s commitment to growth,” said William Farrow, a Cboe board member newly appointed as non-executive chair.

Shares in Cboe were up about 3 per cent after the news and have gained 25 per cent this year, outperforming rivals and the broader market as the exchange benefited from a surge in options trading, particularly in its flagship S&P 500 products.

Line chart of year-to-date, % change showing Cboe has outperformed its rivals

The exchange group is best known, however, for its Vix indices, which measure the stock market volatility implied by options and are popularly known as Wall Street’s “fear gauge”.

Earlier this year, Cboe also launched a push to win new listings in Europe, where it runs the largest pan-European share trading venue.

Tilly had led Cboe since 2013, having held senior management positions since 2006 when he moved from the trading floor. He became chair in 2017 after leading Cboe’s $3bn acquisition of the Bats trading platform, a move that extended its reach into US and European cash equities as well as exchange traded funds and currencies.

“It’s a big deal. He was a really good leader for the company,” said John Lothian, publisher of an industry newsletter and formerly a futures broker in Chicago. “Ed represented a continuation of the Cboe culture even as that changed when it bought Bats and it became much more aggressive and less of a member-led exchange.”

In a filing, Cboe said that, under his contract, Tilly would retain stock options, including performance-related ones, prorated up to his departure date.