BATS made a run at these before the acquisition. Upstart Exchange Looks to Profit From Wall Street Fear MIAX to launch options on index for volatility traders, competing with Cboe’s VIX By Gunjan Banerji Oct. 15, 2018 7:32 a.m. ET Just after the stormiest week for U.S. markets in months, investors may get a new way to bet on Wall Street fear. Miami International Holdings Inc., a small but rapidly growing exchange operator, won regulatory approval on Friday for options on an index that tracks expectations for U.S. stock volatility. The measure, called SPIKES, competes head-to-head with the already established Cboe Volatility Index, known as the VIX. The approval comes after investors were reminded last week of how quickly market turbulence can snap back. On Friday, both the S&P 500 and Dow Jones Industrial Average capped their worst weeks since March as investor anxiety bubbled up over how much longer the nine-year bull market in U.S. equities can go on. The VIX has also been beset by controversies and problems in 2018. The index shot up in popularity over the last decade, enticing everyone from mom-and-pop investors to multibillion-dollar pensions to get into volatility trading. But unusual activity and manipulation claims have dogged it this year, leading to lawsuits against its operator, Cboe Global Markets Inc. The company has taken steps to change VIX derivatives trading. Six-year-old MIAX says SPIKES is a more efficient and transparent way to track expected stock volatility. A key difference will be that trading options on SPIKES will be completely electronic. The VIX remains heavily reliant on an old-school trading floor at Cboe’s headquarters in Chicago. SPIKES is also designed to disseminate a level every 100 milliseconds. A level for the VIX is generated every 15 seconds. Another big difference is that SPIKES is based on options prices on the biggest S&P 500 exchange-traded fund, the SPDR S&P 500 ETF Trust, known as SPY. The VIX is determined by prices of options on the S&P 500 index itself—contracts that can only be traded on Cboe. MIAX Options, the exchange that plans to list the options, will also likely undercut Cboe on trading fees—which have long been a gripe of traders using Cboe’s proprietary products. Data from a monthly auction that establishes derivatives prices for SPIKES will also be publicly available, the company said, tackling an area that has plagued the VIX this year. SPIKES “is not the first attempt by a competitor to launch a VIX-like product,” said a Cboe spokesman in an email. “As seen last week, the marketplace turns to VIX options and futures for opportunities to manage uncertainty and risk.” Princeton, N.J.-based MIAX says there is interest from a number of options trading firms. Chief Executive Thomas Gallagher said the new SPIKES options will inject “healthy competition into the market.” Still, while SPIKES options could be launched this quarter, there is no guarantee they will be successful. Cboe has nurtured the VIX and the products linked to it for years, turning the gauge into a lucrative franchise. More than a third of Cboe’s revenue growth in the two years through 2017 came from VIX derivatives trading, according to Goldman Sachs. MIAX is also not the only exchange vying for a slice of the volatility trading universe. The Wall Street Journal reported last year that Nasdaq Inc. has been working to launch futures and options linked to another index that measures U.S. stock volatility.