Well, good morning, everyone. Welcome to Cboe Global Markets' annual meeting of stockholders. I'm Ed Tilly, the Chairman of the Board and Chief Executive Officer. A copy of the agenda and the rules of procedure should be on each chair. The procedure is as follows. First, I'll introduce our board of directors and some of our key executives who are present at this annual meeting. Second, we will vote on proposals listed in the proxy statement. Third, I will update you on progress made at Cboe. Fourth, we will take questions from stockholders. Finally, we'll report on the preliminary voting results. Now it's my privilege to introduce my fellow directors. First, let me introduce two of our new director nominees, Jamie Parisi and Jill Sommers. Please stand.
Both have extremely impressive backgrounds, with Jamie serving previously as Chief Financial Officer of CME Group, and Jill serving previously as a Commissioner of the Commodity Futures Trading Commission. I hope that you read more about their backgrounds in our proxy. Now let me introduce you to our other director nominees. Please stand when I call your name. Frank English, Bill Farrow, Ed Fitzpatrick, Janet Froetscher. Thank you, Janet. Jill Goodman, Rick Palmore, Joe Ratterman, Michael Richter, Carole Stone, and Gene Sunshine, who is planned to be elected by the Board as Lead Director later this morning. I'd also like to thank Jim Boris, Sam Skinner, and Chris Mitchell, each of whom did not stand for reelection as directors at the annual meeting, for their dedicated service to Cboe. In particular, I'd like to thank Jim for serving as our Lead Director since our IPO nearly eight years ago.
I'll now introduce other Cboe senior executives and board members seated at the dais. Please stand as I call your names. Chris Concannon, President and Chief Operating Officer. Pat Sexton, Executive Vice President, General Counsel, and Corporate Secretary. I'd also like to introduce our independent auditor, Deloitte & Touche, represented here today by Rich Caporelli and Tracy Harrison. In addition, Susan Hogan, a representative from Computershare, is serving as our independent inspector of elections. I thank everyone for being here today. Now let's proceed with the formal business of our meeting. Pat Sexton and I have been appointed as proxies for this meeting. Will the Corporate Secretary now present the required formal documents and affirm that the meeting is duly convened for the transaction of business?
Thank you, Ed. I'm presenting to the meeting copies of the notice of meeting, the proxy statement, the company's 2017 annual report on Form 10-K, which includes the audited financial statements for the year ended December 31, 2017, the forms of proxy, together with affidavits of mailing. In addition, the board of directors adopted resolutions providing for the meeting to be held at this time and place and directing that notice be given. The board fixed March 20, 2018, as the record date for determining persons entitled to notice of and to vote at this meeting. The alphabetical list of stockholders of record as of the record date is available at this meeting for inspection by stockholders.
The inspector of elections reported that immediately prior to the commencement of this meeting, more than 89% of the outstanding shares of the company's common stock as of the close of business on the record date were presented in person or represented by proxy. Therefore, a quorum is present, and the meeting is duly convened for purposes of transacting such business as may be properly come before it.
Thanks, Pat. We have four proposals on which stockholders are voting at this meeting. There will be time for discussion of the proposals after they have been introduced. Each of the matters being brought before this meeting is described in the proxy statement that was mailed to stockholders entitled to vote at this meeting. On each matter, stockholders will have one vote per share of common stock held as of the close of business March 20, 2018. The first item of business for consideration by stockholders is the election of directors as described in the proxy statement. There are 13 director nominees to be voted on at this annual meeting. The directors elected today will hold office until 2019 annual meeting of stockholders and until their successors are duly elected and qualified. Our bylaws require advance notice to the company of stockholders' intent to nominate persons as directors.
No such notice was received. Accordingly, I declare the nominations for directors closed. The second item of business is a non-binding resolution to approve the compensation paid to our executive officers. The third item of business is the approval of our employee stock purchase plan. The final item of business before this meeting is the ratification of the appointment of Deloitte & Touche as our independent registered public accounting firm for our 2018 fiscal year. This concludes the introduction of the proposals to be presented at this meeting. At this time, we will be opening the floor for comments on the proposals. You will have an opportunity to vote after any discussion. Comments on matters other than the proposals should be held for later in the meeting. For now, we will only respond to questions germane to the proposals being put to a vote.
If you would like to speak, please raise your hand, wait to be recognized, and we will come to you with a microphone. Once you are recognized, please state your name and state whether you are an individual stockholder or a representative of a stockholder. We will not address questions from the press or analysts. You may also refer to the rules of procedure for this meeting regarding questions. Please limit any comments to two minutes so that other stockholders may have the opportunity to speak if they wish. Any questions on the proposals? There being no further discussion, it is 9:06, and the polls are now open for voting. Voting is by proxy and written ballot. Ballots are available for each stockholder or proxy holder present and entitled to vote at this meeting.
Any stockholder who has previously given his or her proxy need not vote unless he or she desires to revoke the prior proxy and vote by written ballot at this meeting. Will those stockholders desiring a ballot please raise their hands, and a ballot will be brought to you. If you request a ballot, please mark and sign it now. He needs a pen. You've got help. When the ballot's been marked and signed, please hold it up so it can be collected. You may also turn in any proxies that have not been submitted. The polls will be closing shortly. I can do that. Thanks for your help. Sharon, there is security in here, so it's just. Where is security? This is the signal, right? I told you to watch Brodsky, but now I've got other ones. Thank you.
Since all stockholders have had time to vote, it is 9:08 A.M., and the polls are now closed. While the preliminary ballots and proxies are being tabulated by an inspector of elections, I will report on Cboe's accomplishments in 2017 and provide an overview of the company's progress to date in 2018, as well as strategic initiatives going forward. Following my presentation, we will take questions, and then there will be a preliminary report on the results of the elections. Before I begin, let me remind you that this presentation does contain some forward-looking statements which involve risks and uncertainties. Actual results may vary. Please refer to our filings with the SEC for more detailed information about the risks and uncertainties. How'd we do, Pat?
Very good.
Good. 2017 was a transformational year for Cboe Global Markets. February 28th marked the one-year anniversary of our acquisition of Bats Global Markets. I'm pleased to report that we accomplished what we set out to do within the first year, chiefly, to integrate two great teams while continuing to serve our customers with superior products and services and grow our respective business lines. 2017 was our eighth consecutive year of record revenues and solid financial results, with new all-time highs in trading volume for SPX options, VIX options, and futures. Furthermore, we continued to build on 2017's positive momentum in the first quarter of 2018, reporting record quarterly financial results led by double-digit year-over-year gains across each of our business lines and new trading highs in our proprietary products.
Our record results underscore the utility of our products and the strength of our diversified portfolio of exchanges, particularly in times of heightened market volatility, which we saw in the first quarter. While we've seen some headwinds in our VIX volume post the February spike in volatility, 2018's off to a strong start, and we couldn't be more excited about the opportunities we see ahead. Importantly, we continue to create value for our shareholders. We raised our quarterly dividend in 2017, as we have each year since our IPO in 2010, bringing our annualized dividend growth to 15% over the last seven years. We also continued our strong track record of providing solid shareholder returns with a total cumulative shareholder return of approximately 70% in 2017 and 527% over the last past seven years through the end of 2017, significantly outperforming comparable S&P 500 return of 147%.
Our ability to deliver superior results across key business lines while making great strides in our integration with Bats positions us to more fully leverage our increased global reach and expanded product line. Our mission, to power potential to stay ahead of evolving marketplace, is fueled by our commitment to relentless product innovation, leading-edge technology, and seamless trading solutions. I'll take a minute here to provide some highlights of our recent progress in those three key areas. Our commitment to driving growth through product innovation was evidenced by our launch of Cboe Bitcoin futures in December of last year, the world's first exchange-listed, regulated Bitcoin futures product. We are encouraged by the early trading in Bitcoin futures and the ability to provide an efficient, transparent, and orderly marketplace. We look forward to helping grow this market in 2018 in terms of volume and products traded.
Yesterday, we announced an exclusive collaboration with IHS Markit and BlackRock for Cboe to develop the first-ever broad-based corporate bond index futures. The futures contracts are expected to provide liquid hedging vehicles for institutional investors with exposure to U.S. corporate debt and will be listed and traded on our futures exchange. Pending regulatory review, we expect to begin launching products this summer. Turning now to the migration of Cboe exchanges onto Bats' proprietary technology, which we believe will maximize our value proposition for customers and shareholders and power our company's ongoing growth. On February 25th, as scheduled, we completed a major milestone of our integration with the flawless migration of our Cboe Futures Exchange to Bats technology. Earlier this week, we completed the successful migration of C2 Options Exchange. As previously announced, we have targeted October 7th, 2019, for the migration of Cboe Options Exchange, subject to regulatory review.
In addition, we targeted two technology enhancements for 2018 in advance of migrating Cboe Options Exchange. The migration of S&P 500 index options to hybrid trading, which we successfully completed on April 30th, and the introduction of new trading floor terminals, which we plan to begin rolling out on November 5th, 2018, subject to regulatory review. We are encouraged by the initial response to SPX on hybrid and are very pleased that the conversion itself was flawless. The completion of the CFE and C2 technology migrations and significant steps taken to prepare for the Cboe options migration leave us well positioned to achieve our ultimate goal of providing our customers with a unified world-class trading experience on Bats' leading-edge technology across all our equities, options, and futures markets.
Our preparations in 2017 ahead of MiFID II included the addition of new products and services intended to help our customers and grow European business in the midst of a changing regulatory landscape. We've seen rapid adoption of two such offerings, our Periodic Auctions book and our Large in Scale block trading platform, which continue to attract new customers and increased volume. While the liquidity landscape will continue to evolve under MiFID II, we believe our seamless rollout of new technology and services ahead of the new regulation puts us in a strong position to continue to adapt and grow. We also remain steadfast in our commitment to investor education. Our annual risk management conferences in the U.S., Europe, and Asia attracted strong attendance in 2017 and thus far in 2018, illustrating the continued interest in our products and customer demand for ongoing education.
As I said in my remarks at last year's annual meeting, we plan to leverage the synergies expected to be realized through the Bats acquisition to fund the growth of our business and create long-term shareholder value. To that end, we recently raised our synergy target to $85 million from $65 million, and now expect to reach that target at the end of 2020, one year ahead of our original projections. This is an exciting time for Cboe Global Markets. We are energized by the significant opportunities we see ahead for our company as we power potential for our marketplace, our customers, our employees, and you, our valued shareholders. I'm grateful for your support and look forward to all we can accomplish in the future. This concludes our presentation.
Any stockholder who would like to ask a question, please raise your hand, wait to be recognized, and we will come to you with a microphone. Once you are recognized, please state your name and state whether you are an individual stockholder or a representative of a stockholder. We will not address questions from the press or analysts. You may refer to the rules of procedure for this meeting regarding questions. In the interest of time, please limit your questions or comments to two minutes. I'd open it up for questions. Yes, microphone and Thank you, Alyssa.
Hi, my name is David Krell, and I'm an individual stockholder. What do you see as the biggest risk factors for the Cboe going forward?
Well, as we've disclosed every quarter, the change in risk factors, and we've been really transparent in risk, I think, while not anything new reputationally, the increased attention to the VIX complex coming out of the February spike in volatility has created a lot of attention. It's a lot of our focus, and we spend a great deal of time undoing the misinformation that's out in primarily the financial press at this point. While I don't see it as a long-term risk, I see it right now in the short term of just providing clarity to our process and procedures and really undoing a lot of the misinformation. Really nothing new out of what we've disclosed publicly, but this is just a trending story right now that we're on each and every day. Anyone else? Norm? Bill, I'm telling you, Brodsky, seriously. Norm is first, Bill.
I'm first.
You got one.
I'm good, thank you. Bill, I'm also older.
You can have that distinction.
I'm happy to have it. It means I'm still here. Norman Friedland, individual shareholder. What is the status of The Schall Law Firm class action suit?
Schall. Is that one of them? There are a number of lawsuits, Norm, and this is VIX related? Early stages. There's nothing unique about that one in itself. As we're being prepped at the board level, again, early stages, whether or not this becomes a class or how it's a class or what the claims are ultimately, too early to tell. The information is forming, and if there is something developing, it's been pretty transparent, but we'll share with you as things progress. Right now, nothing new to update, and ongoing litigation is very difficult, as you know, Norm. If something does change and it's material in any way, we'll share that with you.
Okay. I was involved in one of these many, many years ago through another company, and which they settled very quickly for a nominal amount of money. It was explained to me, this particular lawsuit was very typical of what happens on buyouts and things.
Yeah, again, really early. Pat and the entire team are on this, monitoring this, but if something changes or a class is put together, we'll obviously update you in any materiality that as a result.
Okay.
Thanks, Norm.
Thank you.
Did you have another?
Just curious about the Coinbase digital currencies.
I knew there'd be another one, Norm. Digital currency in general?
Yeah.
The question?
Is there a market there?
Certainly, the crypto space, we believe there's a market. Obviously launching a product first to market in December. Whether or not we can pick the winner in the crypto space, whether it's Bitcoin or even more likely something we haven't heard of yet, remains to be seen. We certainly think there is a market in crypto. It is evolving. The assets grow. We wanted to be first to market in a regulated and transparent way. That's what we do, as you know. Yeah, we'll be monitoring and growing the space, and I know Chris has got some ideas coming up, but we'll be leading, and we'll be there.
Just one more question. I'm sorry.
We're at the limit, Norm.
Age takes precedence. Share buyback. Have we continued in that program?
I'm sorry, what's the question, Norm?
Share buyback.
Yeah.
You've been going.
Through April, we've used $50 million to repurchase about 450,000 shares, about average price of $112.
Okay.
From the life of the program, we've repurchased about 11.5 million shares, average cost about $48, $48.50.
Yeah. Okay. Thank you.
You're welcome. Mr. Brodsky.
I don't have a question, but I don't want this meeting to be that short, so I want a couple of comments.
Well, thanks, Bill.
First, I want to congratulate Ed and Chris on a beautiful integration and watching all this unfold, because I know it's not easy. As a stockholder, I'm very grateful. Number two, I want to make special note of Sam Skinner and Jim Boris and their great service, and in particular, Jim Borris, who served as probably the best lead director I've ever seen. I know that Gene will do a great job also, but I know that Sam and Jim aren't here, but I just wanted to put it on the record. Third, I want to compliment the board for their new directors, Jamie Parisi and Jill Sommers, both of whom I know. To see a board refresh itself with high-quality people like this is a terrific thing for our company. Those are my comments. That's it.
Thank you, Bill. Appreciate that. Any other questions? Yes, of course.
Which growth catalyst are you most excited about?
I continue to be incredibly blown away by the interest in the S&P 500 complex, the adoption, the resiliency to any market environment. We were just discussing before the meeting was called to order, the S&P continues to grow in high volatility, low volatility, or a normal or average volatility level. The interaction between the 500 and VIX futures and VIX options and what we've learned about the utility in any given marketplace pivoting from one to the other, that complex continues to be just an amazing opportunity for growth for us going forward, not just domestically, but the interest globally. This is the exposure to the U.S. marketplace in the 500. Then the global barometer for implied volatility being in both futures and the flexibility that derivatives offers continues to be the primary growth engine for us going forward.
I know I'm on the limit. Just one more question. What could help ramp up the volume in the Bitcoin and I guess other cryptocurrency futures? You're thinking of trading like an ETF or what could-
Yeah. If you look at the ecosystem and the success, we'll use VIX as a perfect example, right? There are VIX futures, VIX options. The derivatives really, they're priced off of the strip of options in the S&P 500. There's ETFs, right? The SPDR options. There's ETFs in volatility products, VXX the largest. Then funds that are tracking those both internal to banks and privately. There's an OTC market. It's very vibrant. Crypto's very early. While there is a cash settle contract, we're really the first futures contract. Chris is heavy lift on seeing if we can move ourselves into ETNs, then derivatives on the futures. As the ecosystem builds, so then does the success in all of the asset classes around it or all the products, I should say, around the Bitcoin itself.
Early days, then again, looking at the overall size of the market, relatively small, really, if you look at it. Maybe if you looked in total assets in crypto, Chris, we'd probably equate that to maybe the top 25 of the S&P 500, maybe?
Yeah. The entire crypto space is about half the size of Apple.
Right. Just if you look at it that way, that's where we are in the evolution and without the ecosystem of products around it. Plenty of opportunity, early days.
Jeffrey Kirsch, shareholder Ed, I was wondering, how do you see this new phenomenon, blockchain, and how would it impact exchanges, OCC clearing operations? It's something that I don't really understand, and I just wonder if you, on a forward basis, looking forward into how it impacts exchanges and what we're all about here.
Right.
Could you discuss that?
Yeah, I'm going to keep looking over to Chris Isaacson to make sure I don't get stuck way out of bounds. Right now, I think what you'll find most of the application in our space, in blockchain, really has been centered on the clearing aspect of the business. Whether or not the speed of the transaction can keep up with the frequency that we're trading now remains to be seen. More of a solution looking for a problem. Brilliant. From our application of the frequency and the speed that we transact, not yet. Chris, I don't know if you have anything to add.
Yeah. We watch this space closely. We see all blockchain opportunities. They come to us because of our brand and what we do. We don't see anyone replacing the value of centralized clearing, which is really the guarantee portion. Instantaneous settlement takes leverage, intraday trading leverage, out of the system. One of the reasons why we introduced a Bitcoin future was it allowed for people who were doing instantaneous settlement on the platforms in crypto using blockchain technology to actually have leverage. Blockchain and instantaneous settlement isn't something that the industry is demanding. There are areas in our financial services industry that can benefit from blockchain and blockchain settlement. We're looking at all the opportunities out there.
Jeff, we got head nods from Isaacson, we were good on that one. Any other questions? Thank you. Now that we've completed the question and answer section of the meeting, will Corporate Secretary please report on the preliminary results of the election?
Thank you, Ed. The preliminary results from the Inspector of Elections indicate that more than 96% of the shares of the company's common stock cast on this matter have been voted for the election of each of the nominees named in the proxy statement that are standing for election at this annual meeting. Accordingly, each of the nominees has been elected to serve as a director. Congratulations. More than 94% of the shares of the company's common stock cast on this matter have been voted in favor of the non-binding resolution to approve the compensation paid to our executive officers. Therefore, stockholders have approved this resolution. More than 99% of the shares of the company's common stock cast on this matter have been voted in favor of the approval of the company's employee stock purchase plan. Therefore, this proposal has been approved.
Finally, more than 97% of the shares of the company's common stock represented at this meeting have been voted in favor of the ratification of the appointment of Deloitte & Touche as the company's independent registered public accounting firm for the 2018 fiscal year. Accordingly, Deloitte is so ratified.
Thank you, Pat. This concludes our meeting, and I thank you all for joining us this morning. We are adjourned.