The financial market's biggest and most prominent measure of fear could soon see its only competitor disappear.
After a federal judge last month sided with Cboe Global Markets Inc., trading in Spikes futures is set to stop in November. The product, offered by a unit of the Miami International Holdings Inc., also known as MIAX, is the only competitor to the Chicago exchange's Volatility index.
The decision has unsettled some investment firms and market makers, which argue the move will curb competition, drive up prices and hurt liquidity in the futures market. At least three firms have written to the US's top securities regulator urging it to address the matter and keep Spikes as an option.
"It's good to have competition," said Luke Rahbari, chief executive officer of Equity Armor Investments, whose firm has sent a letter to the Securities and Exchange Commission. "Having another product to compete against makes markets and pricing more efficient, and market participants try a little harder."
Citadel Securities is among firms urging a path forward that ensures that Spikes futures can continue to trade, citing the benefits of increased competition and investor choice, according to people with knowledge of the firm's thinking.
The SEC declined to comment on the matter.
Cboe started its VIX futures, a popular measure of expectations for volatility in the stock market, in the early 2000s. The product, widely known as the fear index, reigned solo until about four years ago, when a unit of MIAX decided to launch Spikes.
Futures are commonly physical commodities such as oil, corn or coffee beans, and listing contracts based on a security index is a complicated process that requires exchanges to get approval from the SEC and the Commodity Futures Trading Commission, which regulates the derivatives market.