"I look at it and I say, 'is it bigness that's the answer, or is it growth that's the answer?'," Brodsky said Monday in an interview at the Chicago Board Options Exchange's headquarters, across the street from CME Group Inc's trading floor.
"I'd rather have growth than just bigness for the sake of it," he said.
CBOE is the only large North American financial exchange to have stayed clear of the wave of exchange industry consolidation in recent years, but analysts and investors do not believe CBOE will last long alone.
CME, whose purchase of two rivals since 2007 helped cement it as the largest U.S. exchange, often leads the list of potential suitors for the smaller CBOE.
NYSE Euronext
"We believe exchanges with established options and equity businesses (like NYSE Euronext and Nasdaq OMX) could have an interest in the CBOE, assuming significant synergies could be achieved," Repetto wrote. "In addition, we believe there could be consolidation within the option exchange industry itself."
But if such scenarios are in the works, Brodsky gave no hint. With the June IPO behind him, he said he is focused on building volume at his existing market in Chicago and launching an all-electronic exchange in New York in the fourth quarter.
C2, as CBOE's new exchange is known, has begun to connect customers to its high-speed trading platform and next month will start accepting trading permit applications. Those permits represent a new stream of revenue on top of the transaction fees C2 will fetch, Brodsky said.
With C2 poised to offer electronic trading of CBOE's biggest revenue generator, options on the Standard & Poor's 500 Index, analysts are predicting a surge in volume.
Currently S&P 500 Index options are traded on CBOE's floor, a venue that typically produces smaller volumes than computer-based trading.
"I'd rather build this company organically, in things that I understand and can do very well with than just get involved in some transaction to say we've done a transaction," Brodsky said. "I think we have everything in place where we can operate as we are for an indefinite period."
While everything is a "potential consideration for the future," he said, he suggested such a future is not imminent .
"The real issue is profitability," Brodsky said.
CBOE certainly has that in spades. Analysts see earnings per share rising about 50 percent next year, faster than many rivals, and because CBOE like most exchanges has relatively fixed costs it benefits dramatically when trading volume rises.
"As the market starts to stabilize and volume picks up, we have exactly what people are interested in owning exchange stocks for, and that's operating leverage," Brodsky said.
Unlike many of its rivals, CBOE is not pushing overseas.
"You don't need offices in 14 countries to get business to this door," Brodsky said. Instead, he said, the exchange is content to rely on the international connections of its biggest customers, like Goldman Sachs and other Wall Street firms, to bring that business.
Despite Brodsky's evident confidence in his company's future, there are some headwinds.
A proposed fee cap by the U.S. Securities and Exchange Commission could hurt CBOE revenue, and competitors continue to come online, including the BATS Options exchange launched this year and a possible 10th options market founded by ex-officials at the Philadelphia Stock Exchange that may start this year.
After selling at $29 apiece in the IPO and rising in the first few days of trading, CBOE shares have slid and are now trading at $26.27.
That's despite a court ruling this month that cemented CBOE's right to keep offering its exclusively listed and highly profitable options, like those on the S&P 500.
"If you are a fundamentalist, which I am, nothing's changed since the road show," Brodsky said of the share performance.
"My view is, we are going to just keep our nose to the grindstone and run this business."
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