Shares of CBOE Global Markets (CBOE) are falling after a Tuesday sell-off amid swings in market volatility which saw the CBOE volatility index rise over 50. CBOE RESPONDS: CBOE defended its VIX volatility index after investors and analysts blamed exchange-traded products that aim to track the measure for worsening the wild trading in the stock market, the Financial Times reported Tuesday. “The markets were resilient…We were generally pleased with how (the VIX) acted in a very volatile and stressful time,” said William Speth, CBOE VP of research and product development. “I think there are a lot of things going on here,” he said. “Certainly the VIX ETPs are part of the mix, but the 800-pound gorilla has been these volatility control funds.” MARKET “CLEARLY WORRIED”: On Tuesday, Wells Fargo analyst Christopher Harris said that spikes in volatility would normally be seen as good for CBOE. However, given that the losses in the overcrowded trade of “short volatility” have been so severe, the market is “clearly worried” about the negative implications for future VIX volumes, which he believes is weighing on CBOE shares. While he cannot say how much of CBOE’s volumes are tied to short volatility strategies, Harris said that if VIX related volumes were to go back to 2015 levels that would be 15% dilutive to his 2018 EPS estimate, adding that the recent selloff appears to be factoring in “quite a lot of downside.” Harris has an Outperform rating on CBOE shares. On Wednesday, JPMorgan analyst Kenneth Worthington downgraded CBOE to Neutral from Overweight and cut his price target for the shares to $110 from $131. The liquidation and fall of various exchange traded notes represents a risk to VIX Futures volumes, likely bringing a reduction in VIX Futures trading activity looking over the next few months, Worthington wrote. He also sees some risk to volumes in VIX options and potential for a deterioration in CBOE’s valuation as VIX has been a key growth driver for the company. Meanwhile, Goldman downgraded CBOE to Neutral from Buy and cut its price target to $115 from $140. Analyst Alexander Blostein said the unwind in the CBOE’s VIX ETF products will likely weigh on the company’s VIX futures franchise, creating headwinds to the firm’s top-line growth and potentially the stock’s valuation. The analyst added he continues to see longer-term growth prospects in the CBOE/BATS combination, but believes the shares may lag. CME UPGRADE: Goldman’s Blostein also upgraded CME Group (CME) to Buy from Neutral and raised his price target to $180 from $160. Blostein expects CME’s revenue growth to accelerate in 2018/19 amid significant growth in open interest and the increasing likelihood of normalization of volatility. The analyst expects the prospects of rising inflation expectations and normalization of volatility to drive product velocity higher over the next two years, adding to already to the healthy build-up in open interest. PRICE ACTION: CBOE Global Markets fell 3.2%, or $3.73, to $113.21, in morning trading. Meanwhile, CME Group is up 2.1% to $160.95.