Observations & Insight
CPO and CTA Registrations Drop Slightly in First Six Months of 2020
John Lothian – John Lothian News
Since the end of 2019, the number of Commodity Pool Operators, or CPOs, registered with the National Futures Association has dropped by almost 6% and the number of Commodity Trading Advisors, or CTAs, has dropped 5% during the same time frame. The number of registered Introducing Brokers, or IBs, has dropped less than 1%, according to data provided by the NFA.
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Former NYMEX Chairman Richard Schaeffer passed away on Sunday, according to David Greenberg, a close friend and former NYMEX board member. Schaeffer was the chairman of NYMEX at the time of its IPO and its sale to the CME Group. Here is a short obituary for him from the funeral home. Condolences to his family and friends. ~John Lothian
The Spread: ‘Tis The Season
This week on The Spread – the OCC gives back to the derivatives industry, the CME Group pays hefty fines to the CFTC, Cboe plans for the worst, and more.
10 Key Features of the VIX Index and New Mini VIX Futures (VXM)
Matt Moran – Cboe
Cboe Futures Exchange (CFE) launched trading in Mini Cboe Volatility Index futures (VXM) on Monday, August 10. The increased volatility in 2020 amplified interest in the Cboe Volatility Index (VIX) and related products, driving demand for a new addition to the VIX Index suite. We’ve compiled a list of features that may help investors better understand the VIX Index and the new Cboe Mini VIX futures.
Top 10 institutional investors fuel market volatility, study finds
Chris Flood – Financial Times
BlackRock, Vanguard, State Street, Fidelity and Capital Group are driving up equity market volatility and fuelling mispricing in company stocks, according to an analysis that raises fresh questions over the regulatory oversight of the largest asset managers.
Global regulators have wrestled for more than a decade over whether large asset managers should be classified alongside big banks as systemically important financial institutions. Tighter rules would drive up running costs and cut the profits of these businesses.
TP ICAP says trading slowed in July
Will Hadfield – Financial News
TP ICAP said that its trading volumes in July were “materially lower” than a year earlier as the world’s biggest interdealer broker reported a jump in first-half revenue.
The company left unchanged its guidance of low single-digit revenue growth for 2020, citing the slowdown in summer trading. Revenues climbed 7% to GBP990m in the first half on a reported basis, the firm said in a statement.
Seven Deadly Unknowns Drive Dollar’s Downward Spin
John Authers – Bloomberg
What follows is dedicated to Donald Rumsfeld and to Athanasios Vamvakidis, foreign exchange strategist at BofA Securities Inc. Rumsfeld, a former U.S. defense secretary, bequeathed to humanity the endlessly useful concept of “known and unknown unknowns.” It turned out that there were far more unknowns in Iraq than he had suspected. Meanwhile, Vamvakidis is arguing that the market consensus the dollar is in a prolonged downward trend is down to complacency about “seven known unknowns.” This is how he explains his point:
The U.S. Dollar Is Now in a Bear Market. That’s Good News for Gold.
Andrew Addison – Barron’s
After forming a double top stretching back more than three years, the U.S. Dollar Index broke down decisively. With the dollar’s follow-through to the downside in late July, a nine-year up trend was smashed. As my work projected, this launched a new bear phase for the dollar.
One of the first things to jump out on the chart shown below is the “double top” (at the 2017 high and the recent March high). Adding to the significance of the double top is that it developed exactly at trendline resistance in the 102-104 area—and that resistance dates back to 1997.
Oil market stalls as absence of signals compounds summer slowdown: Kemp
John Kemp – Reuters
Hedge funds’ oil trading largely dried up last week as the normal summer holiday slowdown was compounded by an absence of price or fundamental signals about the future direction of the market.
Hedge funds and other money managers purchased the equivalent of 13 million barrels in the six major petroleum futures and options contracts in the week to Aug. 4, after selling 40 million the week before.
Exchanges and Clearing
Cboe US Periodic Auction To Combat Off-Exchange Volumes
Press Release via Traders Magazine
Cboe Global Markets is aiming to launch periodic auctions in the US, after success in Europe, as off-exchange trading volume has been increasing.
Adam Inzirillo, head of US equities at Cboe Global Markets, told Markets Media: “In the last couple of years, as off-exchange trading volumes have grown, periodic auctions give the public an on-exchange alternative for executing block trades and attracting natural interest.”
Interactive Brokers intends to continue making acquisitions on opportunistic basis
Maria Nikolova – Finance Feeds
Shortly after electronic trading major Interactive Brokers Group, Inc. (NASDAQ:IBKR) published its financial results for the second quarter of 2020, the company has filed a 10-Q report with the Securities and Exchange Commission (SEC).
Interactive Brokers notes that it regularly evaluates potential strategic investments and acquisitions. The company holds strategic investments in electronic trading exchanges including BOX Options Exchange, LLC and OneChicago LLC. In addition, in June 2018, it made a strategic investment in Tiger Brokers, an online stock brokerage established for Chinese retail and institutional customers.
Eurex Reports Weak Derivatives Demand for July
Arnab Shome – Finance Magnates
Eurex, a subsidiary of the Deutsche Börse Group, has published its monthly volumes on Monday, showing a decline across all classes of derivatives products in July on a year-on-year basis.
The exchange pointed out that the European equity derivatives took the worst hit with a year-on-year decrease of 23 percent in the monthly volume.
Saudi Stock Exchange (Tadawul) Announces The Joining Of Derivatives Exchange Members To Tadawul For New Market Launch
The Saudi Stock Exchange (Tadawul) announces that the first group of Derivatives Exchange Members have completed all regulatory and technical requirements to become members of Tadawul’s Derivatives market. The pioneer members listed below have the right to conduct brokerage services for Derivatives trading and deal as a principal and as an agent in Saudi Stock Exchange:
Nasdaq and Dubai Gold & Commodities Exchange Sign Landmark Technology Agreement
Today Nasdaq (Nasdaq: NDAQ) and Dubai Gold & Commodities Exchange (DGCX) announced a major market technology agreement for Nasdaq to provide DGCX with a full suite of integrated marketplace solutions.
Stock Market Sentiment Gauges: One Is Bullish, The Others Bearish
John Navin – Forbes
The weekly chart of the put/call ratio is still showing many more calls than puts being bought these days, a typically bearish kind of contrarian vibe.
The reason this one gets a lot of attention is that it represents actual money. Someone out there is actually putting money on the table for a put option. Someone is paying for a call option. It’s not a measure based on what someone tells you they think about it.
After 150 days of the COVID-19 pandemic, here are the best- and worst-performing stocks
Philip van Doorn – MarketWatch
Last Friday was the 150th day since the World Health Organization declared the coronavirus a pandemic. During that period of unprecedented volatility, stocks extended gains.