Observations & Insight
Mike Cavanaugh – Open Outcry Traders History Project
Mike Cavanaugh found his way to the trading industry despite his degree in political science because he had a brother-in-law in the wheat pit at the CBOT. He did a summer internship working for “one of the more prolific wheat traders” and soon fell in love with the place.
Jim Bell, former chief financial officer of GameStop, is resigning from his position over a “disagreement over strategy,” Bloomberg reports. From the sound of it, he was pressured to leave. Bell is an ex-Navy officer who has worked in executive roles for various companies over the years, including Wok Holdings (owners of the PF Changs restaurant chain), Harry & David Holdings Inc., and Piper Jaffray Cos. Apparently Ryan Cohen – GameStop board member, former Chewy.com CEO, and “activist investor” (whatever that means) – has been pushing for change in the company. GameStop, which has been one of the biggest retailers of hard-copy video games in the video game industry for years, has struggled to adapt to the industry’s increasingly digital nature as gaming platforms have emphasized digitally-downloaded games over games read from physical media (like CDs). Most of GameStop’s revenue tends to come not only from selling video games and consoles, but selling used games and DVDs, as well as preorders for physical media, which often come with extra bells and whistles like exclusive in-game content or free swag. From the looks of it, Cohen has been pushing for the company to transition from a brick-and-mortar business to more of an e-commerce business. It would be a smart move, though I must admit, my inner child saddens at the thought of GameStop’s retail stores, in which I used to spend hours during my youth, disappearing forever. At least it ain’t all bad for Bell, though – he’s reportedly leaving with a $30 million severance package.~MR
A group of Wall Street Bets traders is laying new plans for a ‘gamma squeeze’ on GameStop stock
Will Daniel – Markets Insider
A group of traders on Reddit’s WallStreetBets (WSB) forum is targeting GameStop yet again, laying new plans for a “gamma squeeze” on the stock.
The move comes amid a new rally in GameStop shares, which are up over 150% this week alone.
A user by the name of “KitrosReddit” explained in a post the potential for a “Mother of all short squeezes” on Thursday, garnering over 25,000 upvotes on Reddit’s WallStreetBets forum.
JPMorgan’s Kolanovic Says ‘VIX Bubble’ May Spark Stock Rally
Joanna Ossinger – Bloomberg
The market’s so-called fear gauge is elevated, and that could bode well for stocks if history is a guide.
The spread between the Cboe Volatility Index, or VIX, and two-week S&P 500 realized volatility has widened to a point that historically has been followed by a volatility decline and stocks on average moving higher, JPMorgan Chase & Co. strategists Marko Kolanovic and Bram Kaplan wrote in a note Wednesday. Historically, three months after that spread moved this wide, the VIX fell 11 points and the market rallied an average 12% with a move higher 87% of the time, they said.
*****JB: Also see the Reuters story, Wall Street’s ‘fear gauge’ is in a bubble, says J.P. Morgan.
GameStop shares double in final 90 minutes of trading day; Volatility returns to favourite of the Reddit day-trading forum
Eric Platt and Aziza Kasumov – FT
GameStop shares doubled in heavy volume in the final 90 minutes of trading on Wednesday, in a return of the volatility that rocked markets last month and led to a congressional inquiry.
The Economic Reopening Trade Is Changing Everything in Markets
Plenty on Wall Street expected bets on a post-pandemic world to change markets in 2021. But few could have predicted the ferocity of this reopening trade sweeping across assets.
From stocks to bonds and commodities, traders are moving in sync on the belief that the most ambitious vaccination campaign in history is about to supercharge economic growth and unleash price pressures that have long been dormant.
U.S. Stocks Could See $170 Billion Stimulus Boost, Deutsche Says
Cormac Mullen – Bloomberg
U.S. stimulus checks could unleash a $170 billion wave of fresh retail inflows to the stock market, according to Deutsche Bank AG strategists.
A survey of retail investors showed respondents planned to put 37% of their stimulus cash directly into equities, a team including Parag Thatte wrote in a note Wednesday. With potentially $465 billion of direct stimulus being planned, that adds up to $170 billion, they said.
Exchanges and Clearing
BoE governor warns EU over derivatives clearing power grab; Andrew Bailey says tensions will escalate if banks are forced to cut ties with City
Philip Stafford and Delphine Strauss and Sam Fleming – FT
The EU risks a “serious escalation” in tensions in its relations with the UK if Brussels attempts to force banks to move all clearing of euro-denominated derivatives from London to the eurozone, the governor of the Bank of England warned on Wednesday.
BOE’s Bailey Slams EU Stance on Swaps Clearing After Brexit
Silla Brush – Bloomberg
Bank of England Governor Andrew Bailey warned the European Union against demanding that euro derivatives are settled by clearinghouses inside the bloc, saying such a move would be a “very serious escalation” and that it would draw a U.K. response. The EU appears to be moving towards a policy of insisting such trades are located in the bloc, Bailey said during a hearing with U.K. lawmakers on Wednesday. A so-called location policy of forcing banks and dealers to move clearing business to the EU would be “very controversial,” Bailey said. “I have to say that that would be something we would have to, and want to, resist very firmly.”
CME Group Announces Record Ultra 10-Year Note and 30-Year Bond Futures Volumes on February 23
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that Ultra 10-Year Note futures reached a record volume of 1.7 million contracts on February 23, surpassing the previous record of 1.5 million set on February 25, 2020. A record 1.8 million 30-Year Bond futures contracts were also traded on February 23, passing the prior record of 1.7 million set on February 25, 2020. Additionally, Ultra 10-Year Note futures reached numerous open interest (OI) records during the month of February, including a record 1.4 million contracts on February 22, 2021, surpassing the previous record of 1.32 million set on February 19, 2021.
Learning from experience – Eurex Webcast on direct CCP clearing for OTC IRS & Repo
Our recently held webcast was a perfect opportunity to directly learn from experts. Frank Odendall, Head of Securities Financing Product & Business Development, Eurex was joined by Jan Grunow, Head Investment Operations, Swiss Life Asset Managers and Roelof van der Struik, Senior Investment Manager, PGGM to talk about the experiences Swiss Life and PGGM had with ISA Direct. Both experts gave comprehensive insights on why they chose ISA Direct for OTC IRS and cleared repo for their company, challenges and first benefits. Valuable tips and tricks to start your own transition were also given during the webcast. Missed our webcast? No problem, listen to the whole session here.
Regulation & Enforcement
SEC attorney defends personal information in the Cat; Regulators will need biographical information to get the most out of the Consolidated Audit Trail, advisor said, as broker-dealers and exchanges argue over liability for breaches.
Joanna Wright – Waters Technology
Broker-dealers are terrified that the sensitive data of their customers could end up in the hands of hackers, but an attorney from the US markets regulator said it is necessary to collect this data to give regulators the power to perform detailed analysis on equities and options transactions, and spot financial crime.
Silver and Natural Gas Scrutinized by CFTC After Price Spikes
Daniel Avis – Bloomberg
Regulator closely monitoring markets, acting chairman says; Silver posts on social media a big focus, Behnam says
U.S. regulators are closely monitoring derivatives markets after silver surged and the crippling Texas storms prompted a spike in spot prices for natural gas, the acting chairman of the Commodity Futures Trading Commission said.
CFTC Market Risk Advisory Committee discusses CCP margin, DCO disclosures; Meeting also touches on energy market volatility, climate risk, benchmark reform and diversity
Jeff Reeves and Kyle Glenn – FIA.org
The US Commodity Futures Trading Commission held a meeting of its Market Risk Advisory Committee (MRAC) on 23 February via teleconference. Among other matters, the MRAC considered reports on CCP margin methodologies at central counterparties and how CCPs adopt rules and respond to feedback from market participants. In his opening remarks, Acting Chair Rostin Behnam noted the CFTC is monitoring recent market dynamics in energy markets in the wake of severe winter weather in Texas. “I commit to taking any and all actions to ensure the CFTC contributes to this administration’s efforts by ensuring our markets remain transparent, fair and efficient, and fulfill their core responsibilities of price discovery and risk management to ensure reliable and low-cost energy for all Americans,” Behnam said.
Itiviti named Best Sell-Side OMS at TradingTech Insight Europe Awards 2021
London, February 25, 2021 – Itiviti, a leading trading technology and service provider to financial institutions worldwide, today announced it has been named the Best Sell-Side OMS by the A-Team Group’s TradingTech Insight Europe Awards 2021. The sell-side OMS category shortlist was selected by a panel of industry experts assessing entrants’ overall capability. Winners were chosen by market participants via online voting.
Investors Make a Triple-Leveraged Bet Tech Pain Won’t Last
Claire Ballentine and Vildana Hajric – Bloomberg
As hordes of day traders show their force in markets once again, a triple-leveraged exchange-traded fund that tracks the Nasdaq 100 is on pace for its best week of inflows on record.
The $11 billion ProShares UltraPro QQQ ETF (TQQQ) has attracted almost $800 million of fresh cash in the span, according to data compiled by Bloomberg. The fund has lured substantial inflows despite a price drop of more than 6% amid a selloff in large technology companies. It fell again on Thursday, joining broader equity-market losses.
Opinion: Stock-market bears have failed again — what to watch for next
Lawrence G. McMillan – MarketWatch
After moving sideways for nearly two weeks, the stock market finally broke down on Feb. 23. The initial decline was very strong and took the S&P 500 index down to almost 3800 – violating the support at 3870 (the highs of January). But the bears once again failed to seize control, and buyers stepped at that level. By the end of the day, the S&P was in positive territory.
2 Options Strategies to Play Walmart Stock
Steven M. Sears – Barron’s
When market conditions change, reconsider your strategies. Stocks might come under pressure, and sector leadership might be rotating from technology stocks to those that could benefit from an economic reopening. That creates opportunities. If you think of the investments in your portfolio as a collection of companies, not stocks, the rotation is an opportunity to use options to offset some of the weakness in stocks you own—or to position to buy stocks at more attractive prices. This is true even as the market begins to worry about whiffs of inflation and rising bond yields.
(Podcast) OBC 124: Those Pesky Puts
Options Boot Camp – Options Insider Radio Network
Host: Mark Longo, The Options Insider Media Group
Co-host: Dan Passarelli, Market Taker Mentoring
Basic Training Segment: To Put Or Not To Put
What Is A Put, What Happens At Expiration, Pros/cons To Put Trades, Puts Vs. Stop Orders, How To Improve Your Puts, And Much More
Cboe Global Markets to Present at the Raymond James Institutional Investor Virtual Conference on Tuesday, March 2
Cboe Global Markets, Inc., a market operator and global trading solutions provider, announced today that Ed Tilly, Chairman, President and Chief Executive Officer, Chris Isaacson, Executive Vice President and Chief Operating Officer, and Brian Schell, Executive Vice President, Chief Financial Officer and Treasurer, will present at the Raymond James Institutional Investor Virtual Conference on Tuesday, March 2 at 8:20 a.m. ET. The webcast and replay of the virtual presentation will be accessible at www.cboe.com in the Investor Relations section, under Events and Presentations. The archived webcast is expected to be available within an hour of the presentation.
Registration is open! – FIA Boca 2021
The SEC’s new derivatives rule: practical implications for funds
25 February 2021 • 10:00 AM – 11:00 AM EST
The SEC recently adopted Rule 18f-4 under the 1940 Act, which will establish a comprehensive framework for the use of derivatives transactions by registered funds. The rule will replace SEC guidance and staff no-action letters that together have governed the use of derivatives by registered funds for over 40 years with an expansive regulatory framework. Funds will not need to come into compliance with the rule until the summer of 2022, but most fund families will need to devote significant time and resources to prepare for the new regulatory framework in advance of the compliance date.
A New Virtual Experience
The Options Industry Conference is Going Virtual in 2021. Join OCC and the options exchanges for the 39th annual Options Industry Conference, April 28-29, 2021. While the conference will be held virtually for the first time in history, the focus will continue to be the key topics facing the options industry today, from the regulatory shifts in the U.S. and Europe to the technological developments that are driving monumental change in markets around the globe.
‘I think he’s a rat and a liar’: Watch Dave Portnoy and Vlad Tenev’s heated Robinhood debate
Annabelle Williams – Markets Insider
If you missed the livestreamed conversation between Barstool Sports’ Dave Portnoy and Robinhood CEO Vlad Tenev, here’s what you need to know-and how to watch.
It started on an awkward note. In his introduction, Portnoy made his opinions known: “We all know how I feel about [Tenev,] I think he’s a rat and a liar.”
Portnoy opened the conversation by asking Tenev: “Ok, Vlad, you know everybody here who’s watching this hates your guts, right?”
“That’s what I hear,” the CEO responded.
Black Americans who broke through barriers in finance; Spotlight on some of the unsung heroes whose vision and tenacity opened doors for future generations
Since 1976, the US has designated February as Black History Month to honor the achievements and the resilience of the Black community and celebrate their central role in US history. FIA is taking this opportunity to shine a spotlight on individuals who made significant contributions to the financial industry during the course of the country’s history. These professionals, some of whom have rarely been recognized for their achievements, helped break down barriers and open opportunities for many who were to follow.