Bourse operator Cboe to buy Canada’s NEO exchange

Nov 16, 2021

Observations & Insight

The CME Group is living proof that going small can be big. The exchange operator announced yesterday that their Micro Equity Index futures and options had traded more than one billion contracts since their launch. Micro E-mini Equity Index futures became available for trading across four U.S. indices – S&P 500, Nasdaq-100, Russell 2000 and Dow Jones Industrial Average – in May of 2019, with Micro E-mini options available on Micro E-mini S&P 500 and Nasdaq-100 futures contracts in August of 2020. Congratulations to the CME on this milestone. ~JJL

Lead Stories

Bourse operator Cboe to buy Canada’s NEO exchange
John McCrank – Reuters
Cboe Global Markets on Monday said it agreed to buy Canadian stock exchange operator Aequitas Innovations Inc, known as NEO, for an undisclosed amount, expanding its North American footprint in the latest of a string of recent acquisitions.
/yhoo.it/3CkWhU3

****SR: A Bloomberg story on the deal is here.

JPMorgan Fights Tesla Over Warrants
Matt Levine – Bloomberg
Companies sometimes issue convertible bonds. A convertible bond is a bond that can be converted into stock. Normally the conversion is at a fixed price that is above the price of the stock when the convertible is issued. In 2014, Tesla Motors Inc. (now Tesla Inc.) sold $1.38 billion of 7-year convertible bonds with a 1.25% coupon and a conversion price of $359.87, a 42.5% premium above its stock price of $252.54 at the time. (At the same time, it sold another $920 million of 5-year convertibles with a 0.25% coupon and the same 42.5% conversion premium, though I will not discuss those bonds further here. ) When the bonds matured seven years later (this March 1), Tesla’s stock was trading at $718.43. But in between Tesla had done a 5-for-1 stock split, making the effective conversion price of the bonds about $71.97. One $1,000 bond converted at maturity into about $10,000 worth of stock. All the convertible bondholders converted by the time the bonds matured — some long before — and were happy and we will not talk about them anymore.
/bloom.bg/3coTj65

Oil futures see gentle hedge fund selling
John Kemp – Reuters
Petroleum futures and options continued to see light profit-taking by hedge funds and other money managers last week, as oil prices drifted lower from the three-year highs set in late October.
/reut.rs/3oCxCoP

Speculators raise U.S. crude oil net longs -CFTC
Reuters via Nasdaq
Money managers raised their net long U.S. crude futures and options positions in the week to Nov. 9, the U.S. Commodity Futures Trading Commission (CFTC) said on Monday.
The speculator group raised its futures and options position in New York and London by 11,328 contracts to 353,807 during the period.
/bit.ly/30xbW56

Major sector ETFs face risk of large tech companies being reclassified
Steve Johnson – Financial Times
Three of the world’s four largest sector-based exchange traded funds face a shake-up due to proposed changes in their composition that would reclassify major companies in information technology indices as financial or industrial.
S&P Dow Jones Indices and MSCI have launched a consultation on a potential revamp of the widely followed Global Industry Classification Standards (GICS) that determine which sector each company is placed in.
/on.ft.com/3njadcD

The Stock Market’s Big Buyer Is Back With $1 Trillion to Spend
Lu Wang – Bloomberg
The post-pandemic retail trading frenzy has drawn a lot of credit for driving stock prices to a series of record highs. Yet overlooked is the return of an even bigger force in the equity market: corporate America.
From Apple Inc. to Bed Bath & Beyond Inc., U.S. companies have announced plans to buy $1.06 trillion of their own shares since January, almost triple the level at this time last year. At an average weekly rate of $22 billion, the pace is poised to surpass the record $1.11 trillion set in 2018, data compiled by Birinyi Associates and Bloomberg show.
/bloom.bg/3otVAmi

Exchanges

Cboe Global Markets Agrees to Acquire NEO, Strengthening Global Equities Offering
Cboe Global Markets
Planned transaction builds on Cboe’s footprint in North America, adding a registered Canadian securities exchange with diverse product set; Next step in Cboe’s pursuit to build one of the world’s largest global securities and derivatives trading networks to service diverse customer needs; Deal is expected to close in the first half of 2022, pending regulatory review
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced it has entered into a definitive agreement to acquire Aequitas Innovations, Inc., more commonly known as NEO, a fintech organization that comprises of a fully registered Tier-1 Canadian securities exchange with a diverse product and services set ranging from corporate listings to cash equity trading.
/bit.ly/3cfarez

Micro E-mini Equity Index Futures and Options Surpass 1 Billion Contracts Traded
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that Micro E-mini Equity Index futures and options surpassed 1 billion contracts traded across all four indices on November 12. Micro E-mini Equity Index futures became available for trading across four U.S. indices – S&P 500, Nasdaq-100, Russell 2000 and Dow Jones Industrial Average – in May of 2019, with Micro E-mini options available on Micro E-mini S&P 500 and Nasdaq-100 futures contracts in August of 2020.
/bit.ly/3HCWiqj

Eurex And Korea Exchange Expand Around-The-Clock Ecosystem For KOSPI Derivatives
Mondovisione
Eurex is the only after-hours trading venue for KOSPI derivatives; Joint link will be extended with KOSPI 200 Weekly Options; Launch scheduled for first quarter of 2022
Eurex and the Korea Exchange KRX will expand their tradable product range with Weekly Options on the Korean benchmark index KOSPI 200. With weekly expirations on one of the world’s most heavily traded index options contracts, the two exchanges are expanding their around-the-clock ecosystem for KOSPI derivatives. Thereby, both exchanges emphasize once again their decade-long commitment to connecting markets globally.
/bit.ly/2YP98zU

Cboe Global Markets to Present on its Growth Strategy and Outlook at Investor Day Meeting Today
Cboe Global Markets
– To Increase Medium-Term Organic Total Net Revenue Growth Target to 5% – 7% from 4% – 6%¹ Annually
– To Announce Medium-Term Organic Data and Access Solutions Revenue Growth Target of 7% – 10%¹ Annually
– To Forecast Continued Strong Cash Flow Generation with Balance Between Growth Investments and Capital Returns
– Will Detail the Emerging Opportunities and Potential Initiatives in the Digital Asset Marketplace
CHICAGO, Nov. 16, 2021 /PRNewswire/ — Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, will present its strategy and path to achieving new medium-term financial targets today at its 2021 Investor Day. The company believes that by expanding its global presence to the highest value markets, increasing access to its differentiated products and solutions and accelerating its growth with recurring non-transaction revenue, Cboe is positioned to drive long-term shareholder value.
/bit.ly/3kFbhpO

Inside Volatility Trading: Options and Markets to Be Grateful For
Cboe Blog
Is It Different This Year?
Next week, Americans will celebrate the Thanksgiving holiday. From a big picture standpoint, there are countless reasons to be grateful in 2021. Equity markets in the U.S. are at record levels. COVID numbers are improving domestically and globally. Earnings and employment data has been strong too.
Last year, gathering for the holidays was a concern. This year will likely be different because 68% of Americans over the age of 12 are fully vaccinated. Almost time to grab a plate!
On average, a Thanksgiving meal will pack on between 3,000 – 4,500 calories. We’re able to sample a wide variety of flavors to suit nearly every palate.
The U.S. derivative markets also offer a buffet of alternatives from which to choose. Let’s look at some of those possible choices and where market participants have been gorging lately.
/bit.ly/3HtnLuf

MIAX Reports Record SPIKES Futures Trading on MGEX in October 2021, New Daily Record Volume and Dissemination of New VSPIKES Index
MIAX
MIAX , creator and operator of high-performance securities exchanges, products and services, today announced average daily volume (ADV) for SPIKES Futures in October 2021 reached 11,952 contracts, a new monthly record and representing a 59.3% increase over the 7,502 ADV in September 2021. In addition, SPIKES Futures volume on October 22, 2021 totaled a new daily record of 22,872 contracts.
/bit.ly/2YSqA6N

Nasdaq Announces Launch of Three New Indexes Effective Tuesday, November 16, 2021
Nasdaq
Effective Tuesday, November 16, 2021, Nasdaq will begin disseminating the following new indexes on the Nasdaq Global Index Data ServiceSM (GIDS).
What are the new Indexes?
The Nasdaq 10HANDL™ Index seeks to produce 2.0x leveraged exposure to the daily return of the Nasdaq 7HANDL™ Base Index (the “Underlying Index”) after accounting for financing costs associated with daily leveraged exposure.
/bit.ly/3oCz2Qi

Eurex and Korea Exchange expand around-the-clock ecosystem for KOSPI derivatives
Eurex
Eurex is the only after-hours trading venue for KOSPI derivatives
Joint link will be extended with KOSPI 200 Weekly Options
Launch scheduled for first quarter of 2022
Eurex and the Korea Exchange KRX will expand their tradable product range with Weekly Options on the Korean benchmark index KOSPI 200. With weekly expirations on one of the world’s most heavily traded index options contracts, the two exchanges are expanding their around-the-clock ecosystem for KOSPI derivatives. Thereby, both exchanges emphasize once again their decade-long commitment to connecting markets globally.
/bit.ly/2YSrJLD

Miscellaneous

Bankers and Traders Are Poised for Their Biggest Bonuses Since the Financial Crisis
Hannah Levitt – Bloomberg
Banks are poised to hand investment bankers and traders their biggest bonuses since the financial crisis, with hopes the cash will stem the high levels of turnover sweeping across Wall Street.
Equity and debt underwriters will be the biggest winners, with a jump of as much as 35% from a year earlier, according to a report Tuesday by compensation consultant Johnson Associates Inc. Equity traders and M&A bankers may see a 25% increase. Fixed-income traders could be the lone losers, with their bonuses potentially sinking as much as 5%.
/bloom.bg/3kKE64a

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