Cboe Buys EuroCCP to Bolster Dutch EU Base After Brexit; Wall Street’s Fear Gauge Is Acting Up. It May Signal Trouble

Dec 10, 2019

Lead Stories

Cboe Buys EuroCCP to Bolster Dutch EU Base After Brexit
Reuters via NYT
Cboe Global Markets said on Tuesday it would take full control of EuroCCP, Europe’s largest clearing house for stock trades, to bolster its post-Brexit base in Amsterdam and diversify into derivatives. It is the latest deal in a rapidly consolidating market where the Swiss Exchange has bid for its Madrid counterpart and the London Stock Exchange is buying financial market data company Refinitiv. Cboe, the biggest pan-European share trading platform, already owns 20% of EuroCCP.

*****MR: Reuters has multiple articles by different reporters on this story today. You can read another report here

Wall Street’s Fear Gauge Is Acting Up. It May Signal Trouble
Joanna Ossinger – Bloomberg
At this point, most investors probably just want the year to be over to book their gains — especially now that the Cboe Volatility Index is behaving in a way that’s preceded stock losses in the past.
The VIX, also known as Wall Street’s “fear gauge,” jumped 16% on Monday and was up another 2.3% to 16.23 as of 8:15 a.m. Tuesday in New York. The S&P 500 Index remained less than a percent away from its record high.

Even as pound rallies, traders wary of post-election downside, options show
Tommy Wilkes and Richard Pace – Reuters
Expectations of a Conservative Party victory in Thursday’s UK election have sent the pound rocketing – but some investors are hedging themselves against a surprise outcome that could deal the currency a mighty blow.
Since early November, sterling has rallied 2% against the dollar, hitting a seven-month high of $1.3180, while against the euro it reached a 2-1/2-year high of 83.94 pence , up 2.7% in the past month.

Oil markets hit by profit-taking ahead of China tariff deadline
John Kemp – Reuters
Hedge funds scaled back their bets on higher oil prices last week, with futures and options markets hit by a wave of selling after a jump in positions the week before.
While much of that can be put down to profit taking, the shaky economic outlook and rapidly approaching deadline for more U.S. tariffs on Chinese goods means fund managers are likely to moderate their bullishness for the time being.

Crypto Exchange OKEx Set to Launch Options Trading
Samantha Hurst – Crowdfund Insider
OKEx, a Malta-based digital assets exchange, announced on Monday it is set to launch Options Trading, which will start on December 27th with simulation beginning on December 12th.

Exchanges and Clearing

Cboe Global Markets Agrees to Acquire Leading European Equities Clearing House EuroCCP
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced it has entered into a definitive agreement to acquire EuroCCP, a leading pan-European equities clearing house. The transaction will bring together two companies that have long championed competition, open access and clearing interoperability in Europe. Additionally, Cboe’s ownership of EuroCCP is expected to provide opportunity to pursue the development of equity derivatives trading and clearing capabilities in the region, subject to regulatory approvals.

Euronext announces binding agreement to sell its 20% minority stake in EuroCCP
Euronext, the leading pan-European exchange, announces it has entered into a binding agreement to sell its 20% minority stake in EuroCCP to Cboe Global Markets, alongside the other current EuroCCP shareholders. Euronext remains committed in developing its Post Trade strategy, described in its Let’s Grow Together 2022 strategic plan. Euronext will continue to leverage its long term derivatives clearing agreement with, and its 11.1% equity stake in, LCH SA, and develop its two fully-owned CSDs in Norway and Portugal, as the foundation for further growth in Post Trade.

Environmental Social Governance (ESG) index derivatives
While portfolios are already shifting from existing benchmarks to sustainable alternatives, 71% of institutional investors stated that all their portfolios will be managed according to ESG principles by 2030(*). With the introduction of five futures on key global, regional and local MSCI Indices, Eurex further extends its ESG derivatives suite and is now the first exchange to offer sustainable futures and options on leading benchmarks. The launch of STOXX USA ESG-X index futures further completes the successful STOXX product suite. The extended offer will be available for the March roll 2020.

Regulation & Enforcement

FIA forum focuses on transition to sustainable finance
On 27 November, FIA held a Compliance and Regulation forum for members in London where regulatory and industry experts offered perspectives on sustainable finance and discussed the importance of a carefully managed transition to a low-carbon economy. Mindy Hauman, professional support counsel at law firm White & Case, made the introduction to sustainable finance, discussing the range of initiatives that are underway in the EU and the UK. A cornerstone of the EU action plan on sustainable finance is a classification system or “taxonomy” defining environmentally sustainable investments.


The legacy and lessons of Paul Volcker
Martin Wolf – Financial Times
Paul Volcker is the greatest man I have known. He is endowed to the highest degree with what the Romans called virtus (virtue): moral courage, integrity, sagacity, prudence and devotion to the service of country.” Thus did I open my review of his memoir,Keeping At It: The Quest for Sound Money and Good Government, published last year. As Hamlet said of his father, “He was a man, take him for all in all. I shall not look upon his like again.”
That book was Volcker’s counsel to the world. It embodied the former US Federal Reserve chairman’s virtues and his values. With his passing this week, we need to dwell on both, while recognising how different the world is today.

Bitmain Shifts Miner Sales Tactics, Betting Big on Bitcoin Halving Pump
Wolfie Zhao – Coindesk
Bitcoin mining colossus Bitmain has rejiggered its sales strategy to reverse a decline in market share following the return of co-founder Jihan Wu to the company’s helm. At a customer event hosted by Bitmain on Saturday in Chengdu, China, Wu appeared on stage for the first time as the sole chairman and CEO a month after regaining control. Addressing clients and partners, he presented new strategies to restore Bitmain’s waning market dominance.

*****MR: Not totally options-centric, but this story includes an interesting use of put options from a company that usually has nothing to do with options trading. If you are unfamiliar, Bitmain is one of the largest producers of cryptocurrency mining equipment – basically, super-powerful computers used to process transactions in a blockchain network. Bitmain is offering put options allowing customers who buy 1,000 or more of their machines to sell bitcoin for 35,000 yuan ($5000) on March 27.

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