Cboe set to launch Amsterdam derivatives exchange

Apr 29, 2021

Observations & Insight

OIC 2021: Options Industry Conference Kickoff Looks at State of the Industry
John Lothian – John Lothian News

Cboe’s Henry Schwartz Offers Keen Analysis of Industry Trends Driving Unprecedented Volume

The 2021 Options Industry Conference, held virtually this year after last year’s Puerto Rico event was cancelled amid the pandemic, kicked off with a session led by Henry Schwartz, formerly of Trade Alert. Schwartz is now a senior director at Cboe Global Markets and head of market intelligence since his firm was acquired by Cboe last year.

Schwartz ran through more than a dozen slides to start his session and then had a quick panel discussion with what he described as “three legends” of the options industry.

He was joined by Annabelle Baldwin of SpiderRock, Shelly Brown of MIAX and Jim Hyde of ICE/NYSE Options.

To read the rest of this story, go HERE.


OIC 2021: ‘Washington Outlook’ is for a mix of clouds, not sunny skies, for Biden’s proposals
Sarah Rudolph – John Lothian News

The main question batted around at The Washington Outlook panel at the 2021 Options Industry Conference on Wednesday was whether President Joe Biden can realize his hope for bipartisanship on his agenda, given that a large chunk of his new American Families Plan proposal is anathema to Republicans – in particular the proposed tax increases on the wealthy that would pay for much of it.

The panel, moderated by Jill Sommers, a senior advisor at Patomak Global Partners and a former CFTC commissioner, started out attempting to predict what Biden would say in his address to a joint session of Congress Wednesday evening, and ended up mostly correct in that Biden discussed the progress in fighting Covid in his first 100 days, the climate crisis, tax increases, and jobs. Biden is presenting two proposals, the American Jobs Plan, which he introduced last month, and the newer American Families Plan. The Jobs Plan addresses infrastructure, clean energy, and corporate tax proposals, and the American Families Plan expands access to education and would cut the cost of child care and give more support to working women.

To read the rest of this story, go HERE.


OIC 2021: Industry Experts Explain the Rise of Retail Trading
Matt Raebel – John Lothian News

OIC 2021 was unusual compared to past conferences for a lot of reasons, one of which was noted during the panel, “Retail Rises,” on Day One of the show. When JJ Kinahan, chief market strategist of trading services at TD Ameritrade, asked Christopher Larkin, managing director at E*TRADE, what he saw as the biggest changes to the market over the past year, Larkin said the discussion about the role of retail trading and traders in the options markets had become a big enough topic that it warranted a Day-One spot on the conference’s agenda.

“You and I have been doing panels for a long time, and this will be the first time that they’ve talked about retail on the first day of an options conference,” he said. “You and I are usually doing the 4 p.m. Friday afternoon session … it’s nice to be part of the kickoff of the conference!”

To read the rest of this story, go HERE.


OIC 2021: SEC’s Lee Weighs In On 2020’s Challenges, 2021’s Regulatory Agenda
Suzanne Cosgrove – John Lothian News

COVID-related issues triggered record volume and volatility in 2020 that presented challenges for exchanges and regulators, from both a market and an operational standpoint, said U.S. Securities and Exchange Commissioner Allison Herren Lee.

In a Tuesday keynote address to the 2021 Options Industry Conference conducted as an interview with John Davidson, OCC’s chief executive officer, Lee said 2020’s jump in volume and volatility “really tested our financial system.” The surge also tested trading and message infrastructures and some funds’ capital reserves, Lee said.

To read the rest of the story, go HERE.


OIC 2021: The Late Joe Levin Honored With Sullivan Award
John Lothian – John Lothian News

Former CBOE head of research and product development “helped shape the industry” with product innovations.

The last event of Day One of the “Virtual Experience” Options Industry Conference 2021 was the presentation of the Joseph Sullivan Award for 2020 to former CBOE Vice President of Research and Product Development Joe Levin.

The session started with a moving tribute to Joseph Sullivan, the first CBOE president and for whom the Sullivan Award is named. Sullivan passed away in October of 2020, so the tribute and session was titled “In Memoriam: Joseph Sullivan Tribute & Presentation of the 2020 Sullivan Award.”

To read the rest, go HERE.

Lead Stories

Cboe set to launch Amsterdam derivatives exchange; Move reinforces exchange operator’s strategy of shifting to EU after UK’s exit from bloc
Philip Stafford – FT
Cboe Global Markets is set to launch a new derivatives exchange in Amsterdam in September, adding options trading to its push into the EU market now that the UK has left the bloc. The exchanges operator has enlisted the support of Goldman Sachs, Morgan Stanley and a host of electronic market makers in an effort to compete in an environment it has long seen as stunted in comparison to the US, its home market.

Re-Imagining ETFs with Simplify
Joel Weber and Eric Balchunas – Bloomberg (Audio)
The stock market looks frothy, moves up and down tend to be steeper and quicker than the old days, and the bond market isn’t the hedge it used to be. This is the situation that Simplify, an upstart new ETF issuer, is looking to solve with a lineup of ETFs enhanced with options — to provide downside protection and also amplify the upside.

Proprietary Trading Firms Set For Significant Expansion Of Crypto Derivatives Trading – Study By Acuiti Finds Strong Demand For Expansion Of Venues And Product Coverage
Proprietary trading of crypto derivatives is set for significant growth as firms seek to expand the numbers of markets traded and their coverage of underlying digital assets, a study by Acuiti has found. The Acuiti Proprietary Trading in Crypto Derivatives report, which was published today, found that 97% of firms surveyed that were actively trading crypto derivatives planned to increase the number of venues on which they traded.

Copper Extends Rally to Top $10,000 With All-Time High in Sight
Yvonne Yue Li – Bloomberg
Copper topped $10,000 a metric ton for the first time since 2011, nearing the all-time high set that year as rebounding economies stoke demand and mines struggle to keep up.
Prices rose as much as 1.3% to $10,008 a ton on the London Metal Exchange, before slipping back to trade near unchanged. The metal hit a record $10,190 in February 2011.

Exchanges and Clearing

Cboe Europe Derivatives Secures Support of Key Participants for September 2021 Launch
Cboe Global Markets
Cboe’s new Netherlands-based derivatives exchange plans to launch on Monday, 6 September 2021, subject to regulatory approvals; Wide range of participants have committed to supporting the exchange; Exchange will introduce a modern, vibrant pan-European derivatives market, which promotes an on-screen market structure; Cboe-owned EuroCCP will provide clearing services for the exchange, subject to regulatory approvals
Cboe Europe, a pan-European exchange operator and a subsidiary of Cboe Global Markets (Cboe: CBOE), announced it plans to launch Cboe Europe Derivatives, a new Amsterdam-based futures and options market, on Monday, 6 September 2021, subject to regulatory approvals. Cboe has secured the support of a broad range of participants, including banks, clearing firms, market-makers and proprietary trading firms who are expected to help contribute to the provision of liquidity and client order flow on Cboe Europe Derivatives.

*****Amazing how a Chicago company can be so worldly and globally focused.~JJL

Euronext today completes the acquisition of the Borsa Italiana Group and publishes Q1 2021 results
Euronext today completes the acquisition of the Borsa Italiana Group, following the satisfaction of all condition precedents. The completion of the Transaction successfully creates the leading pan-European market infrastructure and the leading venue for capital markets in Europe.
Euronext believes that customers, of both Euronext and Borsa Italiana Group, will benefit from the greater size of the new Group, its diversified business mix and strengthened post-trade activities, including a multi-asset clearing house.

Regulation & Enforcement

SEC Enforcement Chief Alex Oh Resigns Days After Taking Job
Benjamin Bain and Matt Robinson – Bloomberg
The U.S. Securities and Exchange Commission’s new enforcement chief abruptly resigned Wednesday, citing a complication in a case from her prior legal career, an early and significant setback in Chairman Gary Gensler’s tenure running the Wall Street regulator.
Alex Oh’s surprise move, announced just a week after she got the job, means Gensler won’t have his preferred pick leading what’s arguably the agency’s most important division. Melissa Hodgman, who was previously serving as acting director of the enforcement unit, will return to that role, the SEC said in a statement.


Citadel poached Citi’s head of equity derivatives trading in the US, the latest in a string of exits in the bank’s trading unit
Alex Morrell – Insider
Citadel has poached the head of equity derivatives trading in North America from Citigroup, the latest in a string of buy-side defections from Citi’s derivatives unit.


BUZZ-COMMENT-Options speak volumes about FX expectations
Implied volatility is the FX option market gauge of expected volatility, but it’s stuck at pandemic lows, which shows traders of this derivative don’t expect any real change from the recent rangebound, and lacklustre FX environment.
FX options thrive on volatility – it’s unknown when determining their premium, so implied volatility is a dealers’ best guess.

Opinion: Stick with this bull market in stocks
Lawrence G. McMillan – MarketWatch
The S&P 500 index engineered a tremendous rally from March 25 through April 16. Since then, it’s been taking a breather.
However, despite overbought conditions and a considerable amount of press about that fact, the index is breaking out to new all-time highs again on Thursday morning. There are no confirmed signals in place at this time. The overbought condition warrants some caution, but only in the form of having stops in place below the market. The main strategy is to remain long.

Surging Interest & Market Quality: Options Trading in the Time of Memes
James Chu, Stefanos Bazinas, and Choey Li – Traders Magazine
At the end of January, stock market news was everywhere from mainstream outlets to Saturday Night Live, as social media seemed to drive unprecedented trading interest in a few stocks. AMC Entertainment (AMC), BlackBerry (BB), GameStop (GME), and Nokia (NOK) received the most attention and saw their combined options ADV increase from 68K contracts in Q4 2020 to over 426K contracts in Q1 2021 – a 523% increase. Overall multi-list options ADV increased 31.3% in that same time frame.

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