Cboe to launch Dutch derivatives hub in 2021; LME seeks to boost options market with new electronic system

Jul 1, 2020

Lead Stories

Cboe to launch Dutch derivatives hub in 2021
Huw Jones – Reuters
Cboe Global Markets said on Wednesday it will launch derivatives trading and clearing at its new European hub in Amsterdam next year as it completes a costlier-than-expected takeover of EuroCCP clearing house.
The Chicago-based group had already opened a share trading hub in the Dutch financial capital in October 2019 to avoid Brexit disrupting European share trading operations in London.

****JB: You can read the press release for this below in the “Exchanges” section.

LME seeks to boost options market with new electronic system
Eric Onstad – Reuters
The London Metal Exchange (LME) launched a consultation on Wednesday about plans to boost options trading through simpler rules and a new electronic trading system.
The exchange, the world’s oldest and largest market for industrial metals, said in a statement it planned to develop a new electronic trading platform that would allow broader participation in options trading.

****JB: You can read the press release for this below in the “Technology” section.

Deutsche Boerse Resolves Second Major Trading Outage of 2020
Lukas Strobl and Ksenia Galouchko – Bloomberg
Deutsche Boerse AG’s electronic trading system was unavailable due to a technical glitch throughout Wednesday morning, the exchange’s second major outage this year, disrupting derivatives and stock markets in several central and eastern European countries and hampering bond sales in the region.

3 reasons why JPMorgan just doubled down on its US stock bullishness
Matthew Fox – Markets Insider
Investors should continue to stay bullish on US stocks in the short to medium term, JPMorgan’s Marko Kolanovic said in a note published on Tuesday.
Kolanovic correctly called the bottom in stocks in March, and has remained bullish on stocks throughout the second quarter, which posted its best quarterly rally since 1987. Kolanovic has often reminded investors why they should stay bullish along the way.
Now, Kolanovic lists three new reasons why investors should continue to favor US stocks.

Dow can hit 30,000 by 2021 if Republicans keep the Senate and the coronavirus is contained, Wharton professor Jeremy Siegel says
Ben Winck – Markets Insider
Wharton finance professor Jeremy Siegel detailed on Tuesday the critical conditions needed for the Dow Jones industrial average to reach a record high of 30,000 before the year is out.
The stock market’s rally from March lows has slowed as investors weigh reopening optimism with fears of a second wave of coronavirus cases. The latest spike in infections and election outcomes represent the “great uncertainties” plaguing valuations, Siegel said.

****JB: A supply-side economist if there ever was one.

Euro Is Riding a Wave of Confidence on Europe Pandemic Response
Vassilis Karamanis – Bloomberg
The euro’s best rally in more than two years looks set to extend, with a host of market metrics reflecting growing confidence in Europe’s pandemic response. The currency completed its biggest two-month advance against the dollar and a trade-weighted index of its strength rose for a third quarter. At the same time, options are relaying optimism on multiple fronts — signaling gains versus the greenback over the next three months, and a drop in bearish sentiment versus the yen, a traditional haven currency, to the lowest since January.

COVID-19 Related Market Turmoil Recap: Part I
SIFMA Research
In light of COVID-19 related market dislocations, SIFMA Research tracked daily market metrics (prices, volumes, volatility) across equities, listed options and ETFs, as well as equity capital formation. This report is the culmination of that work, analyzing market trends from the start of the year through mid-June.

Inside Volatility Trading: June 30, 2020
Jermal Chandler – Cboe blog
An early look at players in uniforms is an annual marketing ploy by the National Football League. Recently, marquee quarterback Tom Brady unveiled his new look with the Tampa Bay Buccaneers after twenty years of service for the New England Patriots.

Exchanges and Clearing

Cboe Global Markets Completes EuroCCP Acquisition, Plans to Launch Cboe Europe Derivatives in First Half of 2021
Cboe Global Markets
Acquisition brings together two pan – European organizations that have long championed competition, open access and clearing interoperability in Europe; Cboe plans to introduce a modern, vibrant pan – European derivatives market, launching futures and options on six key European equity indices in first half of 2021; Investor call scheduled for July 2 at 8:30 am ET to discuss Cboe’s pan – European derivatives strategy
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today announced it has completed its acquisition of EuroCCP, a leading pan-European equities clearing house. The acquisition paves the way for the planned launch of Cboe Europe Derivatives, a new Amsterdam-based futures and options market, in the first half of 2021, subject to regulatory approvals.

European exchanges reject calls for shorter trading day
Philip Stafford – Financial Times
European stock exchanges have come out in opposition to a shortening of their opening hours, dealing a blow to fund managers and bankers pushing to curb some of the longest trading days in the world.
The verdict from the Federation of European Securities Exchanges (Fese), which represents the region’s bourses, comes after the London Stock Exchange and Euronext consulted their users about shorter days.

Dr. Thomas Book becomes the new CEO of the Frankfurt Stock Exchange
Deutsche Börse Group
Dr. Thomas Book was appointed by the Exchange Council of the Frankfurt Stock Exchange (FWB) as a member of the executive board. He will take over the chair of the FWB management board and will succeed Hauke ??Stars, who will leave Deutsche Börse on June 30 and leave the management board. Dr. Book has been with Deutsche Börse for 25 years and is responsible for the Trading & Clearing division on the Board. These include the derivatives exchange Eurex, Eurex Clearing, the currency trading platform 360T and the energy and commodity business of the EEX Group. From July 1st, the cash market with the Frankfurt Stock Exchange will be added. This means that all trading and clearing platforms of Deutsche Börse are combined in one department.

Product Modification Summary for Clearing Firms, Bookkeeping Software Providers, ISVs
CME Group
Effective Sunday, July 12 for trade date Monday, July 13, and pending all relevant CFTC regulatory review periods, please be advised that the Chicago Board of Trade Exchange, Inc. (CBOT) will reduce the block thresholds for the following Grain ICS spreads on CME ClearPort.

Market for Underlying Security Used for Openings on MIAX Options, MIAX PEARL and MIAX Emerald for Newly Listed Option Classes Effective Wednesday, July 1, 2020
Please refer to the Regulatory Circulars listed below for newly added symbols and the corresponding market for the underlying security used for openings on the MIAX Exchanges. The newly listed symbols will be available for trading beginning Wednesday, July 1, 2020.

MIAX Options and MIAX PEARL Options – Reminder for Additional MEI and MEO Limited Service Ports
As previously announced in the May 28, 2020 Alert, the MIAX Options and MIAX PEARL Options Exchanges will offer Market Makers the ability to purchase an additional two (2) Limited Service MIAX Express Interface (MEI) and MIAX Express Order (MEO) Ports per matching engine. The two additional Limited Service Ports will be available on July 2, 2020, in conjunction with the two additional shared segment ULL switches which were previously announced in the May 19, 2020 Alert and June 17, 2020 Alert. These will be over and above the current six (6) additional Limited Service MEI/MEO Ports per matching engine that are currently available for purchase by Market Makers. Market Makers will now be limited to purchasing eight (8) additional Limited Service MEI/MEO Ports per matching engine, for a maximum of ten (10) per matching engine.

Options Technical Update #2020 – 3 REMINDER: Nasdaq Options Markets Update SQF and QUO Technical Specifications in Support of CAT
Nasdaq has updated the Quote Using Orders (QUO) technical specifications for The Nasdaq Options Market (NOM), and the Specialized Quote Feed (SQF) technical specifications for all 6 Nasdaq option markets, to support changes required for the Consolidated Audit Trail (CAT) reporting.

Options Trader Alert #2020 – 19 Nasdaq ISE, GEMX, and MRX Updated Pricing Effective July 1, 2020
Effective Wednesday, July 1, 2020, pending filing with the SEC, Nasdaq ISE (ISE), Nasdaq GEMX (GEMX) and Nasdaq MRX (MRX) amend their pricing as described below:
Nasdaq ISE
ISE will make the below changes to the Fee for Responses to Crossing Orders and Fee for Responses to PIM Orders in both Select and Non-Select Symbols for both Regular and Complex Orders. ISE will also institute a Facilitation and Solicitation Break-up Rebate in Non-Select Symbols for both Regular and Complex Orders, as set forth below. Lastly, ISE will increase the taker fee in Non-Select Symbols for Regular Orders per below.

Regulation & Enforcement

Supreme Court Denies Defendants’ Challenge to CFTC’s Enforcement Authority
On Monday, June 29, 2020 the U.S. Supreme Court denied a petition for a writ of certiorari by the defendants in the CFTC’s anti-fraud enforcement action against Monex Deposit Company and its affiliated companies and principals. The defendants’ petition challenged the CFTC’s authority to bring enforcement cases against alleged fraud, an argument rejected last year by the U.S. Court of Appeals for the Ninth Circuit. [See CFTC Press Release No. 7984-19] The CFTC enforcement action, filed in 2017, charged the defendants with defrauding thousands of retail customers out of hundreds of millions of dollars, while executing thousands of illegal, off-exchange leveraged commodity transactions. [See CFTC Press Release No. 7609-17]


LME issues discussion paper on development of electronic options market
LME Press Release
The London Metal Exchange (LME) today issued a market-wide discussion paper regarding the proposed development of its electronic options market.
Following extensive engagement with its Traded Options Committee and in response to demand from market participants, the LME plans to develop its electronic options market while maintaining the flexibility of its current inter-office options trading structure.


Changes to the Executive Boards of Eurex and Eurex Clearing
Michael Peters appointed as new Chief Executive Officer of Eurex; Randolf Roth responsible for Equity & Index Derivatives and Client Services; Jonas Ullmann joins the Executive Board of Eurex
Jens Janka joins the Executive Board of Eurex Clearing; Eurex Frankfurt AG and Eurex Clearing AG are announcing changes to their Executive Boards.
Michael Peters will succeed Thomas Book as Chief Executive Officer of Eurex Frankfurt AG as of 1 July 2020. Peters has been Deputy CEO of the company since February 2016. Randolf Roth will take over responsibility for Equity & Index Derivatives. As part of the changes, Roth will also be responsible for Client Service Trading & Clearing. Jonas Ullmann will join the Executive Board as Chief Operating Officer, taking over Trading Design & Delivery. His responsibilities will include the further development of trading functionalities and ongoing trading operations.

Itiviti appoints Mireille Adebiyi as Head of Marketing & Communications
Itiviti blog
Itiviti, a leading technology and service provider to financial institutions worldwide, today announces the appointment of Mireille Adebiyi as Head of Marketing & Communications. Mireille has 17 years of experience within Fintech. Before joining Itiviti, she spent most of her career at Murex and joins from AI pioneer Yseop, where she held her most recent position as Chief Marketing Officer.


Black Swan Boot Camp: Option Trading Strategies in a …- Ticker Tape
Doug Ashburn – The Ticker Tape (TD Ameritrade)
“I didn’t train to land a plane in the Hudson. I trained to be prepared for moments like this.”—Captain Chelsey B. “Sully” Sullenberger III, pilot of “The Miracle on the Hudson.”
The event we plan for is often the one that doesn’t happen. Whether a crash happens in the market or in your car, no one sees it coming. The crash of 2020 wiped out a lot of market value. And nobody saw it coming. Sure, you can think back now and see somethings that might’ve triggered it—the earliest fears of the novel coronavirus before it hit U.S. soil, an inverted yield curve, or maybe the market was showing cracks.
Forget it. Leave the “whys” to the academics and economists. It’s their job to do the analysis and come up with reports. Traders have a different job to do. We have to get up in the morning, fire up our trading platforms, stare at the flashing numbers, and try to find new potential opportunities.


Cross border clearing and market access: EMIR 2.2 and Brexit
Regulatory reform following the financial crisis set out to create more robust, transparent and effective post-trade infrastructures for derivatives markets. The introduction of EMIR 2.2 and enhanced equivalence for third country CCPs, together with the impact of Brexit, are set to change the nature of cross-border market access and supervision. Speakers will share their views on the upcoming equivalence approach, the potential impact of market fragmentation on global markets, and implications for the continued growth of derivatives clearing in Europe.


‘This is what a kleptocracy looks like’: Billionaire investor Chamath Palihapitiya blasted the Fed for buying foreign companies’ bonds
Theron Mohamed – Markets Insider
Billionaire investor Chamath Palihapitiya blasted the Federal Reserve for buying foreign companies’ bonds in a tweet this week.
The Social Capital boss, Virgin Galactic chairman, and part-owner of the NBA’s Golden State Warriors questioned how supporting non-US businesses helps Americans struggling during the coronavirus pandemic.

National mask mandate could save US from a 5% GDP hit, Goldman Sachs says
Carmen Reinicke – Markets Insider
A national mask mandate could potentially slash coronavirus infections in the US and save the country from a 5% hit to its gross domestic product, according to Goldman Sachs.
In a Monday note, chief economist Jan Hatzius and his team investigated the link between wearing a mask and certain economic and health outcomes of COVID-19.

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