Cboe’s Former CEO Ed Tilly Joins Fintech Clear Street

Jul 8, 2024

Observations & Insight

SIFMA’s Ellen Greene Discusses Key Concerns and Expresses Optimism at Options Industry Conference

Ellen Greene, managing director of equity and options market structure at the Securities Industry and Financial Markets Association (SIFMA), shared insights on key industry concerns at the Options Industry Conference in Asheville, North Carolina, in an interview with John Lothian News sponsored by the OCC.

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Lead Stories

Cboe’s Former CEO Ed Tilly Joins Fintech Clear Street; Tilly joins the executive team as president starting July 22
Katherine Doherty – Bloomberg
Ed Tilly is joining upstart brokerage-services provider Clear Street, as the former head of Cboe Global Markets Inc. takes a new leadership role in the securities industry. Tilly starts at Clear Street as president on July 22 to help build the financial technology firm’s brokerage business in the US and abroad, reporting to the board of directors. The move is the next step for Tilly’s career after he resigned in September from running the derivatives and securities exchange following an investigation that determined he didn’t disclose personal relationships with colleagues. He’ll be based in the firm’s New York headquarters.

How Stocks Became the Game That Record Numbers of Americans Are Playing; More market participation also means more risk.
Claire Ballentine – Bloomberg
Legions of retail investors flooded the stock market in 2021, eager to chase volatile “meme stocks” with strong social media followings and weak financials. This passion to own a piece of companies such as GameStop Corp. and AMC Entertainment Holdings Inc. seemed like a fever that was sure to break. Fueled by pandemic stimulus checks and pre-vaccine boredom, newbie traders had nothing better to do than funnel their cash into shares championed by internet investing gurus including Keith Gill and Ryan Cohen.

Banks’ Hedges Are Cheap Before the Start of the Earnings Season
Bre Bradham and Cecile Vannucci – Bloomberg
JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. are kicking off the US banks’ earnings season on Friday, and traders are feeling pretty relaxed about it. The trio of stocks has surged more than 22% this year, yet the options market is showing little concern the rally may stumble. A measure of hedging costs for JPMorgan and Wells Fargo shares is hovering near its lowest level since 2021, while protection for Citigroup is below its one-year average, according to data compiled by Bloomberg.

Hedge Funds That Piled Into Big Tesla Short Stung by Huge Rally
Sheryl Tian Tong Lee and Ishika Mookerjee – Bloomberg
Hedge funds piled into short bets against Tesla Inc. (TSLA) right before the electric vehicle maker unveiled a set of numbers that triggered a hefty share-price rally. About 18% of the 500-plus hedge funds tracked by data provider Hazeltree had an overall short position on Tesla at the end of June, the highest percentage in more than a year, according to figures shared with Bloomberg. That compares with just under 15% at the end of March.

The Next Big Power Play on Wall Street
Anna Hirtenstein and Caitlin McCabe – The Wall Street Journal
There is a new force on Wall Street: power traders. Hedge funds are piling into power, drawn by volatile electricity and natural-gas prices that could remain turbulent. They are offering incentives like big sign-on bonuses, large profit-share deals and company cars with drivers to lure traders from utilities, banks and rival investment shops. “There is a spotlight that is now shining on us today, more than any time before,” said Juan Penelas, co-founder of e360 Power, a Texas-based hedge-fund firm with a focus on electricity trading. Assets under management have roughly doubled since the start of 2022, to about $470 million.

Why Your Fund Manager Can’t Beat Today’s Stock Market; The time seems just right for active stock pickers to beat the market. Why, then, are they doing even worse than usual?
Jason Zweig – The Wall Street Journal
It’s a stock picker’s market. So why aren’t more stock pickers doing better? In theory, active fund managers, who try to pick the best investments and avoid the worst, should excel when some stocks zig as others zag and when the gap between the winners and losers is wide. By some measures, that’s the kind of market we’re in right now. An index of implied correlation from Cboe, the Chicago-based exchange, suggests that the extent to which stocks move up and down in unison is near record lows.

****** Today’s market? What is your timeframe? There is always something hot. But what is your timeframe?~JJL


OCC Stories: Taru Sharma on OCC’s Culture of Support
Taru Sharma has been part of OCC’s Information Technology team since she was an intern in 2019. In her OCC Story, she reflects on how the organization’s culture of support helped her develop and excel professionally.

Cboe Europe new VWAP crossing service to launch in Q4; The service is the first of its kind in Europe for equities and will be offered through block trading platform Cboe BIDS Europe.
Annabel Smith – The Trade
Cboe Europe has confirmed plans for the launch of its new volume weighted average price (VWAP) crossing service for equities at the end of this year. Set to launch in the fourth quarter, the VWAP-X service will be made available through block trading platform Cboe BIDS Europe and will give users a greater chance of sourcing and matching liquidity at a forward benchmark price. Natan Tiefenbrun It will utilise BIDS’ conditional trade negotiation and execution workflow to match orders based on a standard and exchange-regulated VWAP methodology. Participants will be able to submit conditional VWAP indications of interest (IOIs). Once a potential match is found, firms will be given the opportunity to firm-up their IOIs.

Cboe Europe Announces Launch of Cboe BIDS VWAP-X, New Service Enabling Trading at VWAP Price
First-of-its-kind, exchange-operated trajectory crossing service for European equities, enabling participants to source and match liquidity based on a standard VWAP methodology; Offered through Cboe BIDS Europe, the region’s largest block trading platform, utilising its proven conditional trade negotiation and execution workflow. Cboe Europe, the largest pan-European stock exchange1 and a division of Cboe Global Markets, Inc. (Cboe: CBOE), today announced that it plans to launch Cboe BIDS VWAP-X, a new trading service allowing participants to source and match liquidity at a forward benchmark price. This service is scheduled to launch in early Q4 2024, subject to regulatory approvals.

ANALYSIS: LME plans technical changes to boost options activity
Luke Jeffs – FOW
The London Metal Exchange plans changes to its options trading practices to boost the already growing demand for commodity options. Speaking after the Hong Kong Exchanges and Clearing-owned venue reported last week average daily options trading volume up 69% in the first half of 2024 to 38,000 lots, the LME’s head of market development said the group is working on technical changes. Robin Martin told FOW: “Our options trade exclusively in the inter-office market which involves bilateral deals typically agreed on the phone. It doesn’t trade on screen in a dollar-quoted format as you would find on many other exchanges.

Cboe Partners with FTSE Russell in Digital Asset Reset
Shanny Basar – The Trade
Cboe Global Markets has partnered with index provider FTSE Russell to develop new digital asset derivatives, including cash-settled index options, after the exchange group decided to close down Cboe Digital.
In 2022 Cboe completed the acquisition of Eris Digital Holdings (ErisX), which operated a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearinghouse, in order to enter digital asset spot and derivatives markets, including clearing and settlement.

CME Group International Average Daily Volume Reached Quarterly Record of 7.8 Million Contracts in Q2 2024
CME Group
Record Europe, Middle East and Africa (EMEA) ADV of 5.8M, up 28% in Q2 2024; Asia Pacific (APAC) ADV of 1.7M, up 9%; Latin America (LatAm) ADV of 182K, up 8% in Q2 2024. CME Group, the world’s leading derivatives marketplace, today announced that its quarterly international average daily volume (ADV) reached a record 7.8 million contracts in Q2 2024, up 23% year on year. Reflecting all trading reported outside the United States, the record volume was driven by growth across all asset classes, with the highest trading volumes coming from interest rate and equity products. Commodities saw strong growth, with metals up 50%, energy up 40% and agricultural products up 25%.

Regulation & Enforcement

ISDA backs global reporting regulations under DRR initiative
Gregory Rosenvinge – FOW
The International Swaps and Derivatives Association (ISDA) is backing 11 sets of reporting regulations in nine major jurisdictions as part of its Digital Regulatory Reporting (DRR) initiative, according to the New York-based trade body’s chief executive.


Trading Technologies’ TT Platform Chosen as Best Listed Derivatives Execution/Order Management System in Markets Media’s European Markets Choice Awards 2024
Trading Technologies
Trading Technologies International, Inc. (TT), a global capital markets technology platform provider, has earned the recognition of Best Listed Execution/Order Management System (E/OMS) for its TT platform at Markets Media’s European Markets Choice Awards 2024. Presented in London last week, the awards are designed to celebrate the “best of the best in capital markets trading and technology.” TT EVP Managing Director, Futures & Options Alun Green said: “We have invested significantly in our EMS and OMS offerings to provide clients with feature-rich, powerful tools to meet their trade execution and order management needs, not only in listed derivatives but also in a growing array of asset classes. Clients throughout Europe and globally have embraced these systems, which are a vital part of the TT platform and unique in their flexibility, breadth and ability to bring flows together. Thanks to Markets Media for this wonderful recognition.”


Effective Options Selling During Volatility Spikes
Kai Zeng – tastytrade
IV moves differently from stocks or equities, presenting both opportunities and risks
Implied volatility (IV) is a critical concept that behaves differently from the price movement of stocks or equities. Unlike stock prices, which often follow trends or patterns, IV tends to spike to very high levels and then quickly revert to the average. After this reversion, it typically stays in a low range for an extended period. This unique behavior of IV can present opportunities and risks for options traders.


How a New York short-seller took on one of the world’s richest people, wiped out $150 billion in market value, and barely made any money
Jennifer Sor – Business Insider
Nate Anderson, the chief mind behind activist short-seller Hindenburg Research, has had an eventful past 18 months. In January 2023, he accused the Indian conglomerate owned by Gautam Adani – one of the world’s richest people – of fraud, subsequently wiping out $153 billion in market value from its associated companies. This led Indian regulators to his doorstep and forced him into defensive mode. A war of words has persisted ever since. A year and a half later, the battle continues. And based on new information released by Hindenburg, one might wonder whether it was all worth it. The firm – which describes itself as specializing in “forensic financial research” – recently disclosed that it’s made just $4 million from its considerable efforts. Compared to the nine figures of market value it helped erase, and the $80 billion wiped from Adani’s personal fortune, that’s a drop in the bucket.

Pity Hedge Funds That Lost in Electricity Chaos — No, Really

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