Observations & Insight
*****MR: The CME Group announced today that they will launch Micro E-Mini S&P 500 Options, pending a regulatory review – because you knew they would eventually. They also announced that trading for Micro E-Mini Nasdaq-100 futures contracts would begin on August 31, 2020, pending regulatory review. You can read the full press release below.
CME Group Announces Aug. 31 Launch of Micro E-mini Options
CME Group (press release)
CME Group, the world’s leading and most diverse derivatives marketplace, today announced options on its Micro E-mini S&P 500 and Micro E-mini Nasdaq-100 futures contracts will be available for trading Aug. 31, 2020, pending regulatory review.
Gate.io, Huobi Enter Booming Crypto Options Scene
Paddy Baker – Coindesk
As the crypto options market explodes, crypto exchange Gate.io opens its new options trading feature and rival Huobi preps for a launch later this year. Chicago’s Gate.io said Tuesday that their first bitcoin options contract had been released with short-term expiries of up to twenty-four hours. This comes as crypto options volumes went from $200 million in August 2019 to over $3 billion in May 2020, according to data site CryptoCompare. Following the halving, options volumes settled at $2.5 million last month.
Investors must prepare portfolios for Covid-19 debt crunch
Mohamed El-Erian – Financial Times
The financial stress caused by Covid-19 is far from over. Investors should brace for non-payments to spread far beyond the most vulnerable corporate and sovereign borrowers, in a reckoning that threatens to drag prices lower.
There is still time to get ahead of this trend. Rather than buying assets at valuations stunningly decoupled from underlying corporate and economic fundamentals, investors should think a lot more about the recovery value of their assets and adjust their portfolios accordingly.
More than 80% of investors fear the market will plummet again before the COVID pandemic ends, UBS says
Ben Winck – Markets Insider
Wealthy investors don’t think the global economy is in the clear just yet.
In a UBS survey of 3,750 investors worldwide, 81% of respondents said they fear a second market decline before the virus is contained and economies recover. Latin America hosts the largest share of such worries, with 88% of investors forecasting another drop. Investors in Switzerland are significantly less concerned, as just 64% hold the same fears.
China’s Hottest Stocks Sink as Beijing Cools Speculative Fervor
Volatility is picking up in China’s most overheated stocks, a sign that this month’s $1.5 trillion rally is looking vulnerable.
The ChiNext Index plunged as much as 3.5% Tuesday before paring the decline to 1.1% at the close. The gauge, where a 10% daily cap on individual stock moves will soon double, was up more than 60% this year and near the most overbought on record. Overseas investors sold a record $2.5 billion of China stocks Tuesday.
Wall Street Signals Economic Worry With Rush to Defensive Assets
Cecile Gutscher and Sam Potter – Bloomberg
The constant refrain on Wall Street is that markets have broken from pandemic reality, yet the evidence keeps suggesting otherwise.
The S&P 500 staged a late-session reversal on Monday on fresh virus fears that underscore the jitters behind the global rebound in risk. The latter keeps taking place alongside a historic bid for safety and elevated equity volatility.
UK firms rethink FX hedging as coronavirus and Brexit fog outlook
Olga Cotaga – Reuters
Coronavirus and the end-2020 Brexit deadline have left UK firms facing historic uncertainties, prompting many to find more flexible ways to protect their foreign exchange exposure — even if these come at a higher initial cost. The pandemic is expected to cause Britain’s biggest economic contraction in 300 years and swell unemployment, debt and corporate bankruptcies. An added risk is that Britain could cast off from the European Union next year without having agreed any trade deals.
Nomura and Wolfe Research Announce Strategic Alliance
Traders Magazine (press release)
The Nomura Group and Wolfe Research today announced their agreement to form a new strategic alliance. Through the alliance, Nomura and Instinet clients in the US will be able to access top-tier US equity research and related services directly from Wolfe. In Japan, Nomura’s Retail and Institutional clients will be given access to Wolfe US Equity Research through a distribution arrangement. Wolfe’s clients will be able to execute their unique content-driven trading strategies via Nomura’s top ranked options, derivatives and equity swaps platform, and Instinet’s agency execution facilities.
Exchanges and Clearing
Saudi bourse to launch derivatives market on Aug. 30, eyes more products
Marwa Rashad and Hadeel Al Sayegh – Reuters
The Saudi Stock Exchange said on Tuesday trading in the kingdom’s first exchange-traded derivatives product would start on Aug. 30, part of moves to make the Saudi equity market more attractive to foreign investors.
Tadawul said the Saudi Futures 30 (SF30) Index Futures Contract was based on the MSCI Tadawul 30 (MT30) Index, and would give investors hedging tools and more opportunities to gain exposure to the Saudi capital market.
*****JB: They plan on adding options in the future.
2020 Labor Day Holiday Trading Schedule
ICE Futures U.S. will observe the trading schedule below for Labor Day 2020. Changes from regular trading hours and daily settlement window times are shown in bold, all times shown in NY time.
Investments in Consolidated Tape Infrastructure Yield Ultra-Low Latency
NYSE – Traders Magazine
The NYSE completed the migration of its five equities markets to the best-in-class Pillar technology platform in late 2019. Then, shortly thereafter, in the early days of the Covid-19 pandemic, Pillar faced its greatest test. Despite historic levels of market volatility, Pillar technology was fast, reliable, and consistent, maintaining low latency and deterministic performance.
(Webinar) Insights into the derivatives clearing landscape
Will Mitting, founder and managing director of Acuiti, a management intelligence platform focused on the derivatives industry, will join Will Acworth, senior vice president of FIA, in a 30-minute presentation on trends in the business of clearing listed and OTC derivatives. The discussion will cover proprietary data from global surveys of derivatives industry executives conducted by Acuiti as well as the latest data from the U.S. on customer funds flows.
Libor Was Largely Guesswork at the Height of Volatility in March
William Shaw and Silla Brush – Bloomberg
At the peak of the pandemic-induced market meltdown, guesswork played a vital role in setting international borrowing costs.
Transactional data used to calculate sterling Libor all but vanished as markets became volatile in March, reinforcing the case for abandoning the benchmark, Bank of England Governor Andrew Bailey said in a speech on Monday.
(Podcast) Option Block 917: Smokey And The Bandit…The Western?
Options Insider Podcast