‘Complete Mess’: Traders Fear Volatility Long After Election Day
Katherine Greifeld – Bloomberg
Donald Trump has all but promised to dispute the election outcome if he loses. Wall Street’s taking him at his word.
Volatility markets from stocks to currencies and bonds show investors bracing for turbulence not just on election day, but for the ensuing weeks as well. The fear is that results from the Nov. 3 vote — already the most expensive event to hedge against ever — won’t be clear enough that a winner emerges without a protracted legal battle.
If that happens, the potential for political chaos and prolonged uncertainty is seen as a bigger risk for equity markets than who actually wins the vote, according to UBS AG.
The Stock Market Rose Thursday. It Might Just Be Staving Off the Inevitable.
Ben Levisohn – Barron’s
The S&P 500 just doesn’t want to correct—at least not yet.
“Correction” is the Wall Street term for a 10% drop from an all-time high, and the S&P 500 began the day very close to that mark. At yesterday’s close, it was down 9.6% from its Sept. 2 high of 3580.84, and it looked like the correction would finally start today, as the market dropped off the open, rallied, and then sold off again later in the day.
Currency markets are overestimating the risk of a delayed US election result, Goldman Sachs says
Saloni Sardana – Markets Insider
Financial markets are showing investors are overestimating the risk of a delayed result to November’s presidential election, Goldman Sachs said in a note Thursday.
The note by Michael Cahill and Alec Phillips said the market appears to be “pricing too high of a probability” that it will take a long-time to sort a winner in the upcoming November 3 presidential election.
SocGen’s maths geeks built an empire: do the sums still add up?
David Keohane and Owen Walker – Financial Times
Thirty years ago, a group of maths and engineering graduates from Paris’s elite grandes écoles changed the direction of one of France’s oldest and most important banks.
Under Antoine Paille, a 31-year-old software engineer, the small team was given a basement office a few streets from the Palais Garnier opera house in Paris with instructions to build a new business for Société Générale, the lender founded in the 19th century.
Exchanges and Clearing
CME changes rules to stoke trading; The Chicago-based futures exchange operator is changing up its overnight trading rules and settlement times for equity-linked products to better suit traders also active in related stock markets.
Lynne Marek – Crain’s Chicago Business
CME Group, which operates the biggest U.S. derivatives exchange, plans to change to its trading rules next month in a way that may gin up more trading volume in contracts tied to the stock market. The Chicago-based company notified its customers this week that it will amend the rules related to overnight trading in its stock market-linked futures and options so that trading halts if prices fall or rise by 7 percent, as opposed to the more sensitive current 5 percent, according to a notice issued Sept. 22. That will put the rules in better alignment with daytime trading rules and those for stock exchanges, assuming regulators approve of the amendment.
CME Group Inc. Announces Third-Quarter 2020 Earnings Release, Conference Call
PR Newswire (press release)
CME Group Inc. will announce earnings for the third quarter of 2020 before the markets open on Wednesday, October 28, 2020. Written highlights for the quarter will be posted on the company’s website at 6:00 a.m. Central Time, the same time it provides its earnings press release. The company will hold an investor conference call that day at 7:30 a.m. Central Time, at which time company executives will take analysts’ questions. A live audio Webcast of the conference call will be available on the Investor Relations section of the company’s website, www.cmegroup.com. Following the conference call, an archived recording will be available at the same site.
Withdrawal of admission of Single Stock Futures, options and Total Return Futures due to corporate actions
Due to corporate actions, the Management Board of Eurex Deutschland took the following decisions with effect from 5 October 2020:
Change to the Market for Underlying Security Used for Openings on MIAX Options, MIAX PEARL and MIAX Emerald for Symbol AZN Effective September 25, 2020
AstraZeneca PLC (“AZN”) will transfer primary listing from the New York Stock Exchange to the NASDAQ Global Select Market (“NASDAQ”) effective Friday, September 25, 2020. MIAX Options, MIAX PEARL and MIAX Emerald will use NASDAQ as the “market for the underlying security” for the purpose of Openings on the Exchange.
Market for Underlying Security Used for Openings on MIAX Options, MIAX PEARL and MIAX Emerald for Newly Listed Symbol SNOW Effective Friday, September 25, 2020
Snowflake, Inc. (SNOW) will start trading on MIAX Options, MIAX PEARL and MIAX Emerald beginning Friday, September 25, 2020. Each Exchange shall use the New York Stock Exchange as the “market for the underlying security” for the purpose of Openings on the Exchange.
Change to Opening and Intra-day Quote Width Requirements and Minimum Standard Quote Size Requirement for Symbol SNOW Beginning September 25, 2020
Effective Friday, September 25, 2020, MIAX Options and MIAX Emerald will increase the quote width requirement to $20.00 and will decrease the minimum required standard quote size to 1 for Snowflake, Inc. (SNOW).
Regularity Approval for Weighmaster in Gold, Gold (Enhanced Delivery), and Silver
DATE: September 24, 2020
SUBJECT: Regularity Approval for Weighmaster in Gold, Gold (Enhanced Delivery), and Silver
The Commodity Exchange, Inc. (“COMEX” or “Exchange”) has received and approved the application of Brink’s Limited for regularity to be a weighmaster in Gold, Gold (Enhanced Delivery), and Silver in the London, United Kingdom region.
Performance Bond Requirements: Agriculture, Energy, Equity, FX, Interest Rate & Metal Margins – Effective September 25, 2020
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below. Please email any questions to Clearing.RiskManagement@cmegroup.com.
Regulation & Enforcement
Amendments to the Termination of Trading Rule of the Options on the Russian Ruble/US Dollar (RUB/USD) Futures Contract (Monthly) to Clarify LTD in the Event of a Russian Holiday
Effective Sunday, October 11, 2020 for trade date Monday, October 12, 2020, and pending all relevant Commodity Futures Trading Commission (“CFTC”) regulatory review periods, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will amend the termination of trading rule of the monthly Options on the Russian Ruble/US Dollar (RUB/USD) Futures contract (the “Contract”) to clarify the last trade date in the event of a Russian Holiday.
Pico Among First to Connect to the National Market System’s (NMS) New Low-Latency Network; – Transitioning to the NMS network will ensure Pico’s clients consume NMS feeds (CTA and OPRA) with the lowest latency possible –
Pico, a leading provider of technology services for the financial markets community, today announced it will offer the Consolidated Tape System (CTS), the Consolidated Quotation System (CQS) and the Options Price Reporting Authority (OPRA) feeds from NMS-dedicated connectivity via a new separate, low-latency NMS network located in the Mahwah, New Jersey data center.
Election Chaos Might Be Looming. How to Invest Now.
Steven M. Sears – Barron’s
It’s a rare moment in U.S. history, with financial markets expecting the months after a presidential election to be dangerously erratic.
The Cboe Volatility Index’s futures market indicates that investors are preparing for tumultuous financial and political conditions in November, December, and January. Until recently, investors had priced October as a month of great volatility, and the following months as less.
Here’s how stocks typically perform in October and why you might want to buckle up
Mark Hulbert – MarketWatch
October is coming. The most volatile month of the year for the U.S. stock market is here but if you’re prepared there’s nothing to fear. In fact, the market typically rises in October and combined with the volatility, gives investors one of the best opportunities for getting into stocks of the entire year.
Market volatility prompts investors to seek out long-short equity
Maiya Keidan and Megan Davies – Reuters
Stretched valuations and the resulting pullback in equities have prompted more interest in long/short fund strategies that can provide some protection against market declines and wild swings, hedge fund and asset managers say.
The S&P 500 index is down nearly 10% from its Sept. 2 peak, and the burst of selling has prompted some managers to seek more protective strategies. The recent selling followed a run-up in stocks, which regained all their coronavirus-induced losses after unprecedented support from the U.S. Federal Reserve.
(Podcast) Sequencing, Skew, and (Option) Strikes with Hari Krishnan
We’re joined by option guru and author of ‘The Second Leg Down’ in this episode to talk through the real-time test of market crashes and volatility dynamics we’ve witnessed since February. Is our guest’s theory on volatility sequencing proving its worth in this environment of bigger VIX spikes, oil going negative, and retail trader flow? Hari Krishnan has all the insight on how to survive during volatile periods.
“Scaling Up With Options: Wider Spreads vs More Contracts” Takeaways
Nick Battista – tastytrade
tastytrade presents TradeTALK, a 10-part speaker series that showcases trading strategies and concepts for the individual trader. Tom Sosnoff, Tony Battista, Liz/Jny, Pete Mulmat, and other tastytraders will show you how to optimize your approach to trading with practical takeaways. You can go beyond stock trading when you learn to trade smarter, not harder, with options and futures.
(Podcast) TWIFO 218: What The Heck Is Rates Volatility?
This Week In Futures Options – Options Insider Network
Law & Compliance Division Conference
7 October 2020 – 9 October 2020 • 9:00 AM – 6:00 PM ET
Our virtual Law & Compliance Division conference (L&C-V) will provide a forum to learn and discuss the legal and regulatory issues impacting the derivatives industry. L&C-V meets the needs of multiple levels of practitioners in the industry, from the new law firm associate to the chief compliance officer. Register today & join us, virtually, 7-9 October to explore recent legal and regulatory precedents affecting the futures, options and centrally cleared derivatives markets.
London has almost caught up with New York as the world’s number 1 financial centre, survey finds
Saloni Sardana – Markets Insider
London is catching up with New York as the world’s biggest financial center, and the British capital only needs four more points to beat New York, according to a survey released on Friday.
The most recent edition of the Global Financial Centres Index (GFCI), compiled by consultancy firm Z/Yen, and the China Development Institute, showed London held on to the number two spot, showing no change since March, but its rating increased by 24 points.