Dow on verge of 30,000 and first record close in 10 months on back of Apple’s stock surge;

Nov 16, 2020

Observations & Insight

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Lead Stories

Dow on verge of 30,000 and first record close in 10 months on back of Apple’s stock surge
Mark DeCambre – MarketWatch
The Dow Jones Industrial Average on Monday was knocking on the door of a psychologically significant 30,000 milestone, which would mark the first such round-number level for the benchmark since mid January as the stock market attempts to punch higher in the wake of the volatility inspired by the COVID-19 pandemic.
The blue-chip index has traversed some 212 trading days since hitting an important milestone at 29,000 on Jan. 15, but has struggled over the past several months as concerns about the viral epidemic has delivered an outsize hit to the large-capitalization gauge. The index needs to sustain a more than 520-point rally on Monday to get it to 30,000.
/on.mktw.net/3f4VE6L

Stock-market investors are ‘living through 3 transitions’ and short-term volatility may be ‘gut wrenching’
Mark DeCambre – MarketWatch
This is a unique period for financial markets, buffeted not just by a wall of worry but a trifecta of inflection points that could feed off one another in the coming months and is sure to deliver turbulence for investors.
That is the summary of the outlook for Wall Street offered by BTIG researchers in a report featuring chief equity and derivatives strategist Julian Emanuel and equity strategy associate Michael Chu.
/on.mktw.net/38MqFeP

Exchanges and Clearing

Australia bourse apologises for shutdown after software glitch
Jamie Smyth and Philip Stafford – Financial Times
Australia’s biggest stock exchange has apologised after a software fault in a new trading system left investors unable to trade for most of Monday.
ASX Ltd, which runs the market, was forced to halt trading after just 20 minutes because of a glitch that created inaccurate market data, and remained closed for the rest of the day.
/on.ft.com/2KfyhMH

EU derivative clearing showed strong growth in 2019
ESMA
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today publishes its third Annual Statistical Report (Report) analysing the European Union’s (EU) derivatives markets. It provides a comprehensive market-level view of the EU’s derivatives markets in 2019, which had a total size of EUR681tn gross notional amount outstanding, a decrease of 5% on 2018. The Report is based on data submitted under the European Markets and Infrastructure Regulation (EMIR).
/bit.ly/3faXCCL

NYSE Arca Options: Reduction of Minimum Allowable Parameter for Transaction-Based Risk Mitigation on Orders
NYSE
On Monday, November 16, 2020, NYSE Arca Options will be modifying the minimum allowable parameter for Transaction-based Risk Mitigation for orders, per Rule6.40-O, Commentary .03. The minimum allowable parameter will be reduced to 1 transaction, from the current minimum of 3 transactions.
/bit.ly/38N145x

Reminder – Monday November 23: Strike Price Format Change for Eurodollar and SOFR Options in SPAN and Settlement Price Files
CME Group
Please be reminded that effective Monday, November 23, 2020, CME will begin listing strikes for options on Three-Month Eurodollars and Three-Month SOFR at intervals of 6.25 basis points (0.0625 index points), and hence strike price formats for these options in daily SPAN and settlement price files will be modified so that they are all consistent, with four implied decimal places and without any usage of assumed trailing digits.
/bit.ly/3f54wtb

Options Regulatory Alert #2020 – 39 UPDATED – PHLX, NOM, BX, ISE, GEMX and MRX – Weekly Quote Spread Parameter Relief November 16, 2020 through November 20, 2020
NasdaqTrader.com
Effective November 16, 2020, the updated market maker quarterly quote width requirements on Nasdaq PHLX (PHLX), The Nasdaq Options Market (NOM), Nasdaq BX (BX Options), Nasdaq ISE (ISE), Nasdaq GEMX (GEMX) and Nasdaq MRX (MRX) will be effective November 16, 2020 through November 20, 2020. The exchanges may, in their discretion, amend these requirements by providing notice to members.
/bit.ly/3pxLuk0

ABS and SGX RegCo enhance due diligence standards
SGX
The Association of Banks in Singapore (ABS) announced today an enhancement of the ABS Listings Due Diligence Guidelines, which have been revised in close collaboration with Singapore Exchange Regulation (SGX RegCo) to raise standards of due diligence conducted on companies planning to list on Singapore Exchange (SGX). The updated Guidelines launched today are an enhancement from the previous guidelines which were last revised in 2016. They set out expectations and recommendations on due diligence work that issue managers and full sponsors carry out during the initial public offer (IPO) / reverse takeover (RTO) and listing process.
/bit.ly/3prTIu4

Reminder – Monday November 23 – Strike Price Format Change for Eurodollar and SOFR options in SPAN and Settlement Price Files
CME Group
Please be reminded that effective Monday, November 23, 2020, CME will begin listing strikes for options on Three-Month Eurodollars and Three-Month SOFR at intervals of 6.25 basis points (0.0625 index points), and hence strike price formats for these options in daily SPAN and settlement price files will be modified so that they are all consistent, with four implied decimal places and without any usage of assumed trailing digits.
/bit.ly/36vWcig

Time for Exchanges to Overcome Longstanding Barriers to Fair Pricing
Sylvain Thieullent – Traders Magazine
From Euronext beating off stiff competition for the Milan stock exchange, to Cboe agreeing to purchase block trading venue BIDS, October was quite the month for exchange deal making. But given how so many post-2008 regulations aimed to increase exchange competition as opposed to reducing it, this recent flurry of merger activity has left many pondering what the knock-on effect will be on European market structure.
/bit.ly/2Uz901G

Change to the Market for Underlying Security Used for Openings on MIAX Options, MIAX PEARL and MIAX Emerald for Symbol CGC Effective November 16, 2020
MIAX Options
Canopy Growth Corporation (“CGC”) will transfer primary listing from the New York Stock Exchange to the NASDAQ Global Select Market (“NASDAQ”) effective Monday, November 16, 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.
/bit.ly/3lDvkTZ

MIAX Exchange Group – Options Markets – New Option Listings for 11/16/2020
MIAX Options
The option classes listed below will begin trading on the MIAX Options Exchange, the MIAX PEARL Options Exchange, and the MIAX Emerald Options Exchange on Monday, November 16, 2020:
/bit.ly/2UzuqvD

Market for Underlying Security Used for Openings on MIAX Options for Newly Listed Symbols Effective Monday, November 16, 2020
MIAX Options
MIAX Options Regulatory Circular 2020-66 identifies newly listed option classes and the market for the underlying security for purpose of Openings on the Exchange.
/bit.ly/2Hcrfao

Effective November 16, 2020 through November 20, 2020, MIAX Options and MIAX Emerald 2X Opening and Intraday Valid and Priority Quote Spread Relief in All Symbols
MIAX Options
Issue Symbol: All Symbols
Multiplier: 2X
Reason: In maintenance of a fair and orderly market.
Time: Opening and Intraday
Subject Summary: Please be advised, effective November 16, 2020 through November 20, 2020, the MIAX Regulation Department has granted 2 times opening and intraday quote parameter relief for all symbols on MIAX Options and MIAX Emerald.
/bit.ly/3pAT1yE

MIAX Exchange Group – Holiday Schedule – Thanksgiving 2020
MIAX Options
Please be advised that the MIAX Exchanges will be closed on Thursday, November 26, 2020 in observance of the Thanksgiving Holiday. On Friday, November 27, 2020, the MIAX Exchanges will have an abbreviated trading session. All Option Classes and Equity Issues will close 3 hours early.
/bit.ly/2IJ2FOu

MIAX Exchange Group – Options Markets – Corporate Action Alert: Pfizer Inc. (PFE)
MIAX Options
Pfizer Inc. (PFE) has announced a distribution effective for Tuesday, November 17, 2020. On that date, the current PFE option class will change to PFE1. The MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange will not list PFE1 options. Therefore, no options on PFE will be available for trading on Tuesday, November 17, 2020.
/bit.ly/32PaZ6G

Regulation & Enforcement

EU regulators seek solution to post-Brexit derivatives rule clash
Jim Brunsden, Philip Stafford and David Keohane – Financial Times
European regulators are racing to avoid London branches of EU banks having to route derivatives trades through New York, if Brussels fails to deem the City’s regulatory standards robust enough after Brexit.
Officials are working on emergency tweaks to rules in the event the UK and the EU do not grant sufficient access rights to each other’s financial services markets, in a set of so-called equivalence decisions, before Britain leaves the bloc on December 31.
/on.ft.com/2Uz5SCY

SR-NASDAQ-2020-075
Nasdaq
A proposal to amend The Nasdaq Options Market Rules at Options 4, Section 3, Criteria for Underlying Securities, Options 4, Section 5, Series of Options Contracts Open for Trading, and Options 4, Section 6, which is currently reserved, to relocate certain rule text and make other minor technical amendments.
/bit.ly/2UfQprj

SR-CBOE-2020-106
Nasdaq
The Exchange proposes to amend its Rules regarding the minimum increment for electronic bids and offers, as well as the minimum increment for exercise prices, of certain FLEX Options and clarify in the Rules how the System ranks FLEX Option bids and offers for allocation purposes.
/bit.ly/32P7Gw9

SR-CBOE-2020-110
Nasdaq
The Exchange proposes to amend Rule 5.52(d) in connection with a Market-Maker’s electronic volume transacted on the Exchange.
/bit.ly/35C9F90

Strategy

Morgan Stanley Says Go Risk-On and ‘Trust the Recovery’ in 2021
Joanna Ossinger – Bloomberg
Morgan Stanley strategists said an expected “V-shaped” economic recovery, greater clarity on Covid-19 vaccines and continued policy support offer a favorable environment for stocks and credit next year.
In an outlook for 2021, a team including Andrew Sheets recommended investors overweight equities and corporate bonds against cash and government debt, and sell the U.S. dollar. Volatility is set to decline, and investors should be “patient” in commodity markets, the strategists said.
/bloom.bg/32NkOSy

The S&P 500 is on the verge of ‘upside confirmation’
Lawrence G. McMillan – MarketWatch
The S&P 500 Index has been in a trading range between the September lows at 3,200 points and the early-September highs at 3,588. The benchmark index has moved back and forth rapidly, traversing it four times in two months. But it seemed as if an upside breakout was coming, after the elections.
/on.mktw.net/35BdX0j

Events

Registration is open for FIA’s Asia Derivatives Conference. This year’s virtual conference takes place December 1-3. It will examine the industry’s response to the Covid-19 pandemic and provide insights into what’s on the horizon for the region. For a full list of FIA’s Asia-V conference program and to register, visit FIA.org/asia.~SR

Miscellaneous

With traders far from offices, banks bring surveillance to homes
Bloomberg
In this open-ended era of working from home, the financial industry is taking unprecedented steps to police bankers and prevent wrongdoing.
Traders at firms like Barclays Plc must certify they work in separate rooms to housemates. Morgan Stanley bankers are using laptops where every key stroke is recorded. Lenders including NatWest Group Plc are requiring daily location updates from traders and recording video calls.
/bloom.bg/3f33IoG

(Podcast) Volatility Views 423: Earnings SlaughterFest and a Small Cap Surprise
Volatility Views – Options Insider Network
/bit.ly/36JShyz

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