Observations & Insight
So Far, So Good – Updates from Cboe’s Options Trading Floor
By Matt Raebel – John Lothian News
Cboe Global Markets has been reopened for more than two weeks now. How have things been going? According to Cboe, it’s been a smooth ride.
“After a tremendous lift involving nearly all departments across our company,” a Cboe spokesperson said in an email, “we accomplished what could only be described as an extremely successful reopening of the Cboe Options Exchange trading floor.”
To read the rest of this story, go here.
Falling VIX Can Unlock Higher Levels for S&P 500, Evercore Says
Joanna Ossinger – Bloomberg
Stock volatility is dropping toward levels that could further encourage U.S. equity bulls even as warnings about complacency continue to hang over the rally from March’s lows.
The Cboe Volatility Index, a measure of implied equity swings, is now one-third the level reached at the height of the Covid-19 market uncertainty. A move lower would be a bullish sign for U.S. stocks, according to Evercore ISI. But Mizuho Bank Ltd. says it’s also possible investors don’t fully appreciate the chances of sharp swings in markets awash with stimulus.
Dow Jones Industrial Average Drops as VIX Remains Too High
Ben Levisohn – Barron’s
A few hundred points here, a couple hundred points there, and the market is, as some have called it, “violently flat.” A look at the Cboe Volatility Index, or VIX, explains why.
The Dow Jones Industrial Average has dropped 207.71 points, or 0.8%, after the blue-chip benchmark gained 459.67 points on Monday.The S&P 500 has fallen 0.3%, and the Nasdaq Composite has advanced 0.1%. The VIX, known as the market’s fear gauge, has gained 0.2% to 28.
Stocks could fall 40% in a collapse mimicking the Great Depression, famed economist Gary Shilling says
Ben Winck – Markets Insider
The stock market faces a second, Great Depression-style downturn if investors realize how long-lasting the coronavirus’ fallout will be, economist Gary Shilling said.
Equities have cooled from their surging bull run as investors mull the odds of a second economic slump and the effectiveness of nationwide reopenings. The market’s meteoric rise through the second quarter mirrors a similar move made in 1929, when equities soared after a steep plunge. The bounce-back didn’t last. Markets tanked a second time in the early 1930s as investors stepped back and grasped the Great Depression’s economic toll.
Volatility Traps Threaten Asia Currency Traders This Summer
Ruth Carson – Bloomberg
Asia investors hunkering down for a lull in currency market volatility this summer may be in for a shock.
Two of the region’s highest-yielding currencies — Indonesia’s rupiah and India’s rupee — look particularly vulnerable in July and August, when liquidity is traditionally thinner as traders take their holidays, according to analysts. Surging coronavirus infections, billion dollar stimulus measures and controversial debt monetization plans threaten to reignite volatility.
Canada’s $16.5 Billion ETF Binge ‘One for the History Books’
Divya Balji – Bloomberg
Investors in Canada are piling back into exchange-traded funds at levels not seen since the start of the Covid-19 pandemic.
Canadian ETFs attracted net flows of C$4 billion ($3 billion) in June, the most since February. About C$2.5 billion went into equity funds, with the money spread among regions in a “remarkable display of risk appetite on the part of ETF investors after waves of pandemic-induced volatility,” Daniel Straus, vice president of ETFs and financial products research at National Bank of Canada, said in a report.
Exchanges and Clearing
Cboe Brings US Market Structure To European Derivatives
Shanny Basar – MarketsMedia
Cboe is bringing US-style market structure for equity futures and options to Europe by launching an exchange with a central order book to provide on-screen liquidity and a single point of access for trading and clearing across the region.
Last week Cboe Global Markets completed its acquisition of EuroCCP, the pan-European equities clearing house. This paves the way for the US group to launch Cboe Europe Derivatives, an Amsterdam-based futures and options market, in the first half of next year subject to regulatory approvals.
NYSE Leads in IPO Proceeds for First Half of 2020 as New SPAC Listings Surge
BusinessWire via Yahoo Finance
The New York Stock Exchange (NYSE), a wholly-owned subsidiary of Intercontinental Exchange (NYSE: ICE), ranked as the leader in U.S. IPO proceeds for the first half of 2020, raising $19.0 billion in new offerings, including a surge of SPAC listings that are increasingly being chosen as an alternative path to the public markets. The NYSE executed 10 of the 15 largest IPOs during the period, including the recent debuts of Albertsons (NYSE: ACI) and Dun & Bradstreet Holdings (NYSE: DNB) on the public markets.
Additional Filing Extension – MIAX Rule 1308 Annual Reports
MIAX Exchange Group (press release)
The MIAX Exchange Group (“MIAX”) is proposing to extend the temporary relief previously granted to member firms for filing of annual reports subject to its Rule 1308 – Supervision of Accounts. Subject to SEC approval, MIAX will extend the filing deadline for member to July 31, 2020.
*****MR: There are three links on this page, each addressing a different exchange in the MIAX Group, including MIAX Options. Each release is essentially the same, though.
Regulation & Enforcement
Options Regulatory Alert #2020 – 25 FINRA CAT Compliance Regulatory Notice 20-20
This FINRA Regulatory Notice 20-20 provides an update on coordination between the national securities exchanges and FINRA on the Consolidated Audit Trail (“CAT”) compliance rules (the “CAT Compliance Rules”). In particular, the national securities exchanges including NOM, BX, PHLX, ISE, GEMX, and MRX (“Nasdaq Options Exchanges”) and FINRA, as CAT NMS Plan Participants, have entered into an amended Rule 17d-2 Plan and corresponding Regulatory Services Agreements to coordinate regulation of the CAT Compliance Rules.
(Webinar) Cross border clearing and market access: EMIR 2.2 and Brexit
8 July 2020 • 9:15 AM – 10:30 AM BST
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.
For press registration, please contact Steve Adamske. Press registration is only available for working journalists.