Observations & Insight
The basic data was out previously, but the Tuesday FIA webinar on third-quarter global derivatives volume and open interest still held a few points of interest. Presenters Will Acworth, senior VP of FIA publications, data and research, and Lisa Cavallari, Russell Investments’ director of fixed income derivatives and commodities, pointed out several highlights of the period. We knew equity contacts, particularly in their new “micro” formulation, have been driving volume growth. Total volume for the third quarter reached 15.8 billion contracts, surpassing a record of 14.8 billion set in the first quarter. Separately, open interest reached a record 1.13 billion contracts at the end of Q3, fueled largely by an increase in trading in North America. Less well known was that the utilization of “global futures” has been growing over the past five years, Acworth said. The stabilization of interest rate futures and options volume around the one billion contract level over the last two quarters also was worth noting, but trading has moved from the once-popular 2-year sector toward the longer end of the yield curve.~SC
Cboe Options Institute will host a free 75-minute webinar on “New Developments in 24 x 5 Around-the-Clock Options Trading” on Wednesday, November 17, at 9 a.m. ET. It’s just in time for the debut of extended global trading hours for SPX and VIX options, which will be lengthened on November 21, subject to regulatory review. More information on the event is here.~SC
John Angelos of Cboe shared this on LinkedIn: Cboe Global Markets is hiring a Director, Credit Derivatives Sales based out of either Chicago or NYC. The ideal background is someone who comes from the credit derivative space and has a deep understanding of the Credit ecosystem, e.g. OTC (CDX, TRS) ETF (HYG, LQD), preferably from a buy-side or sell-side firm. If you or anyone you know is interested in applying, please reach out to Katie at email@example.com. ~JJL
Fear of missing out is driving the stock market — and having this surprising effect as well, research finds
Steve Goldstein – MarketWatch
Tuesday marked the end of a remarkable run of eight straight advances for the S&P 500, and to be honest, apart from Tesla, things weren’t actually that bad — 249 components rose versus 247 that fell.
So what’s driving investment behavior that has sent the S&P 500 up 25% this year? Is it fear of missing out? Yosef Bonaparte, the director of external affairs in finance and associate professor of finance at CU Denver Business School and a Janus Henderson Investors research associate, decided to quantify the term that has been around for around 20 years, and used widely enough that it has spawned academic research and even an exchange-traded fund with FOMO as a ticker. In his own research paper, Bonaparte devises a FOMO index, based on market momentum, Google keyword searches and investor use of margin accounts.
Hedge funds’ FX plays get crushed in red October
Jamie McGeever – Reuters
The recent explosion in interest rate volatility and dramatic repricing of central banks’ near-term policy path has claimed a few victims across the financial market spectrum, none more so than currency-trading hedge funds.
Inflation Was Sharply Higher Than Expected in October
Lisa Beilfuss – Barron’s
The argument that inflation is transitory just got a lot harder to make.
On Wednesday, the Labor Department said consumer prices surged 0.9% in October from a month earlier, pushing the year-over-year rate to 6.2%. That marks the fastest pace of consumer- price inflation since July 1982. It was up sharply from a 5.4% rate in September and far hotter than the 5.8% economists projected.
Tesla will remain volatile until Elon Musk abides by the results of his Twitter poll and sells stock, Wedbush says
Matthew Fox – Markets Insider
Tesla stock will likely remain volatile until CEO Elon Musk abides by the results of his recent Twitter poll and sells 10% of his stake in the company.
Over the weekend, more than 3 million people voted in a Twitter poll held by Musk, who asked his followers if they support him selling 10% of his Tesla stake. A decisive 58% supported Musk selling the stake.
A Tesla bull who runs an ETF loaded with the EV maker’s stock is blowing away most fund managers
Carla Mozée – Markets Insider
Many money managers stay away from Tesla’s volatile, high-priced stock, but for the founder of investment firm Volt Equity, being bullish on the electric vehicle maker has translated into market-beating gains so far this year, according to The Wall Street Journal.
The Volt RoboCar Disruption and Tech exchange-traded fund surged by 36% in October, making it one of the best-performing funds in the US, said the WSJ in a report published Tuesday.
‘This is up from zero just a matter of months ago:’ QCP says its DeFi option trading has hit $250 million a week
Tim Copeland – The Block Crypto
Crypto trading firm QCP Capital is now trading around $1 billion a month in options on decentralized derivatives platforms.
That’s according to Simon Nursey, head of derivatives at Singapore-based QCP Capital, who spoke on Wednesday at an industry conference in Lisbon.
Why Stock Market Will Be Open on New Year’s Eve 2021
Vildana Hajric – Bloomberg
It’s the Grinch That Stole New Year’s.
Thanks to whoever created an obscure piece of New York Stock Exchange red tape — officially known as Rule 7.2 — U.S. equity markets won’t commemorate the start of 2022 with a holiday.
Nasdaq Expands its European ESG Derivatives Offering with Options
Nasdaq (Nasdaq: NDAQ) today announced the launch of options contracts on the OMX Stockholm 30 ESG index. With the new contracts, Nasdaq’s ESG derivatives offering now includes both options and futures contracts based on the world´s first ESG benchmark index, which has grown into one of the most traded indexes in Europe since being launched in June 2018.
The new product has been developed in close collaboration with Nasdaq clients, including Swedbank Robur, and is aligned with Nasdaq’s objective to address the growing demand for more sustainable investment solutions.
Regulation & Enforcement
McKinsey Partner Charged With Insider Trades on Goldman Deal
Bob Van Voris and Sridhar Natarajan – Bloomberg
A McKinsey & Co. partner who advised Goldman Sachs Group Inc. on its impending acquisition of GreenSky Inc. was charged with using inside information about the deal to make more than $450,000 from illegal trades.
Puneet Dikshit, 40, bought short-term GreenSky options before the bank’s Sept. 15 announcement that it planned to acquire the financial technology company for around $2.24 billion and then sold them when shares soared on news of the deal, according to criminal charges unsealed Wednesday in Manhattan federal court. He is also facing a suit by the Securities and Exchange Commission, which alleged that Dikshit reaped a 1,829% return on his $24,647 trade.
****SR: Also see the Wall Street Journal’s story here.
Will Fed Rates Peak Shortly After 2023? Traders Are Betting On It
Edward Bolingbroke – Bloomberg
The Federal Reserve hiking cycle that’s expected to get underway next year might be largely done and dusted shortly after the end of 2023 if traders are right.
While eurodollar futures and options are pricing in numerous quarter point increases in 2022 and 2023, they’re pricing in just one after that, underscoring expectations for a relatively short and slight tightening cycle.
DASH Regulatory Technologies Launches New Security-Based Swaps (SBS) Solution
Dash Financial Technologies
DASH Regulatory Technologies (DRT) – the regtech-focused affiliate of U.S. options technology and execution services provider DASH Financial Technologies – today announced the launch of a new Security-Based Swaps (SBS) add-on to its industry-leading DASH 360R regulatory reporting solution. The solution will enable firms to comply with the CFTC and SEC’s newly implemented rules specifying capital, margin and segregation requirements for U.S. broker-dealers that engage in SBS transactions.
FIA Asia Derivatives Conference
7 December 2021 – 8 December 2021 • 8:00 AM – 2:00 PM SGT
Our annual Asia Derivatives Conference provides unique opportunities for the cleared derivatives community to build an understanding of how global trends along with regional issues combine to shape the Asia-Pacific markets. Make plans to join us virtually, this 7-8 December, to gain insights into what’s on the horizon for the Asia-Pacific region.
McKinsey Partner’s Insider Trading Strategy Was Bad
Also Musk brothers, conglomerates and Mom’s Basement.
Matt Levine – Bloomberg Opinion
The Securities and Exchange Commission today charged Puneet Dikshit, a partner at a global management consulting firm, with illegally trading in advance of a corporate acquisition by one of the firm’s clients in September.
The SEC’s complaint, filed in federal district court in Manhattan, alleges that in the course of providing consulting services, Dikshit learned highly confidential information concerning The Goldman Sachs Group Inc.’s impending acquisition of the consumer loan fintech platform GreenSky Inc. According to the SEC’s complaint, in the days leading up to the acquisition announcement on Sept. 15, 2021, Dikshit used this information to purchase out-of-the-money GreenSky call options that were set to expire just days after the announcement.