FX options are poised for growth; Details on CME Options on Bitcoin Futures Released

Nov 8, 2019

Lead Stories

FX options are poised for growth
Paul Houston – Open Markets
Data from the latest Bank of International Settlements survey shows that daily FX options trading globally rose 16% since April 2016 to $294 billion per day in April 2019, however it is still 13% below the $330 billion mark from 2013. The six years of mostly flat volume growth in options is surprising given the broader FX market has seen continued strong growth with this year’s $6.6 trillion a day headline nearly 25% higher than 2013.

Details on CME Options on Bitcoin Futures Released
John D’Antona Jr. – Trader’s Magazine
In response to growing interest in cryptocurrencies and customer demand for tools to manage bitcoin exposure, CME Group previously announced it would launch options on Bitcoin futures (BTC) in early 2020. According to CME Group, the contracts are slated to be launched in Q1-2020, pending internal and regulator approval. CME options on bitcoin futures settle into 1 bitcoin futures contract upon termination of trading. CME bitcoin futures are based on the CME CF Bitcoin Reference Rate (BRR), which aggregates bitcoin trading activity across five major cryptocurrency spot exchanges between 3:00 p.m. and 4:00 p.m. London time.

Trading Slump Deepens: It’s as If JPMorgan and Goldman Vanished
Matthew Leising – Bloomberg
Almost 20 years ago, when Susan Estes was running Deutsche Bank AG’s fixed-income desk in New York, she’d field calls from clients looking to put on $4 billion spread trades in the U.S. Treasury market.
Plenty has advanced from those days. Trades don’t require a phone call anymore and are executed faster than ever, and the Treasury market itself is four times as big as it was. But one key element has regressed: Banks’ willingness to take on risks of that size. To get the same rate as Estes would’ve charged on that $4 billion trade, clients today could only pull off $250 million, she said.

Opinion: The S&P 500’s upside momentum is intact
Lawrence G. McMillan – MarketWatch
The S&P 500 index is putting on a bullish show of spectacular proportions. After making new all-time highs in late October, it added sharply to those gains by gapping higher on two consecutive days – Nov. 1 and Nov. 4. The last of those gaps was closed on Nov. 6. The point is that these gaps are positive, and the S&P SPX, +0.06% chart has strongly bullish momentum. Its moving averages are all trending strongly higher — even the 200-day moving average.

Regulation & Enforcement

Traders: Managing Risk or Risking Jail
Jeffrey D. Martino and Ivory L. Bishop Jr. – Traders Magazine Online News
As the trial against a former foreign exchange (FX) trader charged with price fixing kicked off in a Manhattan court this month, it is important to understand that criminal antitrust exposure has increased for traders at global banks dramatically over the past 10 years due to the expanding reach of U.S. antitrust law.


Vela’s Metro Trading System Expands Market Data Coverage
Trader’s Magazine (press release)
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading solutions, announced the integration of its Metro trading platform with its award-winning services, SuperFeed and DMA Platform, for expanded market data coverage and risk management capabilities respectively.


(VIDEO) Options Strategy to Surging Yields
Bloomberg Markets
KKM Financial’s Dan Deming talks market moves and presents an options strategy to trade the drop in bond prices. He speaks on “Bloomberg Markets: The Close.”

The Easy VIX: Sequential Return Risk And Drawdown Protection
Michael Gettings – Seeking Alpha
Sequential return risk is the possibility that the combination of withdrawals and sub-par returns in the early years depletes your retirement nest egg, rendering an otherwise viable plan insolvent sometime before the full retirement horizon. In other words, the investment base depletes early and despite good average returns on the reduced balances over the period, you go broke before you die.

S&P 500: Don’t Get Too Comfortable, A Meltdown Could Occur At Any Moment
Victor Dergunov – Seeking Alpha
The S&P 500 (SP500)/SPX is trading at/or near new all-time highs. In fact, the SPX has surged by a whopping 30% since my “A Significant Rally Could Be Approaching” article was written back on December 24, 2018. Nevertheless, despite the meteoric rise, cracks continue to form in the economic foundation and a significant correction, a mini-meltdown, or even a bear market could occur at any moment.


Local News Media Considered Less Biased Than National News
Megan Brenan – Gallup
Research from Gallup earlier this year found that although a majority of Americans continue to mistrust the media in general, they trust local news sources far more than national sources. Gallup’s latest polling on the subject reinforces this finding that the public perceives less ideological bias in local news than in the national news media. While 53% of U.S. adults think their local news media is ideologically “just about right,” fewer, 39%, say the same of the national news media. A 42% plurality of Americans think the national media is “too liberal” and 13% say it is “too conservative.” While more Americans think their local news is too liberal (26%) rather than too conservative (15%), the figures are lower than those seen for the national media.

How the stock market could trigger the next recession — Quartz
Gwynn Guilford – Quartz
As US business spending tanks and residential investment fizzles, one bulwark against recession remains: the American consumer. That’s why economists are glued to data on hiring, wages, and interest rates—they’re traditional gauges of consumer wellbeing.
But contrary to common belief, the stock market could wind up being just as important.

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