Observations & Insight
TT’s Todd Talks Talos, Crypto, What Comes Next and Energizing a Motivated Team
Trading Technologies CEO Keith Todd made a deal with Talos, a provider of institutional digital asset trading technology, and John Lothian News wanted to know more about it and what it meant for TT and its customers.
SEC Rule to Promote Order Competition the Focus of Hitesh Mittal JLN Interview
Hitesh Mittal, the CEO and founder of BestEx Research, talked with JLN in a video interview over Zoom, reflecting on the recent comments by SEC Chairman Gary Gensler about promoting more competition in the market.
JPMorgan (JPM) Says Retail Investors Are Finally Bailing on Stocks
Lu Wang – Bloomberg
Some of the last bulls at the party are finally yielding to the bear market, bailing from stocks at the fastest rate in nearly two years.
Retail investors, who’d almost always bought the dip since the pandemic crash, exited shares in the past week, with sales reaching the heaviest since September 2020, according to an estimate by JPMorgan Chase & Co. based on public data on exchanges.
Crude Oil’s Inflation Trade Is Unwinding, Credit Suisse Says
Tassia Sipahutar – Bloomberg
This year’s standout inflation trade of backing commodities is coming under pressure on concern a recession will curb demand for raw materials.
That’s the view of Mandy Xu, head of equity derivatives strategy at Credit Suisse Group AG, who said derivatives-market bets for crude show growing speculation that the deteriorating economic outlook may outweigh supply challenges.
Euro Stoxx 50: Extreme Bearish Bets in European Stocks Can Fuel Rally, JPM Says
Michael Msika – Bloomberg
Extremely bearish positioning in European equity futures could help trigger sharp upside moves in case of positive news, according to JPMorgan Chase & Co. derivatives strategists.
“We conclude that Euro Stoxx 50 futures’ positioning likely remains close to record-short, which could lead markets to respond to news asymmetrically, with a higher likelihood of sharp moves to the upside,” JPMorgan strategists led by Davide Silvestrini said in a note on Wednesday.
Federal Reserve Chair Jerome Powell Has Markets Right Where He Wants Them
Jonathan Levin – Bloomberg
Federal Reserve Chair Jerome Powell believes that monetary policy is carried out through financial conditions, and for the time being he seems to like where they stand. As he told lawmakers Wednesday, “the market has been reading our reaction function reasonably well.”
That markets and the Fed are on the same page is good news for near-term volatility, but Powell’s words also contain a veiled threat: If financial assets recover too far from the recent selloff, he has ways of putting them back in their place. Investors adjust Powell’s dial at their own peril.
Oil Price Outlook: Traders Bet Recession May Trigger Crude Crash
George Glover – Markets Insider
The oil price is heading for its first monthly loss since last November, as fears of recession and demand destruction have hit sentiment, and the options market shows a growing numbers of investors are becoming increasingly bearish.
The factors that drove oil to decade-highs above $140 a barrel just a few weeks ago — surging demand and a potentially massive shortfall in supply thanks to sanctions on Russia over its war in Ukraine — are starting to shift.
Companies Review Hedging Strategies as Strong Dollar Cuts Profits
Coca-Cola, Microsoft and Salesforce are among the companies that have pointed out the negative effect of the strong dollar on their financial results
Nina Trentmann – WSJ
Companies are reviewing their hedging strategies in light of the strong U.S. dollar, which is denting the value of overseas earnings. The strength of the currency also is making some American products less competitive overseas, forcing businesses to look for ways to cut costs as they struggle to maintain margins.
The dollar in recent months has appreciated significantly against other currencies as weaker global economic growth drives investors toward safe havens. Steps by the Federal Reserve to tighten its monetary policy and increase interest rates also support the dollar.
LinkedIn Lists OCC in Top Companies to Work for in Financial Services
OCC, the world’s largest equity derivatives clearing organization, today announced that it was recognized by LinkedIn as a 2022 Top Company in Financial Services for the first time ever. LinkedIn’s annual Top Companies: Industry Edition List highlights the top 25 companies in which to grow a career across nine different industries in the U.S., serving as a resource for professionals at every stage of their career journey.
Record FX Link Volumes Traded on June 16
CME Group, the world’s leading derivatives marketplace, today announced that FX Link volume has reached a new, single-day record of 82,900 contracts (representing over $7.2 billion in notional value) on June 16. The prior FX Link daily volume record was 77,146 contracts on March 10, 2020.
Eurex Bitcoin Futures exceed EUR 100 million traded notional since inception
So far, 2022 marked quite an impressive year for the BTCetc ETN Futures. The traded notional exceeded EUR 100 million compared to last year’s EUR 20 million (+408%).
Since launch in September 2021, the traded notional climbs up to EUR 120 million. The open interest is presently at approximately EUR 10 million notional.
The increase in volatility in the markets have triggered higher activity in the product.
This Options Strategy Can Magnify Your Returns. Here’s How.
Steven M. Sears – Barron’s
You can’t escape time or volatility. You must roll through them. This is more than a life philosophy—it’s part of the options market’s fabric.
Successfully curating stocks with options can add another source of returns to your portfolio, which is especially attractive in a year when stocks are under downward pressure. Rolling options over from one month to another before they expire—”rolls,” in market jargon—can enhance the strategy.
SPX Weekly Options Bonanza: Why Should You Trade Them?
You’re probably familiar with weekly options for single-name equities and exchange-traded funds (ETFs). But are you aware of how retail traders can use weekly options on the S&P 500 Index (SPX) for the same strategies as big institutions—and more? With the recent addition of Tuesday and Thursday expirations, there’s now an SPX option contract expiring every day of the week. And that opens the door for more trading flexibility.
China’s FDL – Overview and Insights
China’s Futures and Derivatives Law (FDL) is a historic development, being the first law in China regulating futures and derivatives trading at a national legislative level. It establishes a legal framework for the development of the futures and derivative markets and introduces a unified set of rules that are expected to pave the way for significant changes in the market.
In this webinar on 22 June, we invited Linklaters Zhao Sheng to provide a regulatory overview of China’s futures market. In addition to addressing key threshold questions for futures clearing under the FDL and issues around client protection, they provided insights on licensing requirements and other issues around cross-border trading. We also sought their views on the broader implications of the FDL, including how market participants and regulators are expected to approach developments under the FDL.