Market swings are a sign ‘something is lurking,’ says strategist who called ’08 crisis; US stocks rally at end of turbulent month

Sep 30, 2020

Observations & Insight

JPMorgan: “tens of thousands of episodes of unlawful trading”
Government Settles Complaint Against Banking Giant For Almost $1 Billion
Thom Thompson – John Lothian News

JPMorgan Chase and Co has agreed to pay the U.S. government $920 million in fines and disgorgement to settle spoofing charges. It is the largest payment ever agreed to by a defendant to settle a futures market manipulation charge.

In a case that has been brewing for the past several years, the U.S. Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission announced a joint settlement with JPMorgan for spoofing in metals futures, U.S. Treasury futures, and the Treasury securities cash market for a period from 2008 to 2016.

As part of the settlement the DOJ has agreed to defer prosecution for three years, during which the bank is to report any violations involving it or its employees and to document and report all of its undertakings to remediate trading violations that occur or have occurred.

To read the rest of this story, go HERE.


MR: MIAX PEARL, Miami International Holdings’ (MIH) first equities exchange, completed its first day of live trading yesterday. 16 member firms participated in the nascent exchange’s launch on September 29. 888 orders were sent, resulting in 30 trades for 2,075 total shares traded. According to an email statement by MIH Chairman and CEO Thomas Gallagher, the exchange experienced no operational or technical issues.

Lead Stories

Market swings are a sign ‘something is lurking,’ says strategist who called ’08 crisis
Andrea Riquier – MarketWatch
The ups and downs in the stock market over the past few weeks haven’t been fun for anyone – though they arguably help keep financial journalists employed.
Here’s another thought. The recent pattern may be more than just the normal course of business – and perhaps something to pay attention to.

US stocks rally at end of turbulent month
Naomi Rovnick and Colby Smith – FT
US stocks rallied on the final morning of a choppy month, with investors remaining wary of heightened volatility on the world’s main equity markets ahead of the November presidential election. The tech-focused Nasdaq index climbed 1.4 per cent by midday trading, with the broad-based S&P 500 up 1.3 per cent. The gains came in spite of a chaotic first debate between Donald Trump and Democratic challenger Joe Biden on Tuesday evening. The US president, when asked repeatedly whether he would commit to respecting the results of November’s election, instead reiterated his assertions of widespread voter fraud.

Chaotic U.S. election debate fuels investors’ fears of contested result
Elizabeth Howcroft, Noel Randewich and Stanley White – Reuters
U.S. equity futures fell and volatility indicators turned jumpy as a chaotic presidential debate between incumbent Donald Trump and Democratic challenger Joe Biden heightened fears that a disputed ballot could lead to a messy transfer of power.

*****MR: See also: “U.S. presidential debate reinforces election fears in options markets” from April Joyner at Reuters.

Robinhood Users Weren’t as Reckless as Portrayed During Rally
Sarah Ponczek – Bloomberg
Working paper finds main retail trader holdings aren’t crazy; Individual dip buying likely eased, not aggravated, stocks
Sarah Ponczek – Bloomberg
Bankrupt companies, obscure electric-vehicle makers, options fliers, SPACs — each has captured the attention of Robinhood users this year, prompting mockery and taunts from professional investors. But the image of the investing app’s clients spending their days loading up on fad stocks doesn’t accord with reality, according to a new working paper published by the National Bureau of Economic Research titled, “Retail Raw: Wisdom of the Robinhood Crowd and the Covid Crisis.” Rather, it seems, the typical Robinhood user’s portfolio is kind of boring, and evidence shows these small traders helped stabilize markets during the Covid-19 crash.

Lombard Odier’s Monier: No Cheap Way to Hedge Against Upcoming Volatility
Bloomberg (VIDEO)
Lombard Odier CIO Stephane Monier discusses the upcoming U.S. election and market volatility. He speaks with Bloomberg’s Anna Edwards on “Bloomberg Markets: European Open.”

Exchanges and Clearing

The new Website – what has changed?
Eurex refreshed its brand, resulting in new colors, imagery, typefaces, logos on the Website. We sat down with Cornelius Müller, Head of Marketing, to find out what else changed. A new design on the website. Anything else new? A new domain! We moved from to This is now the leading site featuring all the Eurex services from Listed Derivatives, Clearing to Repo. A single domain reflects how we see ourselves and also how the market perceives us: One Eurex. This is also reflected in the branding where we have the same look and feel across the entire Eurex universe. And, fresh new visuals are applied throughout all pages – have fun discovering it.

MIAX PEARL Equities Completes First Day of Live Trading
Miami International Holdings
Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX, MIAX PEARL and MIAX Emerald exchanges, today announced that its first equities exchange, MIAX PEARL Equities, completed its first day of live trading in the symbol NTGR (NETGEAR Inc.). Additional symbols are expected to begin rolling out on October 2, 2020. With its launch, MIAX PEARL Equities joins current options exchanges MIAX Options, MIAX PEARL and MIAX Emerald as part of the MIAX Exchange Group.

CCP12 First 2020 Newsletter
Dear Reader,
Welcome to the First 2020 Newsletter of the Global Association of Central
Counterparties, also known as “CCP12”.
2020 is a challenging year for all of us. The CCP12 team hopes that you and your family
and colleagues are safe and in good health. The global pandemic affected all kinds of
industries as well as the CCP industry. But once again, CCPs showed their resilience and
that they are a safe haven for market participants during extreme periods of stress.
CCP12 hosted the first Virtual Annual General Meeting, at which CCP12 members
elected a new Executive Committee. You can find more about this on page 3.

MIAX Options Exchange and MIAX PEARL Options Exchange – Delisting of Craft Brew Alliance, Inc. (BREW)
Craft Brew Alliance, Inc.(BREW) will be de-listed from the MIAX Options Exchange and MIAX PEARL Options Exchange effective on Thursday, October 1, 2020. All GTC orders resting on the MIAX order books in BREW will be canceled at the close of business on Wednesday, September 30, 2020.

Regulation & Enforcement

JPMorgan pays largest CFTC penalty ever of $920 million and admits wrongdoing in market-manipulation case
Matthew Fox – Markets Insider
JPMorgan agreed to pay $920 million and admit wrongdoing to resolve a case over claims of market manipulation in the trading of precious metals and Treasury securities, Bloomberg first reported on Tuesday.


Cassini Systems Named Post-Trade Solution of the Year in Global Investor Group’s Investment Excellence Awards
PR Newswire (press release)
Cassini Systems, the leading provider of pre- and post-trade margin and collateral analytics for derivatives markets, today won Global Investor Group’s Investment Excellence Award for Post-Trade Solution of the Year. A panel of judges composed of senior market participants selected the winners from shortlists identified by the Global Investor editorial team.


4 stock-market experts break down how to invest heading into ‘uncertain’ US presidential election
Emily Graffeo – Markets Insider
“Stocks exposed to tax reform and the health care sector appear to be most clearly demonstrating their sensitivity to the election outcome,” a team of Goldman Sachs strategists wrote in a Tuesday note. “Our options strategists pointed to the opportunity they see in health care call options given the sector’s unusual implied volatility discount and depressed valuations.”


Law & Compliance Division Conference
7 October 2020 – 9 October 2020 • 9:00 AM – 6:00 PM ET
Our virtual Law & Compliance Division conference (L&C-V) will provide a forum to learn and discuss the legal and regulatory issues impacting the derivatives industry. L&C-V meets the needs of multiple levels of practitioners in the industry, from the new law firm associate to the chief compliance officer. Register today & join us, virtually, 7-9 October to explore recent legal and regulatory precedents affecting the futures, options and centrally cleared derivatives markets.


Biden Advantage? Here’s What Market Analysts Are Saying About a Chaotic Presidential Debate.
Barbara Kollmeyer – MarketWatch via Barron’s
The day after what many are calling a chaotic and contentious presidential debate, analysts are nose to the grindstone, trying to figure out what, if anything, it means for markets and the coming election.
U.S. stock futures fell on Wednesday, with European stocks also dropping, as investors reeled from the back-and-forth arguing between incumbent President Donald Trump and Democratic contender Joe Biden, which never managed a proper debate on the key topics.

These Stocks Have Rallied More Than 400% This Year
Gunjan Banerji and Peter Santilli – WSJ
The stock market’s star performers are shining brighter than ever and creating a stark divide with the rest of the pack.
More stocks skyrocketed at least 400% at some point in the first three quarters of the year than in any comparable period since 2000, according to a Dow Jones Market Data analysis of companies that were worth at least $100 million to start the year.

John Lothian Newsletter

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Past Options Newsletters

The Spread – July 30, 2021

The Spread – July 30, 2021

Earnings season in full bloom; Options lead year-to-date derivatives volume; Robinhood’s IPO; John gets real with Get Real VR: Conflicting factors underpin volatility; Cboe cleared for fall European competition; and the Cboe Options Institute’s Kevin Davitt talks about vega in this week’s “Term of the Week.”

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