Nasdaq to market new options strike listing tech to other exchanges

May 17, 2024

Observations & Insight

Trading Technologies (TT) celebrated its 30th anniversary yesterday, marking three decades of pioneering advancements in electronic futures trading. Founded in 1994, TT initially revolutionized the industry with its X_TRADER platform, which became the standard for global trading operations, including nearly all major banks. TT CEO Keith Todd sent a message to the staff of TT yesterday and it was posted to LinkedIn. I have summarized it below.

A decade ago, TT further advanced the market by launching its TT platform, embracing SaaS and cloud technologies. Despite initial skepticism, the company now processes billions of transactions annually through its platform.

Currently, TT is evolving into a multi-asset platform designed to manage the full trade life cycle. Through a combination of organic growth and strategic acquisitions, the company is close to achieving this goal.

As TT celebrates this milestone, the company reflects on its journey from its early days of overcoming obstacles to becoming a global technology innovator in the financial markets. CEO Keith Todd expressed gratitude to employees for their contributions and emphasized the company’s continued commitment to innovation.

“Let’s take a moment to pause and celebrate these achievements today as we cross into the next decade,” Todd said. “Congratulations and happy anniversary, TT.”

Today JLN published part two of our Open Outcry Traders History Project interview with veteran trader George Hanley, whose family roots at the Chicago Board of Trade go back more than a century. We have also republished part one. Additionally, we have an exclusive interview with the new CEO of the Greenwood Project, Kwesi Smith

In part two of Hanley’s video, he tells the story of moving to the soybean options pit when it opened on Halloween in 1984 and after learning options trading from some former CBOE traders, quickly becoming the largest trader in the pit. He actually became too big and repeatedly exceeded the position limits and was called before an exchange committee as a result. After his ninth time in front of the committee for violating position limits, which Hanley thinks is still an exchange record, committee Chair John Ruth told him if he saw him in front of the committee again he would be suspended for six months. That was a big problem for a trader with positions that ran out 15 months.

In order to solve his issues, Hanley realized he needed to clone himself and scale his trading. This was the beginning of the Hanley Group, which became the largest agricultural options trading firm in the world for about 10 to 15 years, Hanley said.

Another amazing thing about Hanley’s story is that he was an innovator, moving from city to city, exchange to exchange and trading pit to trading pit, as new markets opened up and needed liquidity providers. He was there at the beginning of many markets in the late 1970s and early 1980s, including CDs, T-Bills, Eurollars, Bonds, Rice (in New Orleans) and soybean options. His firm, the Hanley Group, also created another company, Blink Trading, that created the first electronic trading cross exchange spread engine. He would sell Blink Trading to GETCO four years after founding the company in a deal for $2.5 million and make one of the biggest investing mistakes of his career when he took cash rather than stock in GETCO.

As I interviewed Hanley and learned more about his story, it sounded like a story that belonged in the FIA Hall of Fame. Maybe next year I will nominate George. ~JJL

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Veteran Trader George Hanley Shares Family’s Legacy in Trading at CBOT in Open Outcry Traders History Project Interview
JohnLothianNews.com

In an interview for the Open Outcry Traders History Project, veteran trader George Hanley recounted the rich history of his family’s involvement with the Chicago Board of Trade (CBOT). The interview, part one of three parts conducted by John Lothian News for the MarketsWiki Education video series, explored the Hanley family’s deep-rooted connections to the trading world, dating back to the early 20th century.

Watch the video »

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George Hanley Reflects on Trading Career in Second Interview Segment of Open Outcry Traders History Project Interview
JohnLothianNews.com

In the second part of the Open Outcry Traders History Project interview with veteran trader George Hanley for the MarketsWiki Education series, Hanley shares insights into his dynamic trading journey.

Watch the video »

Lead Stories

Nasdaq to market new options strike listing tech to other exchanges
Emma Hilary Gould – Waters Technology
Last year, Nasdaq began using predictive AI in its US options markets, and now it is looking to sell that tech to others.
The exchange operator is in talks with clients to determine if the product, which uses predictive AI to estimate whether an options strike is likely to trade or not, could be used by and sold to other exchanges as part of its market technology business.
/jlne.ws/4bzWqFe

Copper Short Squeeze in New York Is Rocking Metals Markets
Bloomberg
A massive dislocation between the prices for copper traded in New York and other commodity exchanges has rocked the global market for the metal and prompted a frantic dash for supplies to ship to the US. The source of the disruption is a short squeeze that has driven up prices on the Comex exchange in recent days. The premium fetched by New York copper futures above the London Metal Exchange price has rocketed to an unprecedented level of over $1,200 per ton, compared with a typical differential of just a few dollars.
/jlne.ws/3yo3QNh

Ferocious CME copper squeeze presages future turbulence
Andy Home – Reuters
The copper rally turned ugly this week, morphing into a ferocious short squeeze on the U.S. contract operated by CME Group.
CME cash copper hit a record high of $5.1775 a lb, or $11,414 a metric ton, on Wednesday amid extreme tightness in near-dated time-spreads.
/jlne.ws/4dNgA0m

GameStop Extends Rout on Falling Sales, Plan to Sell Shares
Subrat Patnaik and Bre Bradham – Bloomberg
GameStop Corp. shares tumbled for a third day after the company said it may sell up to 45 million shares, further demolishing the meme-fueled rally that had sent the stock soaring at the start of the week.
The shares plunged as much as 25% on Friday after the company said it could sell class A stock in an open market agreement, and reported a drop in preliminary first-quarter net sales. The stock has largely reversed the rally that took it up 179% to start the week, shedding more than $8 billion in value over the three-day retreat.
/jlne.ws/3K8L2nK

The Option Block 1285: MEME Stock Shenanigans
Option Block – Options Insider (Audio)
We’re back with another episode of The Option Block brought to you by Cboe Global Markets.
/jlne.ws/4bKJjkf

Why DJT and Trump Media Fail the Meme Stock Test
Adam Clark – Barron’s
Trump Media & Technology Group stock was rising early on Tuesday but it was trailing behind the rally in meme stocks. That is evidence that the owner of Truth Social might not be as heavily targeted by short sellers as other volatile stocks.
/jlne.ws/3K56tpN

Exchanges

Nodal Exchange named Commodity Exchange of the Year by Energy Risk
Nodal Exchange
Nodal Exchange has been named Commodity Exchange of the Year for the second year in a row by Energy Risk magazine. The Energy Risk Awards recognize excellence in financial risk management across the global commodities markets. Energy Risk presented the Commodity Exchange of the Year award at a ceremony in Houston yesterday. Nodal Exchange is a leader in innovation, having introduced the largest set of electric power locational (nodal) futures and options contracts and the largest set of environmental futures and options contracts in the world. In addition, Nodal Exchange lists natural gas contracts. Nodal Exchange is the market leader in North American power futures achieving 55% share of open interest at the end of April 2024. Nodal posted a record quarter in Q1 2024 with 892 million MWh traded power futures volume, surpassing Q1 2022’s record of 850 million MWh.
/jlne.ws/3V1qOmi

Strategy

Bearish Call
Cboe (Video)
So how exactly are bear call credit spreads structured — and what are some of the opportunities and risks they present? Joel Hawthorne @louiswinthrop breaks it all down in today’s #Vol411.
/jlne.ws/3wEHWVw

Education

Understanding the Life Cycle of an Option Trade
OIC
The life cycle of an option trade starts once an investor, with an approved option trading account, and who has placed an order for a trade receives a fill notification for an option order that was entered into a trading platform, routed to, and then subsequently filled on an options exchange. Even though that process may appear straightforward, the reality is more complex than the summary suggests.
With every one of the millions of options contracts traded per day, there are numerous required steps and participants operating behind the scenes to ensure that each contract makes it all the way through to settlement.
/jlne.ws/4aoDecn

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