Nasdaq Whale Emerges as Facebook, Amazon See Option Trades; OCC Clears New Annual Exchange-Listed Options Industry Volume Record

Oct 2, 2020

Lead Stories

Nasdaq Whale Emerges as Facebook, Amazon See Option Trades
Katherine Greifeld – Bloomberg
Tens of millions of dollars in options trades tied to the biggest American technology companies have again surfaced in U.S. markets, weeks after the Japanese conglomerate SoftBank Group Corp. was linked to similar wagers.
Amazon.com Inc., Facebook Inc. and Netflix Inc. were among companies that saw block trades of call contracts Thursday, representing speculation on movements in their shares through the first months of next year. Call options are bullish bets by themselves but can also be paired with other positions as part of a hedge.
/jlne.ws/2Giu5de

****JB: Also see the Reuters article, Options investor makes big bets on Nasdaq’s popular ‘FANG’ stocks.

OCC Clears New Annual Exchange-Listed Options Industry Volume Record
OCC
OCC, the world’s largest equity derivatives clearing organization, announced today that September 2020 total cleared contract volume was 670,994,045 contracts, bringing total cleared contract volume to-date to 5,453,292,830 for 2020 and surpassing the annual volume record for the U.S. exchange-listed options industry. The previous record was 5.24 billion cleared contracts in 2018.
/jlne.ws/2GsFDKM

Traders Warn of Market Volatility as Trump Tests Positive
Bloomberg
Intense volatility, a stock slump and more delays on a stimulus package are some of outcomes investors are considering after President Donald Trump tested positive for Covid-19.
Trump’s diagnosis adds another element of uncertainty to a market that’s already been sizing up the potential for a legal battle or political chaos after the Nov. 3 vote. Now, investors are contending with the possibility of Trump’s ill health and how it could affect the U.S. government.
/jlne.ws/3nmzmBs

Stock bullishness across Wall Street is back to pre-pandemic levels – and will likely spike even more after the US election, BofA says
Ben Winck – Markets Insider
After months of virus fears, record-breaking rallies, and unprecedented stimulus, Wall Street’s outlook for stocks is back to its pre-pandemic norm.
Bank of America’s Sell Side Indicator – which measures stock bullishness among Wall Street strategists – climbed to 56% in September, its highest since the coronavirus crisis began. The gauge latest reading sets a 12-month S&P 500 target of 3,734, implying an 11% return for the benchmark.
/jlne.ws/30sftPg

Exchanges and Clearing

CME Group Reports September and Third-Quarter 2020 Market Statistics
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today reported its September and third-quarter 2020 market statistics, showing it reached average daily volume (ADV) of 15.6 million contracts during the quarter and 16.9 million contracts during the month of September. Market statistics are available online in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/jlne.ws/30s131Y

Amendments to CME, CBOT, NYMEX/COMEX Rule 588.C. (“Trade Cancellations and Price Adjustments”) and Rule 588.H. (“Globex Non-Reviewable Trading Ranges”) Table Relating to all Option Contracts
CME Group
To Members, Member Firms and Market Users
From Market Regulation Department
# SER 8458
Notice Date 02 October 2020
Effective Date 18 October 2020
Effective Sunday, October 18, 2020 for trade date Monday, October 19, 2020, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME”), The Board of Trade of the City of Chicago, Inc. (“CBOT”), New York Mercantile Exchange, Inc. (“NYMEX”) and Commodity Exchange, Inc. (“COMEX”) (collectively the “Exchanges”) will adopt various amendments to CME, CBOT, NYMEX/COMEX Rule 588. (“Trade Cancellations and Price Adjustments”) and Rule 588.H. (“Globex Non-Reviewable Trading Ranges”) table (the “Table”) to change the process for adjusting prices and cancelling trades for all option contracts (collectively, the “Rule Amendments”).
/jlne.ws/3iphYrZ

Amendments to CME, CBOT, NYMEX/COMEX Rule 588.C. (“Trade Cancellations and Price Adjustments”) and Rule 588.H. (“Globex Non-Reviewable Trading Ranges”) Table Relating to all Option Contracts
CME Group
Effective Sunday, October 18, 2020 for trade date Monday, October 19, 2020, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME”), The Board of Trade of the City of Chicago, Inc. (“CBOT”), New York Mercantile Exchange, Inc. (“NYMEX”) and Commodity Exchange, Inc. (“COMEX”) (collectively the “Exchanges”) will adopt various amendments to CME, CBOT, NYMEX/COMEX Rule 588. (“Trade Cancellations and Price Adjustments”) and Rule 588.H. (“Globex Non-Reviewable Trading Ranges”) table (the “Table”) to change the process for adjusting prices and cancelling trades for all option contracts (collectively, the “Rule Amendments”).
/jlne.ws/2EU9mfb

CME Group Records Marginal Uptick in September’s FX Demand
Arnab Shome – Finance Magnates
US derivatives giant CME Group has published its training volumes for the month of September and also the last quarter, showing mixed market demands across various segments. Demand for foreign exchange (forex) contracts marginally went up by 1.7 percent month-on-month as 829,000 such derivatives contracts changed hands in September. FX also recorded a healthy uptrend as trading of these derivatives continuously went up in the last four months.
/jlne.ws/3jqRHL0

MIAX Exchange Group – Options Markets – Option Class to be added to the Penny Interval Program Beginning Friday, October 2, 2020
MIAX Options
The following option class will be included in the MIAX Exchange Groups’ Penny Interval Program at the start of trading on Friday, October 2, 2020;
BigCommerce Holdings, Inc. (BIGC)
As part of the MIAX Exchange Groups’ Penny Interval Program, select options will trade in $0.01 increments when priced below $3.00. Options priced at $3.00 and above will trade in $0.05 increments.
/jlne.ws/2GzWTO7

MIAX Exchange Group – Options Markets – Corporate Action Alert: Aduro Biotech, Inc. (ADRO)
MIAX Options
Aduro Biotech, Inc. (ADRO) has announced a reverse spilt effective for Friday, October 2, 2020. On that date, the current ADRO option class will change to ADRO1. The MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange will not list ADRO1 options. Therefore, no options on ADRO will be available for trading on Friday, October 2, 2020. Aduro Biotech, Inc. (ADRO) will resume trading on the the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange on Monday, October 5, 2020.
/jlne.ws/3ndWQbG

MIAX Exchange Group – Options Markets – Delisting of E*TRADE Financial Corporation (ETFC)
MIAX Options
E*TRADE Financial Corporation (ETFC) will be de-listed from the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange effective on Monday, October 5, 2020.
All GTC orders resting on the MIAX order books in ETFC will be canceled at the close of business on Friday, October 2, 2020.
Additional details about the E*TRADE Financial Corporation (ETFC) merger are provided in the attached OCC Memo.
/jlne.ws/30uGLVl

Experts assess impact of new EU CCP recovery and resolution framework
Jeff Reeves – FIA.org
Recent regulatory actions show an increased focus on issues surrounding CCP recovery and resolution. And based on the EU’s new CCP Recovery and Resolution regime, it seems that policymakers have provided national authorities and CCPs with adequate tools to manage a crisis while also balancing incentives for all participants to appropriately manage risk.
That was the key takeaway from a recent FIA webinar on the topic. Access a recording of the hour-long discussion here.
/jlne.ws/2HU2ksd

Regulation & Enforcement

NOTICE OF SUMMARY ACTION # CME-RSRH-20-5879
CME Group
Effective Date 01 October 2020
FILE NO.: CME-RSRH-20-5879
MEMBER FIRM: Third Coast Options, LLC
CME RULE VIOLATION: 526.F. BLOCK TRADES
/jlne.ws/2ShvaV6

NOTICE OF SUMMARY ACTION # CBOT-RSRH-20-5948
CME Group
Effective Date 01 October 2020
FILE NO.: CBT-RSRH-20-5948
MEMBER FIRM: MAREX NORTH AMERICA LLC
CBT RULE VIOLATION: CBT Rule 807. Open Long Positions During Delivery Month
/jlne.ws/2GubDhr

Events

Save the Date for the Annual Chicago Conference on Futures and Derivatives
Thompson Coburn LLP
Between the pandemic and the resulting financial devastation, the futures and derivatives markets have displayed unprecedented volatility. Add working from home to the mix and compliance has never been more challenging.
In response, we are offering a two-hour webinar on the current state of regulation and enforcement in our industry. At no cost, you can hear from regulators and enforcement attorneys about the latest developments and earn two hours of CLE.
Tuesday, October 20, 2020
1:00 PM – 3:00 PM CST
/jlne.ws/3ngHKT5

Law & Compliance Division Conference
FIA.org
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.
/bit.ly/3jgx2t1

FIA Legal Opinions Primer
FIA.org
13 October 2020 • 2:00 PM – 3:00 PM BST • Webinar
If you are an experienced user of FIA legal opinions, new to the world of FIA netting and other legal opinions for regulatory capital purposes or just curious as to why FIA maintains a library of legal opinions, please tune in to this FIA webinar where experts from Clifford Chance LLP and FIA will explain the types of legal opinions that FIA maintains, their structure and purpose in the context of regulatory capital requirements. Speakers will also discuss practical aspects of how firms can go about accessing FIA legal opinions, how the legal opinions are reviewed and made available to member and non-member firms. This webinar will focus on the FIA legal opinions procured out of Europe and will not cover the US FCM netting opinions.
/jlne.ws/2SixOds

Miscellaneous

The Stock Trading Revolution: How Robinhood and Its Rivals are Changing Markets
Sarah Ponczek and Katherine Greifeld – Bloomberg
It used to be difficult to trade stocks. Now it’s basically as easy as downloading an app or sending a tweet and what’s more, it’s completely free. Over the past year, there has been a revolution in how people can access the stock market. After a few companies started offering free trades, a move in late 2019 by one giant brokerage — Charles Schwab Corp. — to eliminate fees rippled through the entire industry.
/jlne.ws/3cP24Gd

*****MR: One thing’s for sure – if 2020’s retail trading numbers keep up, especially retail trades from platforms like Robinhood, the options markets will never quite be the same.

(Podcast) TWIFO 219: The Great Nat Gas Coin Flip
This Week in Futures Options – Options Insider Network
Looks like the options market is pricing in pretty much a coin flip in nat gas right now. No real bias in either direction moving away from the $2.50 strike. – Dan Gramza on this episode of This Week in Futures Options.
/jlne.ws/36qAgXq

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