New Variant: Nervous Traders Track Gauges as Markets Wrestle With Omicron

Nov 29, 2021

Observations & Insight

FIA Expo 2021 Video: IncubEx Primed as Interest In Cap-and-Trade Markets Surges

Timing is everything in the derivatives industry. In the case of IncubEx, which develops financial products in environmental, climate risk and related commodity markets, the company appears to be right on time.

In an interview with John Lothian News at FIA Expo, Dan Scarbrough, the founder, president and COO of IncubEx, described his start in the industry with the Chicago Climate Exchange more than 15 years ago. The Intercontinental Exchange bought the Chicago Climate Exchange and its parent company, the Climate Exchange, in 2010.

Watch the video »

Lead Stories

New Variant: Nervous Traders Track Gauges as Markets Wrestle With Omicron
Vildana Hajric – Bloomberg
Friday’s stock-market drubbing reignited coronavirus-related fears for traders. Now, many are taking to reading charts for clues to where prices might settle.
The two key levels to watch for the S&P 500 are 4,546, which represents the September high before that month’s retreat, and 4,489, which is the redrawn long-term uptrend support from the March 2020 and October 2021 lows, according to RBC Capital Markets’s Lori Calvasina. A close below 4,489 would cause damage to the long-term uptrend and signify a roughly 5% decline from year-to-date highs.

4 Currency Market Charts Showing Wild Swing for Volatility: Yen, Euro, Aussie
Vassilis Karamanis – Bloomberg
Currency markets are stabilizing as the week kicks off yet investors are betting on the possibility of further volatility in coming weeks.
Gauges of swings in the options market remain close to levels hit on Friday, when concerns that the Omicron coronavirus variant could derail policy tightening and lead to fresh travel curbs spurred erratic price moves. That’s leaving the cost of hedging elevated and demand for havens in favor.

Currency Volatility Soars as Traders Worry Over New Variant
Maria Elena Vizcaino and Robert Fullem – Bloomberg
Euro, yen one-month implied volatility up the most since 2020; Bloomberg dollar index weakened for the first session in six
Volatility in developed-market currencies spiked by the most in a year as traders digested the impact of the new coronavirus variant discovered in South Africa.

Markets are more fragile than investors think; Calm trading conditions are increasingly interspersed with sharp bouts of volatility
Robin Wigglesworth – FT
Investors have been blithely skating into the Christmas period, basking in another remarkable rally across financial markets. But the ice underneath may be thinner and brittler than many realise, as Friday’s violent sell-off showed.

‘Stay invested’: Major institutions brace for volatility in stocks but remain upbeat in face of Omicron variant
Harry Robertson – Markets Insider
Investors around the world are scrambling to work out what the discovery of a new, highly mutated coronavirus variant might mean for the global economy and markets.
So far, there’s not a huge amount of information on whether the Omicron variant is any more dangerous or transmissible, although reports from southern Africa have said so far many people have only mild symptoms.

Markets are more fragile than investors think
Robin Wigglesworth – Financial Times
Investors have been blithely skating into the Christmas period, basking in another remarkable rally across financial markets. But the ice underneath may be thinner and brittler than many realise, as Friday’s violent sell-off showed.
The past decade has been characterised by unusually calm, strong and long stock market bounces that have occasionally been punctuated by brief but exceptionally ferocious nosedives. This is not a new observation. But there is rising acknowledgment of the phenomenon, mounting research into it and growing understanding of the drivers — even if no one seems to agree on the primary cause.


Three Reasons to Explore Extended Global Trading Hours for SPX and VIX Options
Matt Moran – Cboe Global Markets
Cboe Options Exchange plans to extend global trading hours (GTH) for S&P 500 Index (SPX and SPXW) options and Cboe Volatility Index (VIX Index) options to nearly 24 hours a day, five days a week, beginning November 21, 2021, subject to regulatory review. The expanded trading hours will bring a number of benefits to market participants around the world. Below, we explore some of those benefits and explain why participants may want to join the GTH crowd.

Financial Products News #2021 – 69
Nasdaq Announces Launch of Two New Indexes Effective Tuesday, November 30, 2021
Effective Tuesday, November 30, 2021, Nasdaq will begin disseminating the following new indexes on the Nasdaq Global Index Data ServiceSM (GIDS).
What are the new Indexes?
OMRX is the designation for the Nasdaq Stockholm’s interest-rate indexes, a family of indexes designed to show the value growth trend for a certain type of passively managed portfolio of liquid interest-bearing Swedish securities. OMRXBOND130 index will track the performance of nominal treasury bonds with benchmark status and mortgage bonds represented by benchmark bonds or the equivalent issued by Stadshypotek AB with maturity of 1 to 30 years. OMRXTBOND130 index will track the performance of nominal treasury bonds with benchmark status with maturity of 1 to 30 years.

Margin Rates Update for ICE Futures U.S. Gas Contracts
ICE Futures U.S.
The Exchange is changing the margin requirements for the Energy Contracts listed below effective from the close of business on Monday, November 29, 2021 and reflected in margin calls made on Tuesday, November 30, 2021. Accordingly, Firms carrying accounts with positions in the following contracts should be collecting margin using the updated ICE Risk Model margin parameters: ICE Futures U.S. Gas Contracts

The role of Total Return Futures
Director of product research and development for equity and index at Eurex, Stuart Heath, explains the benefits of TRFs and their future role in the market.
What are total return futures (TRFs)?
Total return futures (TRFs) are centrally cleared and exchange-listed alternatives to total return swaps (TRSs). They’re a synthetic cash instrument whereby one party receives the total returns on an underlying index, or security, until expiry, while at the same time paying the financing costs to the counterparty for providing those returns.

Regulation & Enforcement

FIA submits comments on second reading of China’s draft Futures and Derivatives Law
FIA has submitted comments on the second reading draft of the “Futures and Derivatives Law of the People’s Republic of China” (the “Futures and Derivatives Law”) to the Standing Committee of the 13th National People’s Congress. FIA congratulates the NPC on the publication of the second reading draft of the Futures and Derivatives Law which is a key step in establishing a robust legal framework for China’s futures and derivatives markets.


How to Research Stocks: 5 Steps for Beginners
Bob Haegele – Business Insider
For individual investors, choosing the right stocks can feel like a daunting task. But if you want to manage your own portfolio, you can apply the same kind of techniques that the pros on Wall Street use in their research and analysis.
Not sure how to begin? Use these 5 steps to help guide your approach.

Investors rush into private markets in search of returns
Akila Quinio – Financial Times
Historically low interest rates and high stock valuations are driving return-hungry investors to rush into private markets, with non-publicly listed assets under management expected to rise 60 per cent between 2020 and 2025.
Alternatives — a category of unlisted assets that include private equity, private debt, hedge funds, real estate, infrastructure and natural resources — are set to surpass $17tn in AUM within the next four years. Private equity and private debt will be the main drivers of this growth, according to data provider Preqin.


Cboe expands data and access solutions team with appointment of new director; Incoming director, formerly of AlphaSights and Worldwide Business Research, will be responsible for expanding Cboe’s offerings across the APAC region.
Wesley Bray – The Trade
Cboe Global Markets has appointed Albert Torstensson as its new director of APAC market data sales for its data and access solutions division. Based in Hong Kong, Torstensson will be responsible for expanding Cboe’s entire suite of market data and analytics offerings across the Asia Pacific (APAC) region.


Workers Quit Jobs in Droves to Become Their Own Bosses
Josh Mitchell and Kathryn Dill – WSJ
The pandemic has unleashed a historic burst in entrepreneurship and self-employment. Hundreds of thousands of Americans are striking out on their own as consultants, retailers and small-business owners.
The move helps explain the ongoing shake-up in the world of work, with more people looking for flexibility, anxious about covid exposure, upset about vaccine mandates or simply disenchanted with pre-pandemic office life. It is also aggravating labor shortages in some industries and adding pressure on companies to revamp their employment policies.

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