No One Has Traded Bitcoin Options on Bakkt for Over a Month; Kyle Bass Copycats Snap Up Bearish Hong Kong Dollar Options

Jul 24, 2020

Observations & Insight

Unsung Heroes: Nasdaq’s Brenda Hoffman
By Sarah Rudolph – John Lothian News

In the third installment of JLN’s Unsung Heroes series, Brenda Hoffman, Nasdaq SVP and head of Global Technology U.S. Markets Systems and Global Information Services, talks about the tools she and her colleagues at Nasdaq use to communicate during the time of the coronavirus and how the technology teams have kept things running smoothly amid high volatility and volumes.

SR: What is different about the environment you are working in now, in this time of self-quarantine? Who is working from home and who is coming into the office?

BH: Our teams all started working from home in mid-March. We have 53 offices globally and each location has a specific, unique approach to reopening and allowing employees to return to the office. This process of re-opening is very carefully and thoughtfully being managed in conjunction with giving the local environment full consideration. In the US, we have begun the reopening process starting this month with our Denver, Colorado office.

To read the rest of this interview go here.

Lead Stories

No One Has Traded Bitcoin Options on Bakkt for Over a Month: Deribit Continues to Dominate
Zack Voell – Coindesk
Bitcoin options traders have completely deserted Bakkt, with its volume and open interest flatlining at $0 since June 15. The Intercontinental Exchange’s subsidiary launched its bitcoin options market in December 2019. Open interest for the exchange’s options market has suffered complete inactivity before, but the current 38-day streak dwarfs other periods. Bakkt’s options volume has also dropped to $0 since April 23, according to Skew. Bakkt declined to comment when contacted by CoinDesk.
/bit.ly/2OQlFdJ

Kyle Bass Copycats Snap Up Bearish Hong Kong Dollar Options
Tian Chen and Mark Cranfield – Bloomberg
On the surface, Kyle Bass’s highly leveraged all-or-nothing bet on a collapse of the Hong Kong dollar looks audacious. The currency is near the strongest it can be and the city has sold billions of local dollars since April to stop it from strengthening any further. Another giant stock sale from Ant Group will increase demand for the Hong Kong dollar, helping underpin its strength for far longer than analysts had anticipated. The currency stayed strong even as some U.S. policy makers considered ways to undermine the peg.
/bloom.bg/3fZPqon

Wall Street giants urge Congress to fast-track ‘expensive’ stimulus bill before recession worsens
Ben Winck – Markets Insider
Some of the biggest names on Wall Street are pushing Congress to speed up deliberations on a second stimulus bill, no matter the cost.
Most major banks surprised to the upside with their second-quarter results as bolstered credit reserves were overshadowed by soaring trading-desk revenue. The strong performances were made possible by a combination of Federal Reserve monetary support and market volatility.
/bit.ly/3eRh3yM

Gold shatters ‘summer doldrums’ as it climbs to record territory
Myra P. Saefong – MarketWatch
The gold market saw a lot of excitement on Thursday, with its climb over the last five sessions in a row ultimately lifting prices into record territory.
“Ordinarily this is the quiet time for gold—summer doldrums,” said Ross Norman, chief executive officer of precious metals news and information provider Metals Daily. “Well, not this year.”
/on.mktw.net/2OU4fxa

Everything You Need To Know About Robinhood Canceling Its International Expansion
WSJ Noted
Everyone wants to know about: Robinhood canceling its U.K. expansion Robinhood, the stock-trading app that has become popular among young Americans, was planning on expanding to the U.K. But now those plans are on hold. In an email to U.K. users on the waiting list, the company wrote that it’s focusing its resources on its “core business in the U.S.”
/on.wsj.com/3fYpRUV

Exchanges and Clearing

Product Modification Summary: Amendments to Final Settlement Minimum Price Increment for the Options on Bitcoin Futures Contract – Effective: August 17, 2020; Final Settlement Minimum Price Increment Change – Options on Bitcoin Futures
CME Group
Effective Sunday, August 16, 2020 for trade date Monday, August 17, 2020 Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will amend the final settlement minimum price increment for the Options on Bitcoin futures contract. The final settle tick is changing from 1 to 0.01 and the DPL is changing from 0 to 2.
/bit.ly/30N9jsq

CME Globex Notices: July 20, 2020
CME Group
Mandatory iLink 3 Binary Order Entry Protocol for MSGW
This Sunday, July 26 (trade date Monday, July 27), CME Group will implement the final launch of iLink 3, a new order entry protocol for trading futures and options markets on CME Globex. All customers connected via Market Segment Gateway (MSGW) will need to migrate to the iLink 3 by Q4 2020.
/bit.ly/3hyE1fL

CME Extends Equity Derivatives
Shanny Basar – Traders Magazine
CME Group is introducing options on its Micro E-mini equity futures, which started trading last year, and have been the derivatives exchange’s most successful new product launch. Tim McCourt, CME Group global head of equity index and alternative investment products, told Markets Media that there was a clearly articulated customer demand to launch options on its Micro E-mini S&P 500 and Micro E-mini Nasdaq-100 futures contracts.
/bit.ly/2Bqpkfg

Nasdaq Has Record US Equities, Options Volumes
Shanny Basar – Traders Magazine
Nasdaq reported that combined U.S. equities and options markets set a quarterly record for trading volume, boosting revenue in Market Services by 22% from a year ago. The exchange group said electronically operated equities, options and fixed income markets operated at high performance levels during the surge of trading volume related to the COVID-19 pandemic. Adena Friedman, president and chief executive of Nasdaq, said in a statement: “Our foundational markets are demonstrating their resilience and the power of a distributed, electronic market model, handling record volumes through multiple periods of extreme volatility.”
/bit.ly/3hKsp9N

Regulation & Enforcement

Fed regulator is fed up with hedge funds’ behaviour
John Dizard – Financial Times
The note sent on July 14 by the Federal Reserve’s vice-chair Randal Quarles to other central bank governors and finance ministers reads like one of those anodyne diplomatic demarches that trade hands just before a major war.
The note, written on the heading of the Financial Stability Board, is a warning directed against hedge funds, big asset managers and anyone else Quarles and the Fed believe to be responsible for the approaching apocalypse in the fixed income markets.
/on.ft.com/2WPtO6U

Wall Street Wins as U.S. Retreats From Foreign Swap Policing
Benjamin Bain – Bloomberg
Wall Street banks scored a major win Thursday as the U.S. Commodity Futures Trading Commission largely retreated from policing derivatives trades that are booked abroad.
The CFTC’s shift to defer more oversight to foreign regulators follows years of industry lobbying. The change means that going forward, the regulator will no longer assert sweeping jurisdiction over global swap trades. That has been the CFTC’s approach since the 2008 crisis, with the agency previously arguing that it was necessary to keep tabs on transactions that could trigger billions of dollars in losses and threaten the U.S. financial system.
/bloom.bg/39ncpaG

SR-NASDAQ-2020-037
Nasdaq
A proposal to amend Rule 4702 to adopt the Early Market On Close as a new order type
/bit.ly/2ZVp2q7

SR-NASDAQ-2020-042
Nasdaq
A proposal to add the Consolidated Audit Trail industry member compliance rules to the list of minor rule violations in IM-9216 and in Options 11, Section 1.
/bit.ly/3eZ9UMG

Technology

“Estimating Back Month Volatility Contraction After Earnings” // tastyBeats July 20-24
Nick Battista – Tastytrade
With second quarter earnings starting to ramp up, many of our favorite underlyings will be seeing increased volatility. Earnings present us the opportunity to fast track positions via the expected vol crush after earnings. Rather than going into the weekly expirations that provide more of that instant pain or instant gain, all or nothing type trades, I prefer to be a bit more conservative by going out to the back monthly expiration. Currently I’ll be looking at the AUG monthly expiration.
/bit.ly/2CPacsh

Events

2020 US election: the impact on derivatives markets
FIA.org
MEMBERS ONLY virtual forum featuring political analyst Charlie Cook 29 July 2020 • 10:00 AM – 12:00 PM ET • Virtual Forum
FIA is proud to host an exclusive forum featuring Charlie Cook, editor and publisher of The Cook Political Report – an independent, non-partisan newsletter that analyzes American political trends. Cook will preview the 2020 US election season and how it may shape the political landscape in the coming years. Following his virtual presentation, FIA president and CEO Walt Lukken will host a panel of Washington insiders to discuss the practical implications of the election season on our markets. Each session will include a Q&A at the end.
/bit.ly/2CPacsh

Miscellaneous

FIA statement on the passing of Philippe Buhannic
Traders Magazine (press release)
Washington, DC – FIA today issued the following statement in response to the news that Philippe Buhannic, one of the pioneers of electronic trading in the futures industry, has passed away. The statement was issued by FIA’s president and chief executive officer, Walt Lukken, and the chairman of FIA’s board of directors, Jerome Kemp, the global head of futures, clearing and collateral at Citigroup Global Markets.
/bit.ly/3jC6SSh

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