NYSE to Close Trading Floor After Two Positive Coronavirus Tests
Alexander Osipovich – WSJ
The New York Stock Exchange will close its famed trading floor in lower Manhattan effective Monday after two people who work at the exchange tested positive for coronavirus. The NYSE’s parent company, Intercontinental Exchange Inc., or ICE, said it was temporarily closing the floor and shifting to all-electronic trading in a press release Wednesday. ICE “will continue to monitor events to determine the appropriate time to re-open the NYSE trading floors,” it said, describing the move as a precautionary measure.
Rise in Middle of VIX Curve Shows Traders See a Long Bear Market
Luke Kawa – Bloomberg
The breakneck speed of the equity rout is its most terrifying feature. Now, volatility markets show that fears are shifting to how long the frenzied trading will last.
The VIX futures curve now resembles conditions that prevailed during the worst of the 2008 and 2011 market downturns, periods of persistently elevated swings in the S&P 500 Index.
Carbon’s Coronavirus Plunge in Europe Stoked by Options Trade
Mathew Carr and Will Mathis – Bloomberg
One of the biggest selloffs in the history of Europe’s carbon emissions market stoked record trading in futures and put options as the economic impact of the coronavirus worsened.
As futures crashed through once-remote option strike prices, investors who’d previously sold puts needed to lay off the risk by selling futures. As prices kept falling, managing the hedge would typically involve selling more futures, and steepening what turned out to be the biggest three-day rout in the market for seven years.
Implied FX volatility gauges jump as dollar demand intensifies
Sujata Rao – Reuters
Expected price swings for some of the world’s biggest currencies rocketed to multi-year highs on Thursday as a broad rush for U.S. dollars forced traders to dump currencies across the board.
Crashing Ruble Puts Russia’s Central Bank in Bind
Anna Andrianova – Bloomberg
Ruble rebounds after central bank announces extra FX sales; Options markets show rate rise possible within three months
The Bank of Russia stepped in to slow the ruble’s plunge, highlighting the challenge it faces as it tries to cushion a double blow from coronavirus and the plunge in oil prices.
Rand Volatility Heads for Uncharted Territory as Risks Stack Up
Robert Brand – Bloomberg
With a monetary policy decision and a credit-rating review on the immediate horizon, not to mention market havoc caused by the coronavirus pandemic, traders can’t see a break ahead for South Africa’s rand.
One-month implied volatility for the rand versus the dollar surged on Thursday to the highest since the aftermath of the financial crisis. The premium of options to sell the rand over those to buy it over the next month, known as 25 Delta risk reversal, widened to the most in 18 months.
ETFs, born from 1987 market crash, are so far making 2020 less awful
Andrea Riquier – MarketWatch
Financial markets have been terrifying over the past few weeks. But the losses and volatility seen recently don’t come close to Black Monday — October 19, 1987 — when the Dow Jones Industrial Average plunged 22.6% in one day.
In the wake of that carnage, financial regulators decided to create a new product that would help smooth things out. The first exchange-traded fund debuted in 1993, and the ETF industry has exploded since the 2008 financial crisis as investors pour money into a wide array of inexpensive yet out-performing funds.
Exchanges and Clearing
CME Bitcoin Options Volume Hits Record Low, While Bakkt Goes Weeks With No Trades
Omkar Godbole – Coindesk
Demand for bitcoin options on regulated U.S. derivatives exchanges has dried up even as price volatility reaches record highs. The Chicago Mercantile Exchange (CME) traded just three bitcoin options contracts on Tuesday, with a notional amount of 15 bitcoin (approximately $80,000), the exchange told CoinDesk. That is CME’s lowest daily volume for bitcoin options on record, according to crypto derivatives firm Skew Markets. The previous record low of $125,000 was registered Jan. 24.
New York Stock Exchange to Move Temporarily to Fully Electronic Trading; Equities and Options Trading Floors Will Temporarily Close; Fully Electronic Trading Begins With Market Open on Monday, March 23; Trading and Regulatory Oversight of All NYSE-listed Securities Will Continue Without Interruption
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced today that the New York Stock Exchange will initiate its business continuity plan (“BCP”) and move, on a temporary basis, to fully electronic trading on Monday, March 23. Trading and regulatory oversight of all NYSE-listed securities will continue without interruption.
IG Group revenue jumps nearly a third as coronavirus drives volatility
Antonia Cundy – Financial Times
Revenue at IG Group jumped by nearly a third in the first quarter following “unprecedented” market volatility caused by the coronavirus pandemic, which drove a surge in activity on the online trading platform.
“These are extraordinary times,” said June Felix, chief executive of the FTSE 250 group.
ICYMI: Nasdaq Statement on North American Operations
John D’Antona Jr. – Trader’s Magazine
In light of today’s announcement that the New York Stock Exchange will close its vaunted 80 Broad Street trading floor effective March 23 and go to fully electronic trading, Nasdaq reiterated its position on its Philadelphia trading floor closure and that all its electronic equities, options, and fixed income markets remain fully operational. According to a spokesperson and previous announcement, new listings and Initial Public Offerings continue as scheduled.
SGX RegCo provides guidance on holding of general meetings amid COVID-19
Singapore Exchange Regulation (SGX RegCo) in consultation with the Accounting and Corporate Regulatory Authority and the Monetary Authority of Singapore is providing guidance on the holding of general meetings amid the COVID-19 situation. SGX RegCo had earlier announced measures to give time extensions for issuers with 31 December financial year-end to hold their annual general meetings (AGMs) by 30 June 2020. Separately, SGX announced the SGX Care Package on 16 March 2020. This package includes a grant for qualifying issuers to help them facilitate AGMs amid social distancing, travel and visitor restrictions, which have been challenging for many. SGX will reach out to issuers directly to provide further information.
CME Globex Notices: March 16, 2020
Regulation & Enforcement
The SEC Wants to Be Your Nanny
John Berlau and Gibson Kirsch – WSJ
Massachusetts once barred its residents from investing in the initial public offering of Apple. As the Journal reported on Dec. 12, 1980, state regulators declared the stock “too risky” for individual investors because its relatively high price-earnings ratio made it a “highflier” that lacked “solid earnings foundations.”
Amendments to CME and CBOT Rule 536.E. (“Pre-Negotiated Trades”)
Effective on trade date Friday, April 3, 2020, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME”) and The Board of Trade of the City of Chicago, Inc. (“CBOT”) are adopting amendments to CME and CBOT Rule 536.E. (“Pre-Negotiated Trades”) to harmonize the rule text with the text of New York Mercantile Exchange, Inc. (“NYMEX”) and Commodity Exchange, Inc. (“COMEX”) (collectively, the “Exchanges”) Rule 536.E. (“Negotiated Trades”).
Itiviti and Gemini to offer NYFIX connectivity for cryptocurrency customers
New York, March 19, 2020 – Itiviti, a leading technology and service provider to financial institutions worldwide, today announced that Gemini Trust Company, a next generation cryptocurrency exchange and custodian that allows customers to buy, sell, and store digital assets, now enables cryptocurrency holders trade with their counterparties via NYFIX, Itiviti’s world-class FIX-based order routing network.
Market Earthquake: The Volatility of Volatility
If there was ever a moment in time when we realized just how much everything connects to everything else – a quote (and concept) I have been using to repeatedly bludgeon you lo these many past months – now would be that moment. However, so as not to jump on the singularly overcrowded bandwagon of doom that is the current events flow of content (for now), I’d like to walk through a storyboard of related significance. That sadly familiar aroma in the air is fear; a specific vintage of which has not washed over the market ecosystem since 2008. Many are coming to the conclusion that if the virus doesn’t take us down, the arsenal of preventative measures just might – and therefore, one way or another, we are likely entering a period of financial stress (to put it as mildly as I can – for now).
FIA announces new board members
FIA today announced the election of new directors to its board at the annual board of directors meeting. The board added Paul Anderson of Deutsche Bank, Samina Anwar of Cargill, Kari Larsen of Perkins Coie, John Murphy of Mizuho Securities USA, and Jamila Piracci of Roos Innovations. The meeting took place via teleconference due to concerns over the Coronavirus (COVID-19).
Coronavirus investing strategy: How to profit with stock index options
Akin Oyedele – Business Insider
When the US economy showed signs of vulnerability in October, James McDonald took special notice.
The CEO and chief investment officer of Hercules Investments saw the first indication of possible risk to markets when a key gauge of manufacturing activity shrank for two straight months.
Making Sense of the Three Types of Volatility
Steve Sosnick – Barron’s
Pretty much anyone can tell you that markets have been volatile. Far fewer can tell you how to evaluate that volatility. It was obvious that investors were extremely fearful when the Cboe Volatility Index, or VIX, closed above 80 earlier this week, but only those who truly understand volatility measurements can grasp the ramifications of that extraordinary value. In times like these, anyone who trades or invests with options should fully comprehend such measurements.
A Guide to Understanding Volatility
Steve Sosnick – Barron’s
Pretty much anyone can tell you that markets have been volatile. Far fewer can tell you how to evaluate that volatility.
It was obvious that investors were extremely fearful when the Cboe Volatility Index, or VIX, closed above 80 earlier this week, but only those who truly understand volatility measurements can grasp the ramifications of that extraordinary value. In times like these, anyone who trades or invests with options should fully comprehend such measurements.
Harried Traders Gird for a Frantic Friday
Gunjan Banerji – WSJ
Friday is shaping up as potentially one of the most volatile trading days in years, as scheduled changes in futures, options and other derivatives markets threaten to add to a frenzied trading month that has already had some of the biggest daily stock-index swings ever.
The S&P 500 has risen or fallen at least 4% in eight straight sessions, the longest streak in history, according to Dow Jones Market Data. The Cboe Volatility Index, the Wall Street fear gauge known as the VIX, hit its highest level in history this week.