Observations & Insight
Electronic Algo Execution Competition Poised For Unique Opportunity
We made a factual error when we published the story about Striker, the new options Algo execution product from Quantitative Brokers (“QB”). QB’s Striker was not the first product to offer electronic algo executions. RVAssets has been around since 2014 offering exactly that, though not as an agency broker like QB. Both are poised for a unique opportunity to grow as a result of the temporary closing of the trading floors.
NYSE to reopen San Francisco-based options floor next Monday
John McCrank – Reuters
The New York Stock Exchange said on Tuesday its NYSE Arca Options trading floor in San Francisco would partially reopen next Monday but its New York-based trading floors would remain closed for now, having been shut since March 23 due to the coronavirus crisis.
The Arca Options trading floor will operate with reduced personnel and additional safety precautions for exchange staff and floor traders, the NYSE, which is owned by Intercontinental Exchange Inc, said in a traders’ alert.
Bitcoin’s ‘Most Volatile Day’ Prompts Exchanges to Make Changes
Olga Kharif – Bloomberg
The crypto industry won’t soon forget when the widening coronavirus pandemic sent digital currencies tumbling along with most other asset classes worldwide.
Market heavyweight Bitcoin dropped 37.5% on March 12, recording its third-worst 24-hour performance ever — and the largest decline since the coin entered the mainstream conscience in 2017, according to researcher Coin Metrics. On Huobi, one of the largest digital exchanges, more than 10,000 leveraged users’ positions got liquidated, according to the company.
This one chart makes the case that the worst is over for the stock market and the virus has peaked
Mark DeCambre – MarketWatch
Is the worst behind the stock market after a coronavirus-induced rout? No one knows for sure as officials attempt to restart economies from a self-imposed period of hibernation to curb the spread of the contagion.
However, a chart pairing the infections of the COVID-19 epidemic by growth rate and one of Wall Street’s most closely followed indicators of volatility implies that measures of both the public-health crisis and market volatility may have peaked, a potentially good sign for stock-market bulls.
Oil Is Not the Only Commodity Acting Wacky. Just Look at Milk Futures.
Al Root – Barron’s
Equity markets have been relatively calm for the past couple of weeks. It’s been a nice respite for weary investors. But now is the time, it seems, for commodity markets to go haywire .
The average daily move in the S&P 500 —up or down—during March was an incredible 5%. The average daily move in April is a little more than 2%. Stock volatility is falling.
Why the oil market is even weaker than you think
David Sheppard – Financial Times
Benchmark oil prices are close to record lows, but the rates you see on screens are not telling the whole story.
With the coronavirus pandemic expected to cut oil demand by as much as one-third in April and May, and with storage tanks around the world fast filling up, crude prices in the physical market have fallen even faster.
Exchanges and Clearing
CME Earnings Got a Strong Boost From Volatile Futures Trading
Bill Alpert – Barron’s
The careening prices for oil, stocks and credit in the first quarter may have been hard for some to stomach, but they were great for the futures exchanges of the CME Group. Early Wednesday the exchange operator reported strong revenue and earnings for the period, on a surge in trading volume for its commodity and financial futures products.
CME shares (ticker: CME) were up 0.3% in morning trading, to $184.95, on the quarterly beat. The Dow Jones Industrial Average was up 2%.
Cboe Global Markets and FTSE Russell Extend Licensing Agreement Through 2030
Cboe (press release)
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced it has signed an exclusive licensing agreement with FTSE Russell that extends Cboe’s rights to develop and list index options products based on FTSE Russell global indices through 2030. The extended partnership enables Cboe to continue its successful FTSE Russell-based options franchise and provides opportunity for Cboe to further expand its product suite and create additional trading opportunities for investors.
Money market futures/options and ETF futures/options: Change of the partition ID and/or multicast addresses with effect from 13 July 2020
Eurex Exchange are planning to make configuration changes for a total of 40 products to optimise performance and consolidate the access to the respective market data. For the affected products, Eurex Exchange will either re-assign the partition IDs or the multicast addresses for the dissemination of market data via EOBI.
Regulation & Enforcement
French markets regulator calls for tightening of short-selling regime
David Keohane and Philip Stafford – Financial Times
France’s markets regulator is pushing to improve disclosure around short-sellers and activists targeting French companies, as the country grapples with a growing number of activist campaigns at some of its best-known businesses.
In a report published on Tuesday, the Autorité des Marchés Financiers said it would look to lower the level at which shareholders must declare their positions. It argued that disclosures should capture all securities used to bet against a company — including derivatives and bonds — rather than just a short position in the equity.
Accountability Levels and Large Trader Reporting Requirements in Connection with the Initial Listing of the Options on One-Month SOFR Futures Contract
In connection with the listing of the Chicago Mercantile Exchange Inc. (“CME”) Options on One-Month SOFR Futures contract (the “Options”) on trade date Monday, May 4, 2020 (see SER-8581 published April 7, 2020), please note below and in Appendix C of CME Submission No. 20-144 the corresponding accountability levels (Rule 560), aggregation allocations (Rule 559.D) and reportable level (Rule 561) for the Options.
BTSE Launches OTC RFQ with Options of Instant Fiat, Crypto and Stablecoin Trading
Traders Magazine (press release)
BTSE, the financial technology company that utilizes Bitcoin and cryptocurrency technologies to develop real-world financial products and services, is announcing a new tool that makes the access to OTC trading easier with the BTSE OTC RFQ (Request for Quote). This new tool will allow traders to obtain a quote on a fixed and agreed-upon price before purchase, enabling movement through larger orders without drastic price changes. Traders are often impacted by price ‘slippage’, when executed prices differ from expected prices.
Security futures – the incredible potentially morphing financial instrument
A Law & Compliance Division webinar
The recent transformation – seemingly overnight – of the KOSPI 200 from a broad-based security index contract, subject to the exclusive jurisdiction of the CFTC, to a narrow-based security index futures contract, subject to the joint jurisdiction of the CFTC and the SEC, has brought to the fore the significant differences in the regulation of these products, whether traded in the US or in foreign jurisdictions.