Observations & Insight
Robin Trott – The Path to Electronic Trading Part 1
Robin Trott started out as an undergrad studying philosophy and politics, but it was the peak of the dotcom bust and he realized that wasn’t very practical. So he got a Master’s degree and got on the technology and operations graduate scheme at JP Morgan.
OCC May 2021 Total Volume Up 32.7 Percent from a Year Ago; Highest May volume on record and fifth highest month in OCC’s history
Chicago – OCC, the world’s largest equity derivatives clearing organization, announced today that May 2021 total cleared contract volume was 723,741,756 contracts, up 32.7 percent compared to May 2020 and the highest May volume on record. Year-to-date average daily cleared contract volume through May was 39,367,534 contracts, up 41.9 percent compared to May 2020.
Markets are too tranquil for their own good
Swaha Pattanaik – Reuters
Exceptionally strong U.S. economic reports no longer surprise investors. Meanwhile, measures of market volatility suggest asset prices are expected to be serene in the months ahead. Taking good things for granted can, however, be dangerous.
The Citi Economic Surprise Index reflects how prevalent optimism has become. The gauge shows U.S. data is overshooting expectations by small margins even though the U.S. economy grew at an annual rate of 6.4% in the first quarter, the second-fastest growth rate since 2003, and there’s every sign the boom will continue. For example, the Organisation for Economic Co-operation and Development on Tuesday upgraded its U.S. growth forecast for the whole of 2021 to 6.9% from 6.5% previously.
Meme Stocks Surge as Major Indexes Tick Higher
Will Horner – WSJ
Major U.S. stock indexes edged higher Wednesday as concerns around the consequences of a strong economic recovery, marked by inflation, continued to buffet the market.
The S&P 500 rose 0.2% in recent trading, with the index fluctuating above and below the flatline during the session’s opening hour. Both the Dow Jones Industrial Average and Nasdaq Composite also waffled, both rising about 0.1%.
ION Investment Group completes DASH Financial Technologies acquisition; Under the terms of the deal, DASH becomes part of the ION markets division, which provides trading automation, analytics and innovation across the trade lifecycle.
Annabel Smith – The Trade
ION Investment Group has completed its acquisition of DASH Financial Technologies after confirming it had entered into an agreement to purchase the company in February. DASH Financial Technologies was acquired by ION from private equity firm Flexpoint Ford, which had previously owned the options technology and execution provider since 2018 when it acquired the firm from private equity firm GTCR in a management-led buyout.
Marex to Test Commodity Rally With Up to $165 Million London IPO
Swetha Gopinath – Bloomberg
Commodities brokerage Marex Group Plc’s holders are seeking as much as 115 million pounds ($165 million) in an initial public offering in London, on the back of a strong run in raw material prices.
Holders including investment firms JRJ Group, Trilantic Europe and BXR Group are selling as many as 29.9 million shares at 345 pence to 385 pence apiece through June 8, with the stock set to start trading the next day, according to terms seen by Bloomberg. The listing values Marex at as much as 460 million pounds, the terms showed.
‘Game over’: Investors hunt for new model after years of broad gains
Robin Wigglesworth – Financial Times
Institutional money managers are grappling with a grim investing outlook, sending them on a hunt for the next big idea decades after the late David Swensen triggered a revolution when he arrived at Yale’s endowment in 1985.
It is a pressing problem. Asset allocators like Swensen — who steer big institutional pools of money like pension plans, endowments or sovereign wealth funds — are facing one of the trickiest investing landscapes in history.
Exchanges and Clearing
New Eurex derivatives facilitate exposure to the Chinese equity market
MSCI China Tech 100 Index Futures to focus on technology value chain in China;MSCI China/HK Listed Indexes offer exposure to Chinese equities; Further derivatives targeting investors in the APAC region
Eurex is further extending its footprint in Asia. The derivatives exchange has launched futures on the MSCI China Tech 100 Index, as well as futures and options on the MSCI Hong Kong Listed Large Cap and the MSCI China Hong Kong Listed Large Cap indexes. The derivatives arm of Deutsche Börse Group is thus responding to growing demand for investment and trading instruments in the Asia-Pacific region.
CME Group Reports May 2021 Monthly Market Statistics
CME Group Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, today reported May 2021 market statistics, including average daily volume (ADV) of 20.6 million contracts during the month. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
Nodal and IncubEx Expand Environmental Suite with New EPA Cross-State Air Pollution Rule Contracts
Nodal Exchange and IncubEx today announced the successful launch of new nitrogen oxides (NOx) futures and options, plus extended vintages on two Texas voluntary renewable energy certificate (REC)
The Best May In MGEX History
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports that this past month was the best May in MGEX history with a total of 261,078 contracts, which is 44% higher than the previous record holder, May 2018. This past month also entered the total monthly volume top-25 record book in the 17th position.
Miami International Holdings Reports May 2021 Trading Results, MIAX Exchange Group Sets New Market Share Records
Miami International Holdings, Inc. today reported May 2021 trading results for its U.S. exchange subsidiaries – MIAX , MIAX Pearl and MIAX Emerald (together, the MIAX Exchange Group™) and the Minneapolis Grain Exchange (MGEX).
Regulation & Enforcement
Regulators insist derivatives industry must ditch Libor
Lawrence White – Reuters
Global financial regulators on Wednesday urged firms to stop using Libor by the end of the year, and said derivatives markets linked to the tarnished interbank rate should switch to “risk free rates” or RFRs compiled by central banks.
The Financial Stability Board (FSB), which coordinates financial rules for the Group of 20 Economies (G20), set out its latest roadmap for firms transitioning away from Libor.
Senate Passes Bill to Fund CFTC Whistleblower Program
Mengqi Sun – WSJ
A newly passed Senate bill would temporarily create a separate account to pay for the operation of the Commodity Futures Trading Commission’s whistleblower program as the agency confronts a funding crisis over a large potential payout.
Currently, the CFTC’s Customer Protection Fund, which is funded by money the agency collects in enforcement penalties, is used to pay successful whistleblowers as well as for operating expenses and educational initiatives associated with the whistleblower office. The bipartisan legislation proposes the establishment of a separate account at the U.S. Treasury Department until Oct. 1, 2022, to ensure that the CFTC’s whistleblower office will be able to continue operations even if the amount in the fund drops to a critical level.
Volatility in Pandemic Is Pushing for Replatforming Core Trading and Post-trade Systems
Rick Steves – FinanceFeeds
The findings may be unsurprising as the extreme volatility experienced during the COVID-19 pandemic has challenged much of the current infrastructure to a point of too many trading disruptions taking place across the globe.
A survey commissioned by Nasdaq in partnership with Celent has found that market volatility drives market infrastructure operators to replatform core trading and post-trade systems.
OCC Names Former State Street, Nomura Executive David Ye as Chief Risk Officer; Ye Brings more than 20 Years of Leadership Experience in Financial & Operational Risk Management
OCC, the world’s largest equity derivatives clearing organization, today announced the hire of David Ye as Chief Risk Officer and a member of OCC’s Management Committee. With over 20 years of leadership experience in financial and operational risk management, including executive positions at State Street Global Markets and Nomura Holding Americas, Ye will be responsible for implementing OCC’s risk management strategy.
CrossTower names NASDAQ and Cboe exchange veteran Bryan Christian as Global Head of Exchange
Former Head of Institutional Services for ETF market maker Old Mission to drive product expansion and growth in CrossTower’s transaction business
New York, June 02, 2021 (GLOBE NEWSWIRE) — CrossTower, one of the world’s fastest growing crypto investment and trading firms, today announced it has hired 25-year exchange industry veteran, Bryan Christian, as Global Head of Exchange.
The Stock Market Is Near Record Highs. Why It’s Time to Buy in Europe.
Jacob Sonenshine – Barron’s
With U.S. stocks near all-time highs, the real value may be found in Europe, where the economic recovery is gaining steam.
The S&P 500 is near an all-time-high it achieved a month ago, although it has been in a tight range since then, caused by the realization that inflation is hotter than expected. That has stoked concerns that the Federal Reserve could soon tighten credit, which would lift bond yields, and may, by some estimates, trigger a correction of more than 15%.
How To Use VXX To Predict SPY
Damon Verial – Seeking Alpha
In my last article on the iPath S&P 500 VIX Short-Term Futures ETN (VXX), I recommended shorting the spike, essentially calling a top. One reader pointed out that this is roughly equivalent to buying dips in the SPDR S&P 500 Trust ETF (SPY) prior to rallies, then asking whether we could use VXX to predict movement in the SPY. While I reactively thought the idea was a bit trivial, as the volatility index – and therefore VXX – is essentially a measure of the SPY’s historical volatility and thus not useful in predictions, I realized I had not actually run an in-depth analysis on the subject.
Cboe Global Markets to Present at Piper Sandler Global Exchange and Financial Technology Virtual Conference Thursday, June 10
CHICAGO, June 2, 2021 /PRNewswire/ — Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, announced today that Ed Tilly, Chairman, President and Chief Executive Officer, and Chris Isaacson, Executive Vice President and Chief Operating Officer, will present at the Piper Sandler Global Exchange and Financial Technology Conference, taking place virtually on Thursday, June 10 at 9:00 a.m. ET (Eastern Time).
The webcast and replay of the virtual presentation can be accessed at www.cboe.com in the Investor Relations section, under Events and Presentations. The archived webcast is expected to be available within an hour of the presentation.
CME Group Chief Commercial Officer and Global Head of Commodities and Options Products to Present at Deutsche Bank Global Financial Services & FinTech / Info Services Virtual Conference
CME Group announced today that Julie Winkler, Chief Commercial Officer, and Derek Sammann, Global Head of Commodities and Options Products, will present at the Deutsche Bank Global Financial Services & FinTech / Info Services Conference on Wednesday, June 2, 2021, at 11:05 a.m. (Eastern Time).
Overwriting and Reconstitutions Registration
This 60-minute webinar explores Options for Overwriting and Mid-Year Reconstitutions for the Russell 2000 and Russell 1000 Indices.
Continuing education (CE) credit available – This webcast is accepted for one hour of CFP , CIPM , RMA , CIMC , CIMA , or CPWA CE Credit for webcast attendees. CFA Institute members may self-document their continuing professional development activities in their online CE tracker.
Air Date: Wednesday, June 9, 2021
Start Time:12:00 pm et
Another Sign Meme Stocks and Crypto are the Same Trade
Joe Weisenthal – Bloomberg
The meme stocks are going nuts again today, with AMC surging pre-market. It feels like we’re in this never-ending market timewarp where the same stories keep happening day after day. In addition to AMC going nuts, there’s another story about traders buying a stock because of an Elon Musk tweet. It never ends. Also Dogecoin is up over 30% over the last 24 hours after Coinbase Pro added it to its trading platform.
If it all looks like one big trade, well… there’s a reason for that.