Observations & Insight
Taiwanese Bourse Suffers Worst Crash In Its History; SEC Sets Its Sights on Gamified Trading – The Spread
This week on The Spread, a major crash at the Taiwan Stock Exchange nets gains for bearish options bets, options traders bet on carbon, Nasdaq gets approved to launch VOLQ options, and more.
Catching up with Sterling Trading Tech on “Unprecedented” Trading
Sterling Trading Tech is one of the firms in the eye of the storm for the rise of retail equity and option traders. John Lothian News caught up with their president and head of risk management to talk about how they fared and how they continue to deal with the influx of retail customers and resulting trading activity in 2020 and 2021.
One Way GameStop Might Have Changed the Market; The VIX probably isn’t saying very much about fear anymore.
Tracy Alloway – Bloomberg
One of the big mysteries in markets this year has been the persistently high level of the Cboe’s Volatility Index, better known as the VIX. Even as the S&P 500 touched all-time highs early this year, the VIX remained stubbornly elevated. For something that’s often been described as ‘Wall Street’s Fear Gauge,’ the index didn’t seem to be doing a very good job of matching actual sentiment in the market. So what gives?
Gold Hits Three-Month High as Fund Buying, ETFs Buoy Sentiment
Yvonne Yue Li – Bloomberg
Gold touched a more than three-month high, buoyed by signs that money managers and exchange-traded fund investors are turning more positive on the precious metal. Hedge fund managers increased their long-only position in U.S. futures and options by 12% from a week earlier, the most since June, according to government figures on Friday. Meanwhile, data compiled by Bloomberg show exchange-traded fund investors have bought bullion for the past six sessions, following months of sales.
ESG Options Could Raise 401(k) Participation Rates
ETFTrends.com via Nasdaq
Environmental, social, and governance investment options may help raise contribution rates in retirement 401(k) plans. According to a recent Schroders 2021 US Retirement survey of defined-contribution plan participants, 40% of participants didn’t know whether their employer’s plan offered ESG investment options, and 69% of the members of the group, along with those who said their plans did not offer ESG investment options, indicated that they would or might increase overall contribution rates if offered ESG options, InvestmentNews reports. In contrast, only 31% said they would not. The survey also revealed that among participants who were aware of ESG options, 9 of 10 said they invest in them.
Sterling swaptions edge towards Sonia ahead of July deadline
Ben St. Clair – Risk.net
Sterling swaptions traders are confident the market will fully adopt the sterling overnight indexed average (Sonia) in time for a July 1 ban on non-linear Libor issuance, as activity linked to the alternative rate hit 45% in the first two weeks of May, thanks to a one-day flurry.
Exchanges and Clearing
Enhanced opportunities with new ETF options from Eurex
Already providing the broadest choice of ETF derivatives in Europe, Eurex has recently introduced another five new ETF options. We discussed the interesting market opportunities these options will provide with Michael Delew, Director, Capital Markets, at Wisdom Tree, the leading New York-based ETF sponsor and asset manager, and Matthew Riley, Equity & Index Sales EMEA at Eurex.
CME Group to Launch Micro WTI Futures on July 12
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will expand its suite of micro-sized futures contracts with the introduction of Micro WTI futures. The contracts are expected to launch on July 12, pending regulatory review. Micro WTI futures will be one-tenth the size of the company’s global benchmark WTI Crude Oil futures contract and cash-settled. They will enable market participants – from institutions to sophisticated, active, individual traders – to fine-tune exposure to crude oil markets and enhance their trading strategies in an efficient, cost-effective way.
Regulation & Enforcement
S&P Dow Jones Indices is fined by SEC over U.S. ‘volatility’ crash
Jonathan Stempel – Reuters
S&P Dow Jones Indices will pay a $9 million fine to settle U.S. Securities and Exchange Commission charges that its negligence in managing one of its indexes caused huge losses for securities issued by Credit Suisse Group AG during extreme market volatility. The SEC said S&P DJI should have disclosed that its S&P 500 VIX Short Term Futures Index ER contained an “auto hold” feature that caused its value to remain static for more than an hour on Feb. 5, 2018, even as the underlying CBOE Volatility Index (“VIX”) was spiking 115% higher.
Federal Court Orders Virginia Resident to Pay More Than $5 Million for Futures and Options Fraud
The Commodity Futures Trading Commission announced today that Judge John A. Gibney, Jr., of the U.S. District Court for the Eastern District of Virginia entered a Consent Order for Permanent Injunction, Restitution and Ancillary Equitable Relief against defendant Leonard J. Cipolla finding, among other things, that Cipolla fraudulently solicited individuals to place funds in a commodity pool to trade futures and options while misappropriating more than $5 million of the money he was given to trade. The order requires that Cipolla pay restitution of $5,102,283.51 and imposes permanent trading and registration bans.
ON THE MOVE: BNY Mellon Adds Laide Majiyagbe; Bailey Kessing to NYSE
Anna Lyudvig – Traders Magazine
MSCI has appointed Tia Counts to the newly created role of Chief Diversity Officer, effective May 17, 2021. Based in London, Counts will report to Scott Crum, Chief Human Resources Officer. She will be responsible for operating across MSCI to align our Diversity, Equality and Inclusion (DEI) goals with business outcomes. She joins from JP Morgan’s Asset & Wealth Management business where she served as Global Head of Diversity and Inclusion.
Asset Management Derivatives Forum 2021; Co-hosted with SIFMA AMG
8 June 2021 – 9 June 2021 • 10:15 AM – 1:30 PM ET Daily • VIRTUAL
FIA and SIFMA AMG are bringing you a virtual take on the Asset Management Derivatives Forum in 2021. Join us for virtual programming on June 8 and 9, during which market participants from all sides of a trade and leading regulators will examine the latest developments impacting the use of derivatives by asset managers, including business, clearing, regulatory and operations issues.
With keynote speakers and panels, this virtual Forum presents a unique opportunity to gain insights into how investors, sell-side firms and market structure operators view the landscape for derivatives activity by the asset management community, attracting attendees from the joint membership of FIA and SIFMA Asset Management Group.
Clearing 101: Exchanges, Clearinghouses and CCPs
Dates: Sep. 15, 2021 12:00 p.m. – Sep. 16, 2021 1:30 p.m. ET.
Location Virtual Live. Two 90-sessions over 2 days.
Instructor: Marti Tirinnanzi
Registration is limited to approximately 20 participants to promote student participation and interaction.
Join us for a short program (90 minutes each day for 2 days) that explains the multilateral systems that provide the infrastructure for transferring, clearing and settling payments, derivatives and other financial transactions among financial institutions and end users. Following Dodd Frank, clearinghouses became designated as Systemically Important Financial Market Utilities, vital to the operations of the financial markets and subject to heightened regulatory scrutiny. Buyers and sellers in exchange transactions rely on clearinghouses to intermediate transactions and to manage credit risks between trading parties. As such, clearinghouses promote transparency, efficiency, and stability by providing market-based pricing, daily settlement, and ensuring adequate capitalization for markets to function.
(Podcast) VV 446: An Insane Week in Volatility
Volatility Views – Options Insider
Host: Mark Longo, The Options Insider Media Group
Matrix Hot Seat: Andrew Giovinazzi, The Option Pit
MIAX Hot Seat: Tom Jarck, Miax Exchange Group
Volatility review segment: markets green to end the week breaking down the insane week in volatility top trades of the week in VIX, SPIKES, VXX and UVXY looking at earnings in dis, coin
Crystal ball: where will VIX/SPIKES be next week