Q&A: Exchange Leaders Discuss China’s Evolving Markets

Oct 19, 2021

Observations & Insight

FIA Tech’s Atlantis Ready for More Options Brokers
John Lothian – John Lothian News

Give-up Settlement and Payment System Improves Efficiency, Speeds up Payments

FIA Tech is trying to solve a problem for options brokers with a solution that’s worked for futures brokers and exchange-traded derivatives. That problem is improving the efficiency of give-ups and take-ins reconciliation, settlement and payments.

In July, FIA Tech announced the expansion of its Atlantis service to help options brokers settle give-up trades faster and get paid sooner, while freeing up human resources thrown at this complex problem. One hundred million contracts a month are processed via Atlantis, which is expanding into options in a two-part process.

FIA Tech was launched in 2007 by the Futures Industry Association and recently took on a $44 million investment from 10 leading clearing firms to fund the strategic growth of the organization.

Read more of the interview HERE.

Lead Stories

Q&A: Exchange Leaders Discuss China’s Evolving Markets; Leaders from CME Group, FTSE Russell and Singapore Exchange discuss the changing nature of managing risks across borders.
Lee Meng Gan – CME Group
China has in recent years begun to liberalize its markets. One effect has been the growth of still nascent futures and options exchanges. Today, China has five domestic derivatives exchanges and trading volumes have been on an upward trajectory as domestic investors become more familiar with futures and options, and demand from foreign investors increases.

What will replace Libor?
Marcus Morton – FT
The London interbank offered rate (Libor) has proved one of the UK’s most successful exports. But not everyone is going to feel thankful for that in the coming weeks and months. Since coming into widespread use in the 1970s, it has crept into every corner of finance, not just the derivatives market, where it underpins instruments like interest rate swaps, forward rate agreements and foreign currency options.

Lehman Brothers May Still Cash In on Its Own Big Short From 2009
Lucca de Paoli and Jeremy Hill – Bloomberg
Derivatives Lehman Brothers purchased to guard against defaults on the subprime-mortgage bonds that fueled the 2008 crisis could deliver a big pay-out more than 10 years after the bank’s collapse.

Gas Market Is on ‘Knife’s Edge’ Despite U.S. Warmth, BNEF Says
Gerson Freitas Jr – Bloomberg
Summery weather into October is easing a U.S. natural gas supply squeeze, but the market remains vulnerable to hair-trigger volatility heading into the winter, according to BloombergNEF.
Heating demand this month is expected to be the lowest in about two decades, allowing producers to add more than three times as much gas to underground storage as they did last October, BNEF said Tuesday in a report. As a result, stockpiles could approach normal levels before the winter, even after concerns about tight supply propelled prices to a seven-year high earlier this month.

The first-ever bitcoin futures ETF rises 5% in trading debut as SEC’s Gensler flags volatility
Natasha Dailey – Markets Insider
The first ever bitcoin-linked exchange-traded fund premiered on the New York Stock Exchange Tuesday – marking a long-awaited milestone for crypto enthusiasts.
The ProShares Bitcoin Strategy ETF, which invests in bitcoin futures contracts rather than the actual digital asset, began trading under the ticker symbol “BITO.” Shares rose 5% at $41.90 at 9:37 a.m. in New York.

Regulation & Enforcement

The SEC says positive sentiment from Reddit day traders, not short covering, was the biggest driver of GameStop’s wild stock surge. Here are the 5 main takeaways from the report.
Shalini Nagarajan – Markets Insider
The Securities and Exchange Commission published a long-awaited report on Reddit darling GameStop’s retail-trading frenzy on Monday, saying the phenomenon was caused by a rapid rise in investor accounts betting on the stock.
“Whether driven by a desire to squeeze short sellers and thus to profit from the resultant rise in price, or by belief in the fundamentals of GameStop, it was the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock,” the regulator said.

SEC’s GameStop Report Questions ‘Game-Like’ Trading Apps
Paul Kiernan and Alexander Osipovich – WSJ
A trading frenzy in shares of GameStop Corp. earlier this year should lead regulators to consider whether “game-like” brokerage apps are encouraging investors to trade too much, the Securities and Exchange Commission said on Monday.
The highly anticipated SEC report attributed the episode primarily to a rapid increase in trading by individual investors, many of whom used social-media platforms like Redditto swap ideas and strategies. The agency poured cold water on a number of alternative hypotheses for why the struggling videogame retailer’s share price soared from less than $20 at the end of 2020 to an intraday high of $483 on Jan. 28.


‘Big Short’ investor Michael Burry says he is no longer short Tesla stock
Matthew Fox – Markets Insider
Michael Burry’s Scion Asset Management is no longer short Tesla stock via puts, according to a Friday report from CNBC.
Burry told CNBC by e-mail that the media had blown his Tesla short bet out of proportion and that it was just a trade.


Almost 900,000 accounts traded GameStop at peak of meme stock craze
Madison Darbyshire – Financial Times
Nearly 900,000 individual accounts traded shares of GameStop in a single day after a 90-fold increase at the height of the “meme stock” craze, according to a report by the US securities regulator.
GameStop, a struggling video games retailer, became an emblem of the mania that gripped markets in January when its shares surged by 2,700 per cent in less than three weeks. Individual traders organised on online message boards and collectively unleashed furious rallies in certain stocks.

GameStop Baffles the SEC Too
Matt Levine – Bloomberg
Yesterday the U.S. Securities and Exchange Commission released a “Staff Report on Equity and Options Market Structure Conditions in Early 2021,” specifically the conditions that allowed GameStop Corp.’s stock to go from $17.25 to $325 over the course of January for no particular reason. It would have been cool if the SEC had, uh, found a reason. If the report was like “actually we looked deep into the stock exchange’s computers and found that they accidentally shifted a decimal point one spot to the right, that was supposed to be $32.50, oops,” that would have been an interesting result.

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