Retail options trading boom a burden for some investing firms

Jan 13, 2022

Observations & Insight

Coinbase Buys FairX to Launch Crypto Derivatives
Nikhilesh De – Coindesk
Crypto exchange Coinbase is purchasing FairX, a U.S.-based derivatives platform.The move could open the door for Coinbase to offer crypto derivatives products in the U.S. At present, only a handful of exchanges allow U.S. investors to trade bitcoin and ether futures, with cash-settled products being both the most popular and the longest-available products. FTX.US acquired LedgerX last August with a similar aim.
/yhoo.it/33eMcfK

***** This is a smart move by Coinbase, kind of like buying Park Place in the game of Monopoly before someone else buys it and you find there is nothing more to buy. FairX has a very customer friendly approach that I hope Coinbase will keep. There are some excellent people at FairX too who will make great additions to the Coinbase team.~JJL

Lead Stories

Retail options trading boom a burden for some investing firms -study
John Mccrank – Reuters
A surge in options trading by individual investors helped lift market volumes to record highs in 2021, but it also made trading the derivatives more difficult for many institutional investors, according to a Coalition Greenwich study released on Wednesday.
/reut.rs/3GpYfVO

Retail surge preventing over half of institutions from meeting options trading objectives, study finds; Study by Coalition Greenwich found that 54% of institutions said the retail activity surge was negatively impacting their ability to achieve their objectives in the options markets.
Annabel Smith – The Trade
A surge in retail trading activity has caused US options trading volumes to reach record highs and is blocking institutions from achieving their investment objectives, a study by Coalition Greenwich has found.
/bit.ly/33jmI0F

Don’t deride the Davos prophets of doom
Gillian Tett – Financial Times
Is the global outlook becoming dark(er)? If you look at equity prices this week, the answer might be “no”. In America, the inflation rate has just hit an eye-popping 7 per cent, and the Federal Reserve is preparing to tighten policy.
But the US stock markets remain buoyant, along with most other world indices — never mind the tensions around Ukraine and Taiwan and soaring oil prices.
/on.ft.com/3qpX2bz

Inflation Surge Is on Many Executives’ List of 2022 Worries
Thomas Gryta – WSJ
In the hierarchy of business threats confronting corporate leaders in 2022, Covid-19 still rules. But inflation has quickly closed the gap.
Concerns about rising prices skyrocketed in the past year, according to a survey of more than 900 global CEOs conducted by the Conference Board, a business research group. More than half of the CEOs expect price pressures to persist until at least mid-2023 after having registered as a low-level worry in the year-ago survey.
/on.wsj.com/3nqqlZD

Exchanges

North American Equities Yearly Recap and Look Ahead
Cboe
We hit the ground running at the start of 2021, completing the acquisition BIDS Trading. While the BIDS Trading business remains separate from our traditional equities business in the U.S., we are excited to leverage the innovative BIDS technology in Canada. BIDS has successfully powered Cboe’s European block trading platform for a number of years. The continuous growth of the platform is testament to the power of BIDS technology and will serve as the template for implementation in Canada.
/bit.ly/3GtoTNx

Full year and December 2021 figures at Eurex
Eurex
OTC Clearing at Eurex continued its strong showing in 2021 with overall notional outstanding volumes growing by over 20 percent – from 16,560 billion EUR to 20,077 billion EUR – over the full year. Over the same period, average daily cleared volumes grew by 9 percent from 122 billion EUR to 133 billion EUR. Looking at specific products, the Overnight Index Swaps business grew by 169 percent in terms of notional outstanding – from 721 billion EUR to 1,941 billion EUR – and by 74 percent in terms of average daily cleared volumes – from 5 billion EUR to 8 billion EUR. Notional outstanding and average daily cleared volumes for Interest Rate Swaps grew by 36 percent and 20 percent year-on-year, respectively.
/bit.ly/3rgV5gU

NYSE Pillar Options Migration: Final End-to-end Testing Opportunity on January 22, 2022
NYSE
On Saturday, January 22nd, NYSE Arca Options will offer its last end-to-end Production test, including OCC participation and CAT submissions, in preparation for the migration to NYSE Pillar beginning February 7th, pending regulatory approval. Exchange Participants are strongly encouraged to take advantage of this opportunity to allow time to trouble-shoot any potential items that may arise in advance of the migration. Participants wishing to test can register by contacting connectivity@nyse.com.
/bit.ly/3I7QlB7

The IBEX 35 celebrates its 30th anniversary as the leading brand for the Spanish economy and listed companies
BME-X
The Spanish GDP has tripled over the period and the value of companies is ten times as high; The index family has been expanded to include more than 80 benchmarks; BME is already working on the launch of new indicators linked to sustainability and ESG investment; IBEX 35 with Dividends has a cumulative annual return of 7.95%, 4 points higher than that of the price-based IBEX 35 alone
On 14 January 1992, the IBEX 35 was launched to serve as a benchmark for the newly created options and futures market. Since then, the Spanish economy has tripled in size in terms of GDP, while the value of the companies in the index has increased tenfold. Tomorrow, the index celebrates its 30th anniversary, cementing its position as the leading brand for the Spanish economy and listed companies and main indicator of its transformation.
/bit.ly/3FolOx8

Technology

DAS Trader revs up data provision with new partnership; The firm has partnered with Jersey-based QUODD Financial Information Services for OPRA and corporate actions data.
Laurie McAughtry – The Trade
Everyone knows that data is the new gold, but even as access gets easier, the market for it gets ever more competitive. DAS Trader, a direct access trading technology firm providing electronic trading solutions to private online broker dealers, clearing firms and financial firms, has teamed up with financial market data provider QUODD to access its real-time offering of Options Price Reporting Authority (OPRA) data.
/bit.ly/3Frju8t

Miscellaneous

J.P. Morgan: Hedge Funds Could Be the Go-To Investment for 2022
Hannah Zhang – Institutional Investor
Facing moderate economic growth, higher inflation, and the prospect of low returns in public markets this year, investors need a new playbook.
That’s the overarching finding of J.P. Morgan Asset Management’s latest alternatives outlook. The next promising investment ideas will likely be in the alternatives space, particularly in hedge funds and real assets “whose income is a function of inflation,” according to Anton Pil, global head of alternatives at JPMAM.
/bit.ly/3Fl239r

Indian investors got access to trading on the Moscow Exchange
Moex
Indian investors got the opportunity to make transactions on the markets of the Moscow Exchange. Access to trading in shares, bonds, currency pairs, futures and options for Indian investors is provided by SOVA Capital in the status of an individual clearing member of the Moscow Exchange in partnership with India INX Global Access (a subsidiary of the Bombay Stock Exchange, Bombay Stock Exchange, BSE).
/bit.ly/31Z1STQ

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The Spread

More online traders betting on options and futures, IG says

Observations & Insight There's still time to register for this year's FIA-SIFMA Asset Management Derivatives Forum February 7-9 in Dana Point, California. FIA and SIFMA AMG are bringing together market participants from all sides of the trade to examine the latest...

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