Observations & Insight
JJL: OCC CEO John Davidson is the latest donor to the JLN MarketsWiki Education GoFundme campaign. Davidson is a derivatives clearing veteran who has emerged as an industry thought leader at the revamped OCC. Thank you to John and all who have given and all those who have yet to give. Support our efforts to preserve industry history by donating to our GoFundMe campaign.
Kevin Darby – The Path to Electronic Trading – MarketsWiki Education
Kevin Darby started his career as a college kid on the CBOE trading floor and bridged the open outcry and electronic trading eras by using his knowledge of trading floor processes and trading, his mathematical skills and his programming skills. That was his path to electronic trading.
Riskier Cousins of ETFs Are Shutting Down Like Never Before
Claire Ballentine – Bloomberg
A risky corner of the exchange-traded universe is facing closings at the fastest pace ever.
So far this year, 54 exchange-traded notes have either liquidated or delisted, the most in a single year on record, according to data compiled by Bloomberg.
These instruments faced a wild year, even by 2020’s standards, with violent market swings at the beginning of the coronavirus pandemic leading several issuers to pull the plug. Then a massive price surge in August highlighted how over-the-counter trading for ETNs can unexpectedly whipsaw investors.
Ray Dalio Sees ‘Flood of Money’ With Soaring Asset Prices
Nathan Crooks – Bloomberg
Ray Dalio stressed the importance of diversification in a Reddit Ask Me Anything event on Tuesday where he said that a “flood of money and credit” was unlikely to recede.
“Assets will not decline when measured in the depreciating value of money,” the billionaire investor told users of the discussion network who asked for his perspective on where financial markets are headed. “I believe that with the enormous amount of debt and money that has been created and will be created in the future, the most important thing to pay attention to is the value of debt and money relative to the value of assets and other currencies.”
Wall Street bosses signal strong end to year in capital markets
Laura Noonan and Robert Armstrong – Financial Times
The bosses of two of America’s largest banks signalled a strong fourth quarter for their trading and investment banking businesses, closing out a year when volatility and central bank interventions paid off handsomely for Wall Street.
JPMorgan Chase’s trading and investment banking revenues “are up about 20 per cent, maybe a little more” so far in the fourth quarter, chief executive Jamie Dimon told this week’s Goldman Sachs virtual financial conference.
Gold’s Volatile Run Continues in December
Amrith Ramkumar – WSJ
Gold prices fell Wednesday, paring some of the December rally and continuing a stretch of volatility as traders weigh a recent rise in coronavirus cases against upbeat vaccine trial results and prospects for further stimulus.
Most actively traded gold futures declined 1.5% to $1,846 a troy ounce Wednesday. Prices for the haven metal are up about 4% so far in December but remain more than 10% below their record high in August, hurt by a broad rally in stocks and riskier commodities with investor anxiety fading after the U.S. election.
Exchanges and Clearing
November monthly figures at Eurex and EEX; November sees positive results across all areas at Eurex and EEX
Overall volumes of traded financial derivatives at Eurex were up 8% in November – from 138.2 million contracts to 149.5 million – compared to the same month last year. While European equity derivatives saw a fall of 27% year-on-year, European equity index derivatives and European equity interest rate derivative volumes were both up, the former by 32% compared to November 2019.
SGX reports market statistics for November 2020
Strong volume gains across equities, FX, iron ore derivatives; Securities daily average value in Singapore climbs
Singapore Exchange (SGX) today released its market statistics for November 2020. Progress in the development of a COVID-19 vaccine bolstered optimism of a global economic recovery, while institutional investors repositioned their portfolios following the U.S. elections, fueling strong derivative volume gains on the exchange across multiple asset classes.
Regulation & Enforcement
Statement of Chairman Heath P. Tarbert in Support of the Final Rule on Electronic Trading Risk Principles
The mission of the CFTC is to promote the integrity, resilience, and vibrancy of U.S. derivatives markets through sound regulation. We cannot achieve this mission if we rest on our laurels—particularly in relation to the ever-evolving technology that makes U.S. derivatives markets the envy of the world. What is sound regulation today may not be sound regulation tomorrow.
High-Frequency Traders Can Keep Code Secret Under New CFTC Rule
Benjamin Bain – Bloomberg
U.S. derivatives regulators have approved regulations for high-frequency trading that exclude a controversial plan that would have increased government access to traders’ computer code.
The Commodity Futures Trading Commission regulation adopted Tuesday largely tracks with the agency’s June proposal and will formally require exchanges to take steps aimed at thwarting unintentional disruptions due to algorithmic trading. Instead of targeting code that traders consider to be intellectual property, the CFTC’s “risk principles” aim to codify many practices that are already in place.
SEC Approves Plan to Bring More Detailed Stock-Market Data to Public
Alexander Osipovich – WSJ
The Securities and Exchange Commission approved a plan to beef up the public data feeds that broadcast stock prices to investors, broadening access to market information that exchanges sell to professional traders at a premium. Under the SEC’s plan, detailed data showing supply and demand for stocks will be added to the public feeds, which are called securities information processors, or SIPs. Wall Street banks and electronic trading firms use such data to predict short-term price moves and ensure that they get good prices when buying or selling stocks.
Webinar: The Greeks: Delta and Gamma
The Options Industry Council (OIC)
Many factors affect option prices, and among the most important are delta and gamma – two of the Greeks. These particular Greeks will be in focus during a free, live webinar on Dec. 9 from The Options Industry Council. Led by Ed Modla, a former industry professional turned OIC instructor, this webinar will help you understand:
When: Wednesday, December 09, 2020
3:30 – 4:30 PM CST
CFTC position limits: looking ahead to implementation and compliance
10 December 2020 • 10:00 AM – 11:30 AM EST
On 10 December FIA will provide members with a detailed overview of the CFTC’s final position limits rule. Panelists from FIA, the CFTC, CME, ICE and Willkie Farr & Gallagher LLP will discuss the development, effective and compliance dates, and requirements of the final rule. Special emphasis will be placed on implementation issues and the expanded role of the exchanges in administering federal position limits and hedge exemptions. The panelists also will respond to questions from the attendees.
Colliers acquires veteran Cboe, CME real estate rep’s firm; Longtime financial sector tenant rep Holly Duran has sold her boutique brokerage after a 16-year run.
Danny Ecker – Crain’s Chicago Business
The longtime real estate adviser for the Chicago Board Options Exchange and Chicago Mercantile Exchange has sold her boutique brokerage to Colliers International Chicago.