Observations & Insight
Robinhood Stock Price Jumps as Options Trading Begins
Caitlin McCabe and Gunjan Banerji – WSJ
Shares of Robinhood Markets Inc. surged for a second day Wednesday, almost doubling as investors piled into options on the first day they traded.
Robinhood, which made its debut on Nasdaq last week at $38 a share, hovered around $60 in recent trading, a 29% increase, after jumping as high as $85 earlier in the session. The performance marks a remarkable turnaround for a company that just last week suffered a disappointing start to trading. On the day that trading kicked off, Robinhood tumbled more than 10% intraday, before finishing below $35 a share.
****JB: Also see the Reuters’ story, Robinhood shares surge more than 80% as retail investors dive in.
Hedge Fund Alphadyne Loses $1.5 Billion in Short Squeeze
Nishant Kumar and Sridhar Natarajan – Bloomberg
Hedge fund Alphadyne Asset Management is one of the biggest casualties from a short squeeze in the global bond market, with its $12 billion macro trading strategy snared in a series of bad bets on rising interest rates.
The investment firm is staring down losses of about $1.5 billion after its hedge funds plunged through July, according to people familiar with the matter. Its flagship Alphadyne International Fund lost about 10%. It also manages a leveraged version with about the same amount of assets.
JPMorgan Blames Turkey’s Volatile Lira for Investor Misgivings
Asli Kandemir and Ercan Ersoy – Bloomberg
The lira’s best month this year may only serve to highlight the volatility that still haunts Turkish assets. For JPMorgan Chase & Co.’s top executive in Turkey, swings in the currency remain a key hurdle to convincing investors to buy into the appeal of local securities. Markets are also on alert for how price growth, already at a two-year high, performs in the months ahead, Mustafa Bagriacik, senior country officer for Turkey and Azerbaijan for the U.S. lender, said in an interview.
Tencent Selloff Shows Deep Scar Tissue in Chinese Markets; After the crackdown on education companies, every regulatory blip is seen as a possible death sentence
Jacky Wong – WSJ
China’s recent crackdown on education companies has left scars that could be long in healing. Putting the fear of God into investors may help Beijing direct capital more easily into areas it prefers, but also risks magnifying volatility and complicating corporate-investment plans, as every regulatory blip is seen as a possible death sentence.
Volatility in the VIX shows there’s no real conviction in this market: Trader
BNN Bloomberg (video)
Jonathan Corpina, senior managing partner at Meridian Equity Partners, joins BNN Bloomberg to wrap up the trading day. Corpina says the recent volatility indicates there is no real conviction in the market, and the Delta variant could cause stocks to trade lower in the short term.
Nasdaq Will Implement Blockchain And Become A Disrupter, Says CEO Adena Friedman
Adrian Zmudzinski – Benzinga
Nasdaq (NASDAQ:NDAQ) CEO Adena Friedman said that the exchange intends to apply blockchain to financial market infrastructure and become a disrupter in the space.
What Happened: According to a Tuesday Fortune report, Friedman said that, currently, “[it] is just not in a position to be able to support the level of trading activity that we experience in the equities and options markets.”
Intercontinental Exchange Reports July 2021 Statistics
July ADV up 33% y/y; OI up 10% y/y
Intercontinental Exchange, Inc. (NYSE :ICE), a leading global provider of data, technology and market infrastructure, today reported July 2021 trading volume and related revenue statistics, which can be viewed on the company’s investor relations website at https://ir.theice.com/ir-resources/supplemental-information in the Monthly Statistics Tracking spreadsheet.
Regulation & Enforcement
United States: The Long Arm Of The CFTC: What Stakeholders In The MENA Region Should Know
Sean T. Boyce (Dubai) , Brian C. Rabbitt (Washington), Joshua B. Sterling (Washington) and Sheila Shadmand (Dubai) – Mondaq
The Situation: As a regulator of the global derivatives markets, the U.S. Commodity Futures Trading Commission (“CFTC”) has powers to investigate violations of its rules and the Commodity Exchange Act (“CEA”) occurring both within the United States and overseas.
The Result: A MENA-based non-U.S. person trading derivatives such as futures and options on certain exchanges in the UAE, or internationally, may be liable for breaches of the CEA and CFTC regulations, even if that non-U.S. person has no direct link to the United States. This may also be true with “over-the-counter” transactions in swaps or physical commodities that are conducted with a U.S. person or that otherwise have a connection to the United States.
DTCC Launches Enhanced CDS Kinetics Platform to Provide Increased Transparency Into Credit Default Swaps Markets; New DTCC data platform will offer new insights into notional outstanding, net notional and trading volume metrics along with enhanced analytics capabilities
The Depository Trust & Clearing Corporation (DTCC), the premier market infrastructure for the global financial services industry, today announced the launch of an enhanced DTCC CDS Kinetics platform to support growing demand for more transparency into the credit default swaps (CDS) market within the over-the-counter derivatives space.
Why China’s Videogame Stock Chaos May Be Overblown
Evie Liu – Barron’s
Investors have been buying Chinese stock funds on the dip last week. Don’t necessarily take it as a bullish sign.
Chinese stocks are sliding once again amid concerns that Beijing could expand its regulatory crackdown to the gaming industry. Shares in gaming giants Tencent Holdings (ticker: 700.Hong Kong) and NetEase (NTES) plummeted in Tuesday trading. The iShares MSCI China exchange-traded fund (MCHI), which holds some 600 Chinese stocks listed domestically and abroad, is down 1.4%.
Robinhood extends 2-day gain to 126% as it becomes the most talked-about stock on Reddit’s Wall Street Bets forum
Matthew Fox – Markets Insider
Shares of Robinhood surged as much as 82% in Wednesday trades, extending its two-day gain to 126%.
The move higher in Robinhood came after the online trading app stumbled in its post-IPO trades last week, with the stock falling as much as 12% on its first day of trading. Robinhood priced its IPO at $38 per share on Thursday. The stock hit a high of $85 on Wednesday amid numerous trading halts for volatility.
Archegos employees face $500m losses from crashed bonus fund
Ortenca Aliaj, Eric Platt, Tabby Kinder and Leo Lewis – Financial Times
Employees of Archegos Capital Management face losses of about half a billion dollars after the value of a deferred pay plan set up by the firm crashed along with its other investments.
The family office run by Bill Hwang is yet to release money it owes to former employees, who saw the value of their deferred bonuses soar to about $500m before Archegos collapsed in March, according to two sources close to the firm.