Seven-Day VIX Swoon Reaches Chaotic End: What Traders Are Saying
Claire Ballentine and Lu Wang – Bloomberg
A two-week stretch of building bliss in the stock market hit a wall Thursday, with measures of volatility surging and traders reassessing their reaction to the Federal Reserve’s promise to hold interest rates near zero for the next three years.
The S&P 500 dropped 1.5% for its worst drop in three weeks and the Nasdaq 100 fell 3.1%, erasing its gain for the year. The moves came as bond yields rose, oil prices plunged on concern about the impact of European lockdowns on demand, and traders braced for the simultaneous expiration of futures and options prices on Friday.
Quadruple Witching Moves Jump-Start Stock Market Volume
Lu Wang – Bloomberg
Equity traders frustrated by recent sleepy volumes are getting a big liquidity boost.
Stock transactions spiked Friday amid a quarterly event colloquially known as quadruple witching, when options and futures on indexes and equities expire. As of 11:05 a.m. in New York, volume on S&P 500 stocks was 24% above the average for that time of day over the past 30 sessions as the benchmark almost erased an earlier loss of 0.7%.
GameStop (GME) Stock’s 2,460% Roller Coaster Rumbles Toward a Reality Check
Bailey Lipschultz – Bloomberg
In the wild, speculative ride known as GameStop Corp., traders are about to get a real-world dose of data when the video-game retailer reports earnings next week. Whether the results justify the company’s $14 billion market value is another issue entirely.
While shares of the Grapevine, Texas-based company have given back a huge chunk of this year’s 2,460% gain after hitting a record intraday high of $483 in late January, they’re still up better than 900%, closing Thursday at $201.75. Skeptics are warning amateur investors who piled into the stock that this remnant of their euphoria could still come crashing down.
Quadruple Witching Moves Volume, Volatility Higher
The expiration of options and futures on indexes and equities drove stock transactions to spike Friday in the first 15 minutes of trading on the S&P 500. Virtu Financial CEO Doug Cifu offers insight on “Bloomberg Markets.”
Investors have piled a record $57 billion into US stocks over the past week amid inflation-fueled volatility
Will Daniel – Markets Insider
Investors piled a record $56.76 billion into US stocks during the week ended March 17 amid inflation-fueled volatility, according to a recent report from Bank of America.
US equity inflows jumped 237% during the period, up from $16.83 billion the week prior.
J.P. Morgan’s view on the key trends in listed derivatives
As the world moves beyond the Covid-19 crisis, thoughts across capital markets are turning to understanding the lessons and the long-term impact. In cleared derivatives markets, the experience has accelerated several key trends and highlighted where there is room for innovation and improvement. Eurex caught up with Eileen Herlihy, head of EMEA derivatives clearing sales, and Jamie Philip, head of EMEA futures execution sales at J.P. Morgan to discuss their experiences during 2020 and other key trends in the listed derivatives market.
Dow, S&P 500 dragged lower by bank stocks
Shashank Nayar, Medha Singh – Reuters
The S&P 500 and the Dow dropped on Friday with banks leading the way after the U.S. Federal Reserve said it would not extend a temporary capital buffer relief put in place to ease a pandemic-driven stress in the funding market. The S&P 500 bank stocks shed about 3% as the Fed’s move means banks will have to resume holding an extra layer of loss-absorbing capital against U.S. Treasuries and central bank deposits from next month. “Banks have had such a significant up move this year and this news has only acted as a catalyst for profit taking,” said Art Hogan, chief market strategist at National Securities in New York.
Exchanges and Clearing
Annual Markets Review In Central Counterparty Clearing – A CCP12 Report
CCPs have demonstrated time and time again their robustness during significant market stresses. As explored in our previous CCP12 report ‘CCPs Again Demonstrate Strong Resilience In Times of Crisis’, their robustness was captured and evident from how well CCPs weathered the Covid-19 Crisis (“CC”) storm. This positive outcome was also referenced in various communications and reports from local regulators and international standard-setting bodies, including the FSB’s Holistic Review.
Drivers and barriers on the path to FX clearing
FX clearing has long been touted as the next big thing for the listed world. Eurex talked to André Besant, Managing Director / Head of Foreign Exchange Germany at Deutsche Bank, on the progress to date and why a hybrid world might be the future.
HKEX Enhances Product Offering with Baidu Debut
Baidu Futures and Options to be introduced on 23 March; Baidu shares to be included in Designated Securities Eligible for Short Selling on 23 March;Issuers can list derivative warrants on Baidu shares on 24 March
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce today (Friday) that it will offer investors more options on Baidu, Inc. (Baidu, stock code: 9888) shares after its debut.
Amendments to the Spot Month Period Definition and Increase in the Spot and Single Month Position Limits of the Cash-Settled Butter Futures and Options on Cash-Settled Butter Futures Contracts
Effective on trade date Monday, May 3, 2021 and commencing with the May 2021 contract month and beyond, the Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will amend the spot month period, the spot month limit, and the single month limit for the Cash-Settled Butter Futures and Options on Cash-Settled Butter Futures (the “Contracts”) as noted below and in Appendix A of CME Submission No. 21-130. Please note that the spot month limit, single month limit, and spot month period for the March 2021 and April 2021 contract months remain unchanged.
Regulation & Enforcement
Risky Trading Targeted in Democrat Proposal for Financial Transaction Tax
Megan Howard – Bloomberg
Investors would face a 0.1% tax on each sale of stocks, bonds and derivatives under a Democrat-led proposal aimed at curbing risky trading behaviors. The new tax would apply to the fair market value of stocks and bonds, and to payment flows under derivatives contracts. Initial public offerings and short-term debt would be exempt under the bill, which was reintroduced in the Senate Thursday by Hawaii’s Brian Schatz.
ESMA clarifies application of position limits pending MiFID II change
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, is issuing a public statement on its supervisory approach to position limits for commodity derivatives. The purpose is to clarify the application of position limits and coordinate the supervisory actions of National Competent Authorities (NCAs), pending the legislative change introduced by the MiFID II Recovery Package for commodity derivatives. This legislative change will start to apply in early 2022.
Fundamentals of Futures & Options Course (applicable to Series 3 Exam)
For more than 30 years, IFM has consistently provided learners with a solid foundation and understanding of futures and options markets and trading including terminology, risk management, pricing, and basic trade strategies. This instructor-led virtual course includes lectures from an engaging instructor with real-world expertise and supported by class discussion, practice exercises and educational materials. The course fee includes two must-read industry books – Futures and Options and the Guide to U.S. Futures Regulation.
A New Virtual Experience
The Options Industry Conference is Going Virtual in 2021. Join OCC and the options exchanges for the 39th annual Options Industry Conference, April 28-29, 2021. While the conference will be held virtually for the first time in history, the focus will continue to be the key topics facing the options industry today, from the regulatory shifts in the U.S. and Europe to the technological developments that are driving monumental change in markets around the globe.
New EU and UK prudential regimes for investment firms; Current state of play and expected market impact
23 March 2021 • 9:30 AM – 10:30 AM GMT • Webinar
Are you an investment firm in the EU or UK? Are you a clearing member who provides clearing services to EU or UK investment firms? Please tune in to a panel discussion of experts on the new EU and UK prudential regimes for investment firms (EU IFR/IFD and UK IFPR). With only a few months left before the new capital requirements framework for EU investment firms starts to apply, we will hear from market participants, external counsel and a representative of the European Banking Authority. We will also discuss the proposed UK IFPR regime, which is still being developed and is currently scheduled to come into effect on 1 January 2022. This is a pre-recorded webinar. If you would like to submit a question to the panelists, please email Sabina Hussain. Open to FIA Members only.
Barron’s 100 Most Influential Women in U.S. Finance: Adena Friedman
Carleton English – Barron’s
Last year, amid unprecedented market volatility, Nasdaq, which powers 120 markets around the world, accomplished what had seemed unthinkable: A majority of its employees were working from home. And aside from a few trading halts tied to market conditions, the Nasdaq didn’t skip a beat.
One of those remote workers was CEO Adena Friedman, 51, who first joined the company in 1993 and became chief executive in 2017.
(Podcast) TWIFO 241: Evaporating Energy, Sliding Stocks and Rampaging Rates
Options Insider Radio Network
Host: Mark Longo, The Options Insider Media Group
Co-host: Sean Smith, FTSE Russell
On this Episode, Mark and Sean discuss: the movers and shakers this week in futures options; top volatility movers; energy/oil; equities/Russell 2000/small-caps; metals/gold/silver rates; and much more.
Dylan Ratigan – tastytrade
Speculation is healthy. It’s necessary. It’s fundamental to capitalism because without it, no prospective business would have access to the financing required to get an idea off the ground. Speculation is betting on someone or something because you believe their product or service meets a need people are willing to spend their hard earned money to buy. But what happens when there are no good ideas? There’s a difference between abundant opportunity speculation and desperation speculation. Opportunity speculation happens when the marketplace is flooded with good ideas so money is aggressively spread out and diversified across a spectrum of potential. Desperate speculation is what happens when common sense and reason lose out to greed and conclusions predicated on false syllogisms.