Observations & Insight
The SEC issued an “Opinion of the Commission” on Monday in a case between ABN AMRO Chicago LLC and Chicago Board Options Exchange, Inc. and C2 Options Exchange, Inc. Here is a summary of the opinion:
“ABN AMRO Clearing Chicago LLC petitions for review of disciplinary action taken by the Chicago Board Options Exchange, Inc. (“CBOE”), and C2 Options Exchange, Inc. (“C2” and, collectively, “the Exchanges”).1 The Exchanges found that ABN AMRO violated Rule 15c3-5 under the Securities Exchange Act of 1934 (the “Market Access Rule” or the “Rule”) and CBOE Rule 8.2 (which requires adherence to applicable laws) by failing to maintain controls reasonably designed to assure compliance with pre-order entry restrictions on complex order auction responses. We conclude that ABN AMRO violated those rules by not having controls reasonably designed to prevent its client from placing unauthorized trades, but also find that the sanctions imposed are excessive and should be cancelled because outreach by the Exchanges’ marketing department led to ABN AMRO’s client placing the unauthorized trades.”
Some of DeFi’s Leading Investors Are Backing a New Options Protocol
Cheyenne Ligon – Coindesk
Lyra, an options trading protocol built on Ethereum scaling network Optimism, received $3.3 million in a seed round led by Framework Ventures and ParaFi Capital. The DeFi Alliance, Orthogonal, Robert Leshner’s Robot Ventures and Apollo Capital also participated in the round.
China Stock Rout Spreads Amid Fears of Foreign Investor Exodus
Jeanny Yu and Livia Yap – Bloomberg
A deepening selloff in Chinese stocks spread to the bond and currency markets on Tuesday as unverified rumors swirled that U.S. funds are offloading China and Hong Kong assets.
The speculation, which included talk that the U.S. may restrict investments in China and Hong Kong, triggered a late afternoon bout of selling by traders in Asia who had already been dumping stocks in the crosshairs of Beijing’s sweeping regulatory crackdowns. The Hang Seng Tech Index plunged as much as 10% in Hong Kong, the yuan slid to its weakest since April against the dollar and Chinese bonds sank.
China’s tech giants slammed for second day as Hang Seng dives
Steve Goldstein – MarketWatch
China’s intensifying regulatory crackdown crushed tech stocks for a second day on Tuesday.
The Hang Seng dropped 4.2% after falling 4.1% on Monday, in what’s been the steepest fall for the index since the coronavirus pandemic hit global markets in March 2020. The selling in Hong Kong accelerated toward the end of trading.
Oil edges higher as tight supply outweighs virus spread
Ahmad Ghaddar – Reuters
Oil prices edged higher on Tuesday as investors bet that tight supply and rising vaccination rates will help to offset any impact on demand from surging COVID-19 cases worldwide.
Brent crude futures rose 31 cents, or 0.4%, to $74.81 a barrel by 1336 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 27 cents, or 0.4%, to $72.18.
London FX turnover hits new high as commodity currency trading soars
Trading on London’s foreign exchange market reached a record high in April of $3 trillion in average daily turnover, the Bank of England said on Tuesday, with significant rises in dollar, sterling, Japanese yen and commodity-linked currency volumes.
MIAX Exchange Group – Options Exchanges – August 1, 2021 Fee Changes
The MIAX Options, MIAX Pearl Options and MIAX Emerald Options Exchanges Fee Schedules will be amended on August 1, 2021, pending filing with the SEC.
MIAX Options Exchange, MIAX Pearl Options Exchange, and MIAX Emerald Options Exchange: Primary/Secondary Facility 10 Gigabit ULL
Colt adds connectivity to upcoming Cboe Europe Derivatives market; Users of the Colt PrizmNet network will gain access to the new Cboe derivatives market to trade equity index futures and options when it goes live in September.
Hayley McDowell – The Trade
Connectivity solutions provider Colt Technology Services has said it will provide access to the new European derivatives market at Cboe when it goes live in September. Colt will provide its clients connectivity to Cboe Europe Derivatives (CEDX) via its PrizmNet low-latency network, which aims to speed up time to market, reduce slippage and lost trades for users accessing the new exchange.
Eventus Systems wins Trade Surveillance Product of the Year in 2021 Risk Technology Awards
Second win in category for Validus platform
Eventus Systems, Inc., a leading global provider of multi-asset class trade surveillance and market risk solutions, today won the award for Trade Surveillance Product of the Year in the 2021 Risk Technology Awards. The firm won the comparable honor in 2019, also for its Validus platform that now provides not only trade surveillance and risk monitoring but also anti-money laundering and transaction monitoring.
Inside Volatility Trading: Nothing Remains Unchanged
Kevin Davitt – Cboe
In my experience, travel (music, literature, etc.) is all about perspective. I am a “flatlander” who just visited Montana/Wyoming with my family and life-long friends. Departing Chicago and finding yourself in the northern Rockies inherently forces a perspective shift. We spent time in Yellowstone National Park and discussed John Muir, Lewis and Clark, and other early Western explorers. It’s awe inspiring to observe how quickly the natural landscape moves from rolling plains to 14,000-foot peaks in the Grand Tetons.
Reflexively, I come back to the broad concept of volatility. Volatility is embedded in the natural order. Nothing remains unchanged. Everything is in a constant state of flux. Relative peaks and valleys. For every buyer there is a seller. There are bull and bear markets, up and down days, weeks, or months. There is chaos that gives rise to opportunity. Knowns and unknowns.
The Tether Put: Crypto Equivalent of Credit Default Swap?
Omkar Godbole – Coindesk
Tether, the largest dollar-backed stablecoin, penetrating nearly every nook of the crypto market, is in the news again and for inauspicious reasons.
Perma-bears who are worried that the lingering tether (USDT) scare would eventually culminate in a breaking of the buck might now be searching for the crypto market equivalent of a credit default swap – a derivatives instrument that allows buyers to bet on another trading counterparty’s creditworthiness.
The answer to that might be a put option on tether, essentially a bet that the stablecoin’s price will fall below its ostensible redemption value of $1.
How to prepare for investing in more ‘normal’ timesMarco Mottadelli
Marco Mottadelli, Head of Global Brokerage, Fineco Bank – Finextra
Extreme periods of disruption are seldom quiet. When the stock market moves several percent points in the course of a day, headlines scream while opinion writers speculate on the cause. Such was the case in the latest round of serious market volatility in the latter part of the first quarter 2020. As the pandemic swept around the world, indices from New York to Shanghai plunged as investors sought to absorb the scale and impact of this rather unprecedented global challenge. Markets would shoot up at the announcement of stimulus, only to plummet on miserable viral news.
Registration for IDX is open!
Say goodbye to Zoom and make your plans to connect with FIA and the cleared derivatives community in London at this year’s International Derivatives Expo, taking place 27-28 September at the Park Plaza Westminster Bridge. Registration rates go up after 27 August.
CFEC Releases Results of April 2021 Foreign Exchange Volume Survey
Notice – Tuesday, July 27, 2021, 09:00 (ET)
The Canadian Foreign Exchange Committee (CFEC) released today the results of its April 2021 semi-annual survey of foreign exchange volumes in Canada. The purpose of the survey is to provide information on the size and structure of the foreign exchange and foreign exchange derivatives markets in Canada. Volumes are broken down by product, currency, counterparty, maturity and execution method. The nine banks with the largest foreign exchange sales activity in Canada participate.