Anonymous, Trading Technologies
Observations & Insight
Tom Ascher – Open Outcry Traders History Project – Part One
Tom Ascher was interviewed by John Lothian News over Zoom for the Open Outcry Traders History Project. Ascher traded at the Chicago Board Options Exchange, and after getting into exchange politics he rose to vice chairman of the CBOE board. He later served as the CEO of Nasdaq-Liffe and had a long run as the chief strategy officer of the International Securities Exchange. Today, he is the executive chairman of Quantitative Brokers, which is majority owned by Deutsche Boerse.
Options traders make gargantuan VIX options bet; FINRA gently reminds members to exercise “reasonable diligence” – The Spread
This week on The Spread, traders make a $40 million bet on VIX options, FINRA reminds its members to vet options trading accounts appropriately, MIAX announces a new partnership, and more.
Stock Shorts Collapse as No Hedge Fund Wants ‘Head Ripped Off’
Justina Lee and Lu Wang – Bloomberg
Wall Street bears battered by the Reddit crowd earlier this year have yet to regain their gumption, even with stocks at records and valuations near two-decade highs.
The median short interest in members of the S&P 500 sits at just 1.6% of market value, near a 17-year low, according to Goldman Sachs Group Inc. In Europe, a short-covering frenzy has sent bearish bets collapsing like never before in Morgan Stanley data.
Global Derivatives Market Embraces Pact to Preempt Libor Pain
William Shaw – Bloomberg
Most major financial firms have signed on to ISDA protocol; There’s close to $280 trillion in derivatives linked to Libor
A sweeping agreement designed to prevent turmoil from being unleashed in the global derivatives market when Libor expires is gaining widespread acceptance. Nearly 14,000 parties have agreed to sign on to the ISDA protocol, according to the International Swaps and Derivatives Association. The pact allows for Libor to automatically be yanked from hundreds of trillions of dollars of interest-rate swaps, futures and options and replaced with another rate, addressing a major risk hanging over markets as the discredited benchmark’s end nears. https://bloom.bg/3n1BDlv
US STOCKS-Futures dip after S&P 500, Dow hit record closing highs
Shivani Kumaresan – Reuters
U.S. stock index futures eased on Monday after the S&P 500 and the Dow closed at record highs in the previous session, while investors geared up for quarterly earnings reports from Coca-Cola and IBM. The world’s largest soda maker dipped 0.4% premarket ahead of its first quarter report. Technology company IBM is slated to post its results after markets close. About 79 S&P 500 companies are due to report earnings this week including Johnson & Johnson, Netflix Inc, Intel Corp, Honeywell and Schlumberger, according to Refinitiv IBES data.
Exchanges and Clearing
OCC Announces Clearing Fee Reduction to Two Cents Effective June 2021
As part of its continued commitment to deliver operational excellence to the users of the U.S. equity derivatives markets, OCC, the world’s largest equity derivatives clearing organization, today announced a reduction in clearing fees from four and a half cents ($0.045) per contract to two cents ($0.02) per contract effective June 1, 2021, subject to regulatory review.
Smart Execution with Quote Depletion Protection
Eugene Davidovich – Cboe
Quote Depletion Protection (QDP) for Midpoint Discretionary Orders (MDO) is a popular order type for market participants who aim to avoid adverse selection while accessing hidden liquidity. MDOs allow participants to post displayed or non-displayed liquidity at the National Best Bid or Offer (NBBO) with discretion to execute up to and including the midpoint of the NBBO. By pairing a QDP instruction with an MDO, brokers may be able to minimize potential outliers and protect themselves from adverse selection.
MIAX Exchange Group – Options Markets – New Listing Effective for April 20, 2021
The option class listed below will begin trading on the MIAX Options Exchange, the MIAX PEARL Options Exchange, and the MIAX Emerald Options Exchange on Tuesday, April 20, 2021: Coinbase Global, Inc. (COIN) Market Makers can use the Member Firm Portal (MFP) to manage their option class assignments. All LMM and RMM Option Class Assignments must be entered prior to 6:00 PM ET on the business day immediately preceding the effective date. All changes made after 6:00 PM ET on a given day will be effective two trading days later. MIAX Options and MIAX Emerald Primary Lead Market Maker (PLMM) assignments and un-assignments will not be supported via the MFP.
Position Limits and Accountability Levels
Effective on trade date Monday, May 3, 2021, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory supersedes CME Group Market Regulation Advisory Notice RA2101- 5RR from March 15, 2021. It is being issued based on amendments to CME, CBOT, and NYMEX/COMEX Rule 559 (“Position Limits and Exemptions”) that harmonize the rule text with language already contained in RA2101-5RR and the CFTC’s final rules concerning position limits. Specifically, the amendments codify the requirements attendant to market participants who submit a position limit exemption application after exceeding a position limit.
Regulation & Enforcement
Lawsuits against Robinhood in the GameStop saga are getting their day in court — but there’s one big snag
Andrew Keshner – MarketWatch
When Robinhood suddenly set buying restrictions at the height of the GameStop trading frenzy in the early months of 2021, users reacted with fury.
Now, the legal journey begins in earnest on Monday for those angry investors.
Libor-Replacement Competitor Gains Strength From New Offerings
Julia-Ambra Verlaine – WSJ
Financial industry pioneer Richard Sandor is ramping up his efforts to compete in the race to replace the London interbank offered rate, which helps set borrowing costs on everything from mortgages to business loans. Mr. Sandor—who helped create interest-rate futures in the 1970s and launched his own replacement for the scandal-marred short-term interest-rate benchmark in 2019—is expanding offerings to include one-month and three-month borrowing rates. Ameribor is set on the American Financial Exchange, which was founded by Mr. Sandor and is where banks lend to each other through mutual lines of credit. Some small and medium-size lenders favor Ameribor because it changes with their funding costs.
SEC Indicts Spot Option and Two Operators, Pini Peter and Ran Amiran
Arnab Shome – Finance Magnates
The United States financial market regulator has moved against binary options company, Spot Option and its two operators, Malhaz Pinhas Patarkazishvili (Pini Peter) and Ran Amiran for running illegal operations in the country and deceiving investors. The lawsuit filed by the Securities and Exchange Commission (SEC) in a Nevada court on April 16 alleged that Spot Option, Ltd., now known as Spot Option Tech House, Ltd., operated in the US from at least April 2012 through August 2017. The binary options scheme onboarded thousands of US-based investors, including retirees, who lost hundreds of thousands of dollars from their retirement savings, while the company raked in millions.
OCC Congratulates New SEC Chair Gary Gensler
OCC, the world’s largest equity derivatives clearing organization, today congratulated Gary Gensler on becoming the new U.S. Securities and Exchange Commission (SEC) chair.
Craig Donohue, OCC Executive Chairman, said, “On behalf of the Board of Directors and my OCC colleagues, we congratulate Gary Gensler on becoming the new SEC chair. His deep expertise in public policy combined with his wealth of knowledge about the global financial markets will serve the Commission and the investing public well. We look forward to working with him and the other Commissioners on key issues related to ensuring continued confidence in the financial markets and the broader economy.”
JPMorgan dismisses correction fears and says investors should buy any dips in stocks
Harry Robertson – Markets Insider
Investment bank JPMorgan has said it remains positive about global stocks and recommended that investors buy any price dips over the coming months, despite some fears about high valuations.
Although there are a few signs that equities could be due a fall, the rollout of coronavirus vaccines and recoveries in service sectors should keep boosting the market, JPMorgan said in a note Monday.
Fundamentals of Futures & Options (also 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.”
Dates: May 10, 2021 through May 14, 2021, 12:00 p.m. to 2:00 p.m.
Location: Virtual Live. 2-hour sessions over 5 days.
Instructor: Marti Tirinnanzi
Class size registration is limited to approximately 20 participants to promote student participation and interaction.
The World Federation of Exchanges to Hold 37th Clearing & Derivatives Forum This Week
The World Federation of Exchanges
The World Federation of Exchanges (“The WFE”), the global industry group for CCPs and exchanges, will hold the 37th edition of its Clearing & Derivatives Conference virtually this week. The conference runs April 19 through April 23.
The conference brings together academics, policymakers, regulators, CCPs, derivatives markets and practitioners from around the world to exchange ideas on the opportunities and challenges for the future of central and bilateral clearing in the light of regulatory reforms, market structure changes and technological developments.
Clearing 101: Exchanges, Clearinghouses and CCPs
Dates: Sep. 15, 2021 12:00 p.m. – Sep. 16, 2021 1:30 p.m.
Location Virtual Live. Two 90-sessions over 2 days.
Instructor: Marti Tirinnanzi
Registration is limited to approximately 20 participants to promote student participation and interaction.
Join us for a short program (90 minutes each day for 2 days) that explains the multilateral systems that provide the infrastructure for transferring, clearing and settling payments, derivatives and other financial transactions among financial institutions and end users. Following Dodd Frank, clearinghouses became designated as Systemically Important Financial Market Utilities, vital to the operations of the financial markets and subject to heightened regulatory scrutiny. Buyers and sellers in exchange transactions rely on clearinghouses to intermediate transactions and to manage credit risks between trading parties. As such, clearinghouses promote transparency, efficiency, and stability by providing market-based pricing, daily settlement, and ensuring adequate capitalization for markets to function.
Q1 2021 ETD Volume
May 5, 2021; 10:00 a.m. to 11 a.m. ET
The webinar will highlight the main trends in trading activity in Q1 2021 in the global exchange-traded derivatives markets, with category and regional breakdowns as well as exchange and contract rankings. The webinar also will feature two guest speakers from UBS discussing the rise of retail participation in the U.S. ETD markets.
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 its 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.
The Covered Call Options Strategy
Date: Wednesday, May 12, 2021
Time: 3:30 p.m. CT
Duration: 1 hour
Mark Benzaquen – Principal, Investor Education – OCC
For options investors, the covered call is one of the core strategies for income generation, but there are many details to consider before opening a position. On May 12, join The Options Industry Council’s Mark Benzaquen, a former pit broker who now focuses on options education, for a detailed overview of the covered call.
Here’s a technical analyst’s explanation of the short squeeze driving bonds
Steve Goldstein – MarketWatch
Short squeezes aren’t just for videogame retailers.
The big surprise in financial markets over the last two weeks has been the strength in government bonds, even after stronger-than-forecast U.S. consumer price and retail sales data were released.
(Podcast) VV 442: Shifting Volatility
Volatility Views – Options Insider
Host: Mark Longo, The Options Insider Media Group
Matrix Hot Seat: Andrew Giovinazzi, The Option Pit
MIAX Hot Seat: John Smollen, Miami Exchange Group