Stock Trading Frenzy Has U.S. Volumes Near Peak Panic Levels; Brexit deals London another blow with loss of euro derivatives volumes

Feb 12, 2021

$28,251/$300,000 (9.4%)
Adam Spence

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Derivatives Forum Frankfurt 2021. Registration is open!Eurex invites you to join the virtual edition of the Derivatives Forum Frankfurt 2021! It will take place on 23-24 March 2021 covering European and the US time zones.

The Derivatives Forum Frankfurt 2021 will be held as virtual edition with thought leadership insights, industry debates, keynote speeches and virtual networking opportunities. The Derivatives Forum is the leading European event focused on trading and clearing for derivatives and securities financing across asset classes.

We look forward to welcoming you on March 23.


Observations & Insight

MR: JLN will not be publishing the JLN Options Newsletter on Monday, February 15, 2021 in observance of President’s Day. We will resume our usual publishing schedule on Tuesday, February 16, 2021.

Lead Stories

Stock Trading Frenzy Has U.S. Volumes Near Peak Panic Levels
Cormac Mullen – Bloomberg
The frenzy of trading in U.S. equities is showing no signs of abating and looks set to surpass levels seen during the worst of the pandemic panic in March.
Over the last 20 days, an average 15.8 billion shares have traded each day on all U.S. exchanges, according to data compiled by Bloomberg. That’s just below the 16.1 billion average hit on March 25, which was the highest in at least over a decade, the data show.

Brexit deals London another blow with loss of euro derivatives volumes; A report by IHS Markit found that UK market share in euro-denominated swaps fell from 40% to 10% in January.
Annabel Smith – The Trade
The UK’s market share in euro-denominated swaps plummeted from roughly 40% to just over 10% in January this year, data by IHS Markit has revealed. The data published by IHS Markit on 11 February found that UK market share in euro swaps traded on multilateral trading facilities (MTFs) and organised trading facilities (OTFs) fell 30% in the first month of the year.

*****JB: Also see the Financial Times story, Fresh blow for London as euro derivatives trading floods out.

Credit Suisse’s Mandy Xu on Volatility, S&P 500 Risk
Bloomberg (VIDEO)
Mandy Xu, chief U.S. equity derivatives strategist at Credit Suisse, discusses the Reddit-driven retail stock frenzy and market volatility.

Exchanges and Clearing

Nasdaq: 50 Years of Market Innovation; This month marks the 50th anniversary of Nasdaq’s launch in 1971. The story of Nasdaq’s first five decades highlights its impact on trading today.
Phil Mackintosh – Nasdaq
This month marks the 50th anniversary of Nasdaq’s launch in 1971.
The story of Nasdaq’s first five decades highlights its impact on trading today. The introduction of computers to markets, and sharing of quote data more widely, led to the automation of trading. With that automation came huge cost savings that, together with the internet, have democratized investing and helped the U.S. market stay the biggest, deepest and most cost-efficient market to list and trade in in the world.

*****Congratulations to Nasdaq. May your next 50 be even better!~JJL

Is the stock market open on Presidents Day? Here are trading hours
Mark DeCambre – MarketWatch
U.S. financial markets will pause Monday in observance of Presidents Day — which, technically, is not the name of the holiday.
The New York Stock Exchange and Nasdaq will be closed on Feb. 15. And the Securities Industry and Financial Markets Association, or Sifma, is recommending no trading in dollar-denominated securities, meaning the closely watched 10-year Treasury note TMUBMUSD10Y, 1.194% — as well as interest rates for money markets and certificates of deposit — will join the Dow Jones Industrial Average, the S&P 500 index and the Nasdaq Composite Index in a static state.

Euronext Norwegian Derivatives contracts expands to green stocks
From today options and futures will be listed on the green companies Tomra, NEL og Scatec. In December 2020, the Oslo Børs Derivatives market successfully migrated onto the Euronext Optiq platform, further supporting the growth of Oslo Børs thanks to an enlarged pool of liquidity and investors, and a flexible and agile trading technology.

Initial Listing of the Options on Standard and Poor’s 500 Stock Price Index Futures – Quarterly PM (European-Style) Contract
CME Group
Effective Sunday, March 7, 2021 for trade date Monday, March 8, 2021, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will list the Options on Standard and Poor’s 500 Stock Price Index Futures – Quarterly PM (European-Style) contract (the “Contract”) for trading on the CME Globex electronic trading platform (“CME Globex”) and for submission for clearing via CME ClearPort as more specifically described in the table below.

ESG Core Investments lists on Euronext Amsterdam
Euronext today congratulates ESG Core Investments, a Special Purpose Acquisition Company (SPAC) with a unique Environmental, Social and Governance (ESG) profile, on its listing on the Amsterdam Exchange (ticker symbol: ESGT and ESGWA). ESG Core Investments was successfully listed through the admission to trading of the 25,000,000 shares. At opening, the share price was set at EUR10.00 per share. Market capitalisation was approximately EUR250 million on the day of listing. With its listing, ESG Core Investments offers a unique investment opportunity for institutional and retail investors in Europe and globally. ESG Core Investments strives to acquire a majority stake in a strongly positioned ESG company in North Western Europe, supporting that company to realize its growth ambitions. With its strong track record in ESG, Infestos Sustainability B.V is the sole sponsor.

More than 100,000 contracts traded: new daily record in ESG derivatives
Ahead of their second anniversary on 18 February, Eurex’s ESG products remain on course for success: a new daily record was set on 11 February 2021 with 104,000 contracts traded, with Options on the STOXX Europe 600 ESG-X accounting for the majority of the contracts traded. Cumulatively, 2.1 million ESG contracts have now been traded since the launch of the first ESG derivatives in February 2019. Eurex has been at the forefront of launching ESG-based contracts and now offers several futures and options for investors looking to gain exposure to indexes that incorporate ESG index methodologies such as negative screening or ESG integration.

Retail Trading Reaches Record at CME
Traders Magazine (press release)
Global retail participation on CME Group increased 50% last year and growth is expected to continue.
Julie Winkler, chief commercial officer at CME Group, said on the results call today that global retail participation on CME was a record last year after increasing 50% over 2019. The largest retail volume was in equity index contracts, but participation in metals rose 50% and volumes also grew in foreign exchange and energy. “Our digital education outreach reached 2.5 million traders, 15 times as many active traders as doing physical events,” she continued. Terry Duffy, chairman and chief executive of CME Group, said on the results call today that retail is not going away. “We want their participation in all our markets but education is very important,” he added.

Regulation & Enforcement

US suspends trading in penny stock as regulator sharpens gaze
Eric Platt and Hannah Murphy – Financial Times
US securities regulators on Thursday suspended trading in a seemingly defunct company whose shares had attracted the attention of investors over the past two months.
The decision by the Securities and Exchange Commission to bar trading in SpectraScience, a Minnesota healthcare company, comes as new and inexperienced retail traders have flooded into the country’s $45tn stock market, drawing scrutiny from policymakers in Washington.


The London Metal Exchange selects Itiviti for automated client onboarding as part of trading infrastructure overhaul
London, February 11, 2021 – Itiviti, a leading technology and service provider to financial institutions worldwide, today announced that the London Metal Exchange (LME) has chosen Itiviti’s FIX Conductor and VeriFIX Enterprise solutions to automate the onboarding process for their clients. The implementation comes as part of the LME’s wider programme to refresh its overall trading infrastructure, which includes fully rebuilding LMEselect, its electronic member-to-member trading system. The new version of LMEselect will deliver FIX 5.0 protocol access through a convenience gateway, which will give clients access to all the partitions within the trading system.


Nationwide’s ‘NUSI’: Protective Hedges, Covered Calls, and More
ETF Trends
Interest rates are still low, but Treasury yields are on the rise, presenting fixed income investors with a vexing scenario. The Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) is an ideal way to thrive during tricky bond climates. NUSI can act as a complement to traditional equity and fixed income allocations or as the ideal protective hedge for investors with heavy exposure to technology and growth stocks because the fund is a “rules-based options trading strategy that seeks to produce high income using the Nasdaq-100 Index,” according to Nationwide. Rather than relying on dividend stocks or interest from bonds, NUSI generates income from covered calls. Covered call strategies such as NUSI can augment a portfolio during periods of heightened volatility. The options allow an investor to hold a long position in an asset while simultaneously writing or selling call options on the same asset.


Naked options: Definition, risks, how naked calls and naked puts work
Simon Chandler – Business Insider
Options trading has become increasingly popular with investors over the last few years — they’re a way to lock in good prices on stocks without being obliged to actually purchase if they don’t perform as predicted. There is, however, a type of option which is particularly risky, even if it appears to offer a way of profiting at a minimal cost.


Registration is open! – FIA Boca 2021

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.


Why recruiting for investment-banking internships is starting earlier
Reed Alexander – Business Insider
If you want to work on Wall Street, chances are your path will begin with a competitive summer internship before you start your senior year of college.
But the journey to an investment-banking internship can kick off as early as 24 months beforehand, according to industry insiders.

(Podcast) TWIFO 236: ETH Rockets Onto The Scene
This Week in Futures Options – Options Insider Radio Network
Host: Mark Longo, The Options Insider Media Group
Co-host: Sean Smith, FTSE Russell
Cme Hot Seat: Tim McCourt, CME Group

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