Observations & Insight
The first panel for FIA Asia-V was “The Outlook for Asia-Pacific Exchanges.” There were two polling questions during the panel. The first was “What new product category are you most interested in for 2021?” The results this morning showed 41% ESG, 9% Volatility, 0% Single stock futures & options, 16% Mini contracts, 16% Technology indices and 19% New Asia country indices. ~JJL
The Options Industry Council (OIC) has emailed out its save the date for the Options Industry Conference 2021, which is currently planned for April 28 – 29, 2021. It seems they aren’t taking any chances this year – the event will be totally virtual. You can email the event organizers at firstname.lastname@example.org for details. The email notice said registration and sponsorship info are to follow. ~MR
From FIA President and CEO Walt Lukken’s opening remarks for the FIA Asia-V conference: “FIA recently published a white paper that examines the increases in initial margin at derivatives clearinghouses during the March timeframe. While margin increases are expected during volatile times, we must make sure that margin levels are calibrated to be predictable and not overly procyclical, adding undue stress during these times of market turbulence. FIA’s paper makes several suggestions, which aim to promote an important dialogue within the industry and regulatory community on whether improvements need to be made.” ~SR
FIA also recently published a policy paper on “How derivatives markets are helping the world fight climate change.” The paper highlights existing industry solutions and potential partnerships to help build a more sustainable economy. ~SR
‘Strong markets finish strong’: Why the stock market is poised to hit records in December, according to Fundstrat
Matthew Fox – Markets Insider
The US stock market is poised to hit new records in the month of December, according to Fundstrat’s Tom Lee.
In a note on Monday, Lee explained that “strong markets finish strong” based on a historical analysis of price action in the stock market.
The Market Expects That Everything Will Be Awesome
James Mackintosh – WSJ
Rarely have investors had better reason to be optimistic. Vaccines are imminent, the economy’s doing well and money has never been cheaper.
After an awful year, things are finally looking up.
A ‘severe’ drop is imminent, this stock market is signaling, says contrarian strategist
Barbara Kollmeyer – MarketWatch
Buoyed by hopes for a handful of COVID-19 vaccine approvals, stocks are flying out of the gate on the first trading day of December. That is on the heels of a gravity-defying month.
This year’s recovery for equity markets in the face of a deadly pandemic has been remarkable, so a strong December would seem to follow.
*****JB: It is not lost on us how different this story is from the two just above it.
After a turbulent year, the “fear index” calms down
Dan Atkinson – Capital.com
They call it the “fear index”, which may be another example of those employed in financial markets trying to make their work sound rather more dangerous and exciting than it really is – think of Wall Street’s “triple witching hour”. Its proper name is the Volatility Index (VIX) and, as the name suggests, it is used to forecast the likely level of volatility in the immediate future. It was devised by the Chicago Board Options Exchange and is based on the Standard & Poor’s 500 index.
Exchanges and Clearing
New exchanges bring ambition to reshape US equity market
Richard Henderson – FT
Three new stock exchanges launched in September have begun to alter the shape of the world’s biggest equity market, challenging the trio of incumbents that dominate US share trading. Long Term Stock Exchange in San Francisco, Miax Pearl Equities in Miami and New Jersey-based Members Exchange, known as MEMX, all debuted in the same month and bring the number of US stock markets to 16.
London determined to stay top in euro derivatives clearing, LSE says
Huw Jones – Reuters
The City of London is determined to make sure that it remains the top centre for clearing euro-denominated financial derivatives, a senior London Stock Exchange official said on Tuesday, as Britain’s finance industry steps up its lobbying for permanent access to the European Union after Brexit.
Policymakers in the bloc see Britain’s full departure from the EU on Dec. 31 as a chance to shift large chunks of clearing in widely used euro derivatives from London to Eurex in Frankfurt.
MIAX Exchange Group – Options Markets – Corporate Action Alert: Apartment Investment and Management Company (AIV)
Apartment Investment and Management Company (AIV) has announced a 1-for-1.23821 reverse stock split effective for Tuesday, December 1, 2020. On that date, the current AIV option class will change to AIV2. The MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange will not list AIV2 options. Therefore, no options on AIV will be available for trading on Tuesday, December 1, 2020.
MIAX Exchange Group – Options Markets – Delisting of Aarons Holdings Company, Inc. (AAN)
Aaron’s Holdings Company, Inc. (AAN) will be de-listed from the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange effective on Tuesday, December 1, 2020. All GTC orders resting on the MIAX order books in AAN will be canceled at the close of business on Monday, November 30, 2020.
MIAX Exchange Group – Options Markets – Corporate Action Alert: Wrap Technologies, Inc. (WRTC) Symbol Change to (WRAP)
Wrap Technologies, Inc. (WRTC) will have a symbol change to (WRAP) effective on Tuesday, December 1, 2020. All GTC orders resting on the MIAX order books in WRTC will be canceled at the close of business on Monday, November 30, 2020. NOTE: WRAP options will trade on Cloud 19 on the MIAX Options Exchange and on Cloud 10 on the MIAX PEARL Options Exchange and the MIAX Emerald Options Exchange.
MIAX Exchange Group – Options Markets – Delisting of Titan Pharmaceuticals, Inc. (TTNP)
Titan Pharmaceuticals, Inc. (TTNP) will be de-listed from the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange effective on Tuesday, December 1, 2020. All GTC orders resting on the MIAX order books in TTNP will be canceled at the close of business on Monday, November 30, 2020.
MIAX Exchange Group – Options Markets – Corporate Action Alert: iShares 10-20 Year Treasury Bond ETF (TLH)
iShares 10-20 Year Treasury Bond ETF (TLH) has announced a capital gains distribution. Associated strike price adjustments will become effective on Tuesday, December 1, 2020. TLH options will continue to trade without interruption on the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange. All GTC orders resting on the MIAX order books in TLH will be canceled at the close of business on Monday, November 30, 2020.
Options Trader Alert #2020 – 34 Nasdaq BX Updated Pricing Schedule Effective December 1, 2020
Effective Tuesday, December 1, 2020, pending filing with the SEC, the following changes will apply to Nasdaq BX Options 7, Section 3. Nasdaq BX Options will retire symbol-specific pricing overlaying options on SPY. Penny Symbols Tier Schedule will apply to relevant transactions in options overlaying SPY.
Data Technical News #2020 – 44 All SOD GIFFD Files for all US Indexes are Now Available
All start of day GIFFD files for Tuesday, December 1, 2020, are now available for all Nasdaq US indexes including NBI, NDX, and COMP. The files were delayed and are now available on GIFFD.
Reminder: CME Optimizer Software Version 15 Release, Mandatory Upgrade Required CME Group
As a reminder, in conjunction with CME expanding the Portfolio Margin program to include Options on Eurodollar Futures, CME is releasing a new build of the Optimizer software, version 15. Optimizer users must upgrade to the newest build by the production deadline December 7, 2020. Firms who do not upgrade on the production deadline will experience subsequent Optimizer failures.
Production: CME Inclusion of Options on Eurodollar Futures in Portfolio Margin Program with Interest Rate Swaps (IRS) Products – Effective December 07, 2020
As referenced in advisory #20-416, CME is expanding its portfolio margining offering for IRS Products to include several Options on Eurodollar Futures in addition to existing eligible Futures products: Eurodollar Futures, Fed Funds Futures, Treasury Futures and Deliverable Swap (MAC) Futures. This expansion is scheduled to be enabled in the Production environment on December 7th , 2020, subject to regulatory approval. Note that the inclusion of Listed Options has been available for testing in CME’s test environment since October 28th, 2020.
CME Launches Trio of FX Analytics Tools
Shanny Basar – Traders Magazine
CME Group recently launched its third new foreign exchange analytics tool since the summer as the exchange prepares to migrate EBS Markets for FX trading to CME Globex, its proprietary platform, next year. The exchange acquired EBS as part of its purchase of NEX Group in 2018.
He turned $5,000 into nearly half a million with the help of Tesla options — now he’s all in on just two stocks
Shawn Langlois – MarketWatch
It was a November to remember for a trader going by the name of osbetel in Reddit’s stock-flipping “WallStreetBets” community, where outsized risk reigns and passive investing is left to the boomers.
If his story is to be believed, osbetel has managed to turn $5,000 into just shy of $500,000 in a matter of weeks, thanks mostly to his Tesla TSLA, 2.83% option plays, which skyrocketed when it was announced that the stock would be added to the S&P 500 SPX, 1.29%.
Next stop, he says, $1 million by year-end.
Opening remarks of FIA President and CEO at the virtual Asia Derivatives Conference 2020
Walt Lukken – FIA
Thank you, Bill and Ian. I appreciate all the good work and leadership that you all and the FIA Asia board provide for our industry. A special note about Bill who finished among the top ten participants for the SGX Bull Charge for charity last month, logging more than 350 kilometers over those two weeks. That is an impressive feat! Good morning everyone and welcome to the FIA Asia Derivatives Conference. I’m Walt Lukken and I want to thank you for being a part of the FIA community during these challenging days. As you can see from my surroundings, I’m coming to you live from Washington DC, but my heart is in Singapore. I’m disappointed I cannot be with you in person because the FIA Asia conference always is a highlight that caps off the year for our industry. I am feeling a bit nostalgic about not being in Singapore?
S&P Global’s $39 Billion Deal Marks Data’s Dominance in Markets
Lananh Nguyen and Viren Vaghela – Bloomberg
S&P Global Inc. grew out of a firm that provided bond ratings and railroad data. IHS Markit Ltd. traces its roots to a British barn and an effort to offer prices for the opaque world of credit derivatives.
Now, the second-biggest acquisition of 2020 will combine the two into a data Goliath that tracks everything from the price of wheat to the movements of hundreds of thousands of ships criss-crossing the world’s oceans.