The John Lothian Daily Update is a podcast turning the daily JLN hits and takes comments, our original content and the stories and quips in the top box of First Read into a daily podcast.
Hits & Takes
Without fanfare or amplification from its executives, the CME Group shut the books on most — but not all — of its floor trading history Tuesday afternoon with the announcement that it will not reopen its trading pits that were closed early last year. The CME closed its Chicago trading floor as of the close of business Friday, March 13, 2020, in response to the COVID-19 pandemic. The Eurodollar options pit, which was reopened in August 2020, will remain open and will trade both electronically and via open outcry. (Options, with their multiple strike prices, expirations and spreads, are generally viewed as more challenging to trade electronically, and euro options command healthy volumes.) CME Group also announced that, subject to regulatory review, it will delist its floor-based S&P 500 futures and options contracts following the expiration of its September 2021 contracts on September 17, 2021. Any remaining open interest in those contracts will be migrated into the E-mini S&P 500 futures and options on CME Globex, the exchange said.~SC
In fitting timing, yesterday before the CME floor closing announcement JLN released a video interview with former CME CIO Jim Krause for The Path to Electronic Trading series. Krause, who looks great since he retired, talks about his career, which featured development of the Globex project from the very start with the Reuters trading match engine system. Thank you Jim for participating in this video. There is some great history and stories he shares. — JLN
There have been whispers in recent weeks that the CME Group would be closing its floors. There were second- and third-hand reports that price reporting employees who work on the trading floor had been told they would not be returning to their jobs. Also, I expect a reduction in fine income from the CME, as the last of the floor-based shenanigans will cease. The saddest part is that Ceres is still closed for the pandemic so we can’t go there and toast the closing of the pits.~JJL
I can remember a prominent trader at the CBOT from 1999 proclaiming the floors would close in 2000 and traders should be aware. He was just a little off.~JJL
The TMX Group has pledged support to COVID-19 relief efforts in India. “Conditions continue to worsen in India, as the devastating outbreak of COVID-19 has overwhelmed hospitals and led to shortages of key medical supplies and resources needed to save lives,” said John McKenzie, Chief Executive Officer, TMX Group. “We salute the brave people working on the front lines during this crisis in India and around the world; including healthcare workers, first responders and volunteers providing essential services and crucial support.” — TMX
It would be great to see broad industry support for relief for India. They need our help.~JJL
Rachna Mathur, the head of equity and index derivatives sales Americas at Deutsche Börse, is running a Facebook fundraiser for GiveIndia to help those affected by COVID-19 there. — Facebook
Barchart is hiring a director of licensing to manage third-party content licensing and relationships and is looking for candidates with significant market data licensing experience. Their business is heavily focused on integrating, aggregating and distributing market data, as well as other content like news in support of global equity, commodity and currency markets. — LinkedIn
Eurex has a busy May planned. It started on May 1 with a VSTOXX future liquidity provider scheme change that will reduce the maturity range to the first three expiries and change the minimum quote size in FVS1 and FVS3. Also on May 1, in FX derivatives they will have amendments to ESU parameters, changing LP schemes to “around the world timezone” schemes that will lead to significantly lower ESU limits compensated by an increase of MM Base. For the whole list of events and necessary actions, click HERE.
The birthrate in the U.S. was down last year and dropped 8% in December, which would correlate with the beginning of the pandemic.~NY Times
We had an anonymous donation of $100 to the JLN MarketsWiki Education GoFundMe campaign yesterday. Thank you to Anonymous and all who have given and all who have yet to give. Support our efforts to preserve industry history by giving to our GoFundMe campaign.
Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL
The founder of /r/WallStreetBets has announced that he is launching a new blockchain trading app with other members of the Reddit community to “combat market manipulation,” which is hilarious. The app will allow users to gain exposure to various ETPs and will run on a decentralized autonomous organization (DAO), which will be governed using a digital token called a $WSB token. This will allow users on the app to vote on important decisions within the community, including whether to adjust exposure to each ETP, which will be owned by the community.~MR
JIm Krause: The Path to Electronic Trading
Jim Krause came to the futures industry from a job in temperature control and HVAC at a company called MCC Powers. He followed Don Serpico, his supervisor at MCC Powers, who had been hired by the Chicago Mercantile Exchange, to the CME. His timing could not have been better. He was hired to develop the clearing system at the CME.
CME Group to Close Most of Its Chicago Trading Pits Permanently; Floor trading for agricultural commodities has existed in the Midwest hub since the mid-19th century
Alexander Osipovich – WSJ
The exchange operator CME Group Inc. CME 0.32% said it would permanently close most of its open-outcry trading pits in Chicago, ending one of the world’s last vestiges of old-fashioned floor trading. CME said Tuesday that a number of trading pits that it closed temporarily in March 2020 to prevent the spread of Covid-19 wouldn’t be reopened. Many U.S. workplaces are coming back to life as the pandemic eases.
*****My posts to several exchange-related Facebook groups showed responses from sadness to statements that open outcry trading ended 10 years ago.~JJL
LaSalle Street buildings go up for sale; The marketing of the two properties could reveal investor sentiment about Loop offices.
Danny Ecker – Crain’s Chicago Business
What will investors pay for LaSalle Street office buildings amid the COVID-19 pandemic? A pair of landlords on the high-profile Loop corridor want to find out. In the larger of two new offerings, a joint venture of New York-based Fortress Investment Group and Chicago-based Hearn has hired the Chicago office of Jones Lang LaSalle to market the 26-story building at 2 N. LaSalle St. for sale.
*****This will be an important test of the Chicago financial district’s real estate market.~JJL
If the Pentagon Takes UFOs Seriously, So Should Markets; The possibility of alien life on Earth has implications for the entire human race, including investors.
Tyler Cowen – Bloomberg
Now that the Pentagon takes UFOs seriously, it’s perhaps appropriate to consider some more mundane aspects of the phenomenon — namely, what it means for markets. UFO data will probably remain murky and unresolved, but if UFOs of alien origin become somewhat more likely (starting, to be clear, from a low base rate), which prices will change? Or, to put the question in market terms: Where is the alpha in Alpha Centauri?
*****If Thor shows up, I will take it seriously.~JJL
The Dogecoin Joke Is Turning Serious in Latest Crypto Binge
Justina Lee and Joanna Ossinger – Bloomberg
Digital token’s value soars overnight to $90 billion; Cryptomania popularity may be hurting gold, say analysts
For anyone who still thinks Dogecoin is a joke, there are 90 billion reasons that say it’s not. That’s how much the digital token is now worth in dollar terms after another 40% gain in the 24 hours through Wednesday. Useless or not, the coin has been swept up in the crypto mania that’s gripped markets awash in central bank largesse. It’s the latest milestone in a year of speculative excesses for a market Nouriel Roubini once described as “the mother of all bubbles.”
*****My college student, IT-studying son, Robby Lothian, bought $50 worth of Dogecoin at the beginning of the year. He was up over 600% at last reading a couple of days ago.~JJL
Tuesday’s Top Three
The top story on Tuesday was from the Financial Times about a Chicago-based company, Environmental derivatives firm IncubEx raises $12m in funding round. The second most read was JLN’s MarketsWiki page on IncubEx, http://www.marketswiki.com/mwiki/IncubEx. And the third was from Bloomberg, a particularly interesting story in light of the CME Group’s Tuesday announcement, NYSE Says More Staff Can Return to Trading Floor If Vaccinated.