This week on The Spread, oil markets go contango, Quantitative Brokers releases a timely futures and options trading algorithm, FIA cancels more events, and more.
Produced by Mike Forrester.
Hello and welcome to The Spread, where just like you, we’re getting through this quarantine one day at a time. I’m Matt Raebel. The oil markets hit a major turning point this week, and not for the better. WTI Crude Oil at the CME became about as valuable as a lead balloon, trading below zero for the first time in history for such a major contract. With the coronavirus keeping everyone at home instead of commuting, demand for oil has gotten so pitiful that oil suppliers literally don’t have anywhere to put it all. I used to have the same problem with all my old VHS tapes, until I found a solution. Unfortunately I don’t think they can fix a problem like this in the same way that I did; ditching thousands of barrels of oil in the woods probably isn’t the way you wanna go. Quantitative Brokers, or QB, launched Striker, a new options on futures execution algorithm. It’s a nifty product that takes a lot of the work out of calculating fair value, and has a lot of other helpful features as well. Products like this, if customers adopt them, may make it harder for the options pits to re-establish themselves when and if the floors reopen in Chicago. John Lothian himself interviewed their CEO Christian Hauff, so check it out – especially if you’re an options and/or futures trader. FIA announced two new event cancellations and one postponement this week. The Law & Compliance conference, which was slated for next week in DC, has been cancelled for this year. IDX, which was going to take place in London in early June, is also off the table; however, the Futures for Kids Gala, a children’s fundraiser that usually happens on the last night of IDX, has been postponed – not cancelled – until sometime later this year, so you can still look forward to helping bring bright futures to kids in the future. The industry is showing its resilience in these trying times; as we discussed before, the Fed okayed the early adoption of the SA-CCR weeks ago. I recently spoke to Cboe’s Angelo Evangelou about why the CBOE is so jazzed about this update – you can listen to the audio interview on our website. Cboe, by the way, also announced it will hold its annual meeting of shareholders on May 12 virtually. No worries about fighting through the crowd to get in. Besides the early adoption of the SA-CCR getting greenlit, the SEC also established a new consolidated audit trail reporting timeline for broker-dealers to help deal with the myriad problems related to coronavirus, and the CME’s clearing house announced it was switching over to the Bachelier pricing model for options to help account for negative oil prices. Seems like everyone’s doing their part to deal with the pandemic. I know I am by staying at home – that, and I’m worried what Chicago’s mayor will do to me if I leave. Illinois governor JB Pritzker extended the quarantine until late May, so tune in next week for another episode of The Spread – I’m not going anywhere.
Wild Oil Market Sees Record Contango as Expiry Nears
Dan Murtaugh and Alex Longley – Bloomberg
What negative US oil prices mean for the industry | Free to read
Derek Brower, David Sheppard, Anjli Raval, and Gregory Meyer – FT
Striker From Quantitative Brokers Brings First Options On Futures Execution Algorithm
John Lothian – John Lothian News
Quantitative Brokers launches first options on futures execution algorithm
Hayley McDowell – The Trade
FIA cancels IDX, L&C and Commodities conferences
SEC issues updated CAT reporting timeline
Brian Croce – Pensions & Investments
US consolidated audit trail timeline disrupted due to COVID-19
Hayley McDowell – The Trade
Switch to Bachelier Options Pricing Model – Effective April 22, 2020
Cboe Global Markets to Host 2020 Virtual Annual Meeting of Stockholders