The Spread: Time for an Upgrade

Suzanne Cosgrove

Suzanne Cosgrove

Editor

This week on The Spread, Softbank ditches a controversial options investment, the CME becomes the new king of bitcoin derivatives, and more.

Produced by Mike Forrester.

 

Transcript

Welcome to The Spread, I’m Matt Raebel. According to a recent survey by Acuiti, the volatility in the markets this year put a strain on sell-side post-trade systems, causing all kinds of nasty issues. “I’m givin’ her all she’s got, Captain! But I dinnae have the bandwidth to clear that many trades!” Someone probably said that at some point. In response, 95 percent of Tier one and Tier two banks said they plan to invest more in post-trade infrastructure in the next three years to help cope with high-volume periods like the one in March – maybe it’ll come in handy someday. Softbank ditched some huge equity options trades due to investor and employee concerns over the bank’s founder, Masayoshi Son, who allegedly had a personal stake in some of the options investments that cost the bank 2.7 billion dollars between July and September. Son defended the strategy, but it sounds like he finally caved. This kind of trading caused some to start calling Softbank the “Nasdaq Whale,” but in Son’s case the “white whale” might be more appropriate. Bitcoin hit its highest price ever last week, surpassing its 2017 high to reach over nineteen thousand eight hundred dollars per coin. Around that time, the CME Group overtook OKEx, an exchange that is legally based in Malta, but is headquartered in Kuala Lumpur – it’s complicated. Open interest at the CME for bitcoin futures surpassed that of OKEx last week, which is good news for the CME’s options on those futures. Also late last week, the CME announced it would include options on Eurodollar futures in its portfolio margin program with interest rate swap products. I also wanted to give a brief mention to Tesla, which has been a popular company to invest in for options traders, since it’s poised to join the S&P 500 at its full float-adjusted market capitalisation weight before trading starts on Monday, December 21. Is it a good thing? Reddit is certainly excited, and the company’s performance over the past year or two has benefited lots of options traders, despite – or perhaps because of – the antics of its Dogecoin-loving CEO. 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 and 29 of next year. It seems they aren’t taking any chances this time – the event will be totally virtual, so you can watch the whole thing in your PJs, if you want. You can email the event organizers at options conference AT the OCC dot com for details. The email notice said registration and sponsorship info are to follow. JLN covered FIA Asia-V, which was totally virtual this year. Check out our coverage of the event, and other financial topics, on John Lothian News dot com. That’s it for The Spread this week – stay safe and happy trading.

 

Sources:

Banks to increase spend on post-trade infrastructure after failures in market volatility
Annabel Smith – The Trade
https://jlne.ws/39HzxD0

SoftBank abandons its ‘Nasdaq whale’ bets
Kana Inagaki, Leo Lewis, and Robert Smith – FT
https://jlne.ws/2Jw4xuN

Tesla to join S&P 500 in one swoop
Michael Mackenzie – FT
https://jlne.ws/3fVdVUP

Bitcoin Rallies Above $19,000 After Biggest Rout Since Pandemic
Todd White – Bloomberg
https://bloom.bg/3opP528

CME overtakes OKEx as largest Bitcoin futures market
Sam Bourgi – Cointelegraph
https://bit.ly/3mHCuXV

Clearing Firms; Back Office Managers; CME Optimizer Users; CME CORE Users
CME Group
https://bit.ly/3qE7zhw

Save the Date April 28 & 29 The Options Industry Conference is Going Virtual in 2021
OIC
http://bit.ly/2Q6M3iy

John Lothian Newsletter

Today’s Newsletter

Crypto Nomads: Surfing the World for Risk and Profit

Crypto Nomads: Surfing the World for Risk and Profit

First Read $51,906/$300,000 (17.3%) ++++ Hits & Takes John Lothian & JLN Staff The STA is holding the 88th Annual Market Structure Conference in person on October 6-8 at the JW Marriott in Washington, DC with the title "The Great Return." That is a very good...

We visit more than 100 websites daily for financial news (Would YOU do that?)

Past The Spread Episodes

The Spread – July 23, 2021

The Spread – July 23, 2021

Volatility makes a return appearance as the Delta variant jangles nerves; Treasury bond yields perk up; July options expire; John Lothian chats with Cboe’s Ed Tilly about a World of Opportunity; UBS and SEC reach a settlement; FIA Tech expands; and the Options Institute’s Kevin Davitt explains why contract size matters in the “Term of the Week.”

The Spread – July 16, 2021

The Spread – July 16, 2021

Options traders torn between higher Inflation and steady Fed policy; June market share up at MIAX; John Lothian talks about a World of Opportunity; SEC charges binary options shop with fraud; Moscow Exchange set to offer quarterly options on U.S. stock index futures; and the Options Institute’s Kevin Davitt talks about implied volatility in the “Term of the Week.”

The Spread – July 9, 2021

The Spread – July 9, 2021

Chicago, a data destination; SEC, Robinhood and payment for order flow; John Lothian weighs in with his take; Retail trading continues to percolate; and Cboe’s Kevin Davitt explains the differences between equity and index options in the “Term of the Week.”

The Spread – July 2, 2021

The Spread – July 2, 2021

Finra socks Robinhood with its biggest-ever fine; Cboe acquires Chi-X Asia Pacific; OCC reports another volume gain; NIO takes its cue from options; John Lothian weighs in with his take; Looking for volatility; and Jermal Chandler explains hedging in the options “Term of the Week.”

Pin It on Pinterest

Share This Story