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.
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.
Banks to increase spend on post-trade infrastructure after failures in market volatility
Annabel Smith – The Trade
SoftBank abandons its ‘Nasdaq whale’ bets
Kana Inagaki, Leo Lewis, and Robert Smith – FT
Tesla to join S&P 500 in one swoop
Michael Mackenzie – FT
Bitcoin Rallies Above $19,000 After Biggest Rout Since Pandemic
Todd White – Bloomberg
CME overtakes OKEx as largest Bitcoin futures market
Sam Bourgi – Cointelegraph
Clearing Firms; Back Office Managers; CME Optimizer Users; CME CORE Users
Save the Date April 28 & 29 The Options Industry Conference is Going Virtual in 2021