The Spread: ‘Tis The Season

Matt Raebel

Matt Raebel


This week on The Spread – the OCC gives back to the derivatives industry, the CME Group pays hefty fines to the CFTC, Cboe plans for the worst, and more.

Produced by Mike Forrester.


Welcome to The Spread, I’m Matt Raebel. The OCC had a couple of big announcements this week. First off, they released volume data for the month of July and once again, volumes were record-high. How high, you ask? How does a fifty-two point five percent increase in total volume grab you? The OCC report said that last month was the third-highest month ever in terms of cleared contract volumes and the highest ever for the month of July – once again beating themselves at their own game. Speaking of the OCC, they announced this week that Christmas has come early for the derivatives industry, because the OCC is in a giving mood! The OCC has had such a good year, they’re making it more affordable for market participants to trade by lowering trading fees and giving out refunds to clearing member firms. They will be reducing clearing fees for derivatives from five and a half cents per contract to four and a half cents per contract as of September, pending regulatory approval. The CME Group will have to pay at least three point five million dollars in fines to the CFTC after admitting liability for the actions of two former employees who leaked trade secrets to a broker named Ron Eibschutz, who used them to trade crude oil and natural gas options between 2008 and 2010. You know what they say – loose lips sink ships, and sometimes they also get you into legal trouble. Cboe is preparing for the worst as the coronavirus pandemic increases in the U.S. Plans for an alternative, virtual trading floor were filed with the SEC in June. Cboe’s Chief Operating Officer Chris Isaacson said on a conference call last week that this was a preparatory measure in case the city of Chicago forced Cboe to close its doors again, and that it was “just an option.” He did not confirm whether or not the pun was intended. Cboe also published its trading volume for July this week, revealing that average daily volume across its four exchanges was up 33 percent from July 2019 – guess we know where a big chunk of the contracts the OCC cleared came from. The exchange will also launch a new product this Sunday night – Mini VIX Futures. My money’s on those adding a healthy amount to Cboe’s August volume, given the popularity of “Mini” derivatives. Meanwhile in Canada, Cboe also completed its acquisition of MATCHNow, one of the biggest ATS’s in Canada, continuing their expansion across North America and Europe. JLN has begun publishing our videos of MarketsWiki World of Opportunity. This week we published our video of Bevon Joseph’s presentation. We also have a new report by Suzanne Cosgrove on how Chicago Fed President Charles Evans views the economic impact of COVID-19. You can check that out on our site, John Lothian News dot com. That’s it for The Spread this week, stay safe and happy trading. We’ll see you next week.


OCC July 2020 Total Volume Up 52.5 Percent from a Year Ago
Third-Highest Month on Record; Highest July Ever

OCC To Lower Costs for Users of U.S. Equity Derivatives Markets
Announces Fee Reduction, Projected Year-End Refund for Clearing Member Firms
Press Release via Business Wire

CME to pay $3.5m over leak of secret trade data; US exchange operator admits liability in case involving oil and natural gas options
Gregory Meyer – FT

Cboe braces for possible floor re-closing
Lynne Marek – Crain’s Chicago

Cboe Global Markets Completes Acquisition of Leading Canadian ATS MATCHNow
Cboe (press release)

Cboe Futures Exchange to List Mini VIX Futures Beginning August 10
PR Newswire (press release)

Bevon Joseph: Closing the Opportunity Gap – MarketsWiki Education World of Opportunity
Sarah Rudolph – JLN

Analysis: Fed’s Hold on Economy Challenged as Virus Eludes Policy Outlook
Suzanne Cosgrove – JLN

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