Observations & Insight
Coinbase Purchases FairX; NinjaTrader Acquires Tradovate; UBS Faces Legal Battles – THE SPREAD – January 14, 2022
“Alex Perry’s Optionstopia” takes a look at this week’s options news highlights: Coinbase Purchases FairX; NinjaTrader Acquires Tradovate; UBS Faces Legal Battles
Futures exchanges as “hot commodities” is the theme of “John’s Take”
Tom Jarck of MIAX explains “VSPIKES”
Traders Are Pricing Risk of First Half-Point Hike Since 2000
Benjamin Purvis and Edward Bolingbroke – Bloomberg
Money markets are reflecting increased speculation that the Federal Reserve might opt for its first super-sized boost to borrowing costs in more than two decades.
While a quarter-point increase is still the most likely scenario, swap markets are now pricing in more than 25 basis points of tightening by the end of March. With no move anticipated at this month’s meeting, that suggests traders are at least contemplating the possibility of a 50-basis-point move in March. The Fed hasn’t tightened that much in one shot since May 2000, when the central bank’s tightening cycle was already well underway.
Goldman Sachs CEO Solomon sees ‘above-trend’ inflation possibly for ‘some time’
Steve Gelsi – MarketWatch
Goldman Sachs Group Inc. CEO David Solomon told analysts on Tuesday the bank expects inflationary pressure to increase in 2022.
Stocks Fall as Bond Yields Hit Two-Year High
Caitlin Ostroff and Michael Wursthorn – WSJ
U.S. stock indexes fell Tuesday and bond yields hit two-year highs, as investors fretted over whether the Federal Reserve will raise interest rates more quickly and aggressively than expected.
Investors, coming off a holiday weekend that had closed markets on Monday, sold stocks and bonds across the board. All three indexes fell, with the S&P 500 sliding 1.7% and the Dow Jones Industrial Average shedding 1.6%. The Nasdaq Composite retreated 2.3%, leaving it close to entering a correction, or a drawdown of 10% or more from a recent high.
With Rate Increases Looming, Investors Dump Shares of Money-Losing Companies
Dave Sebastian and Hardika Singh – WSJ
Moonshot stocks are coming back to Earth.
As the Federal Reserve moves closer to raising interest rates, investors are repricing their bets on one of the riskiest corners of the market: shares of companies that don’t make money. Cash-burning technology firms, biotechnology companies without any approved drugs and startups that listed quickly via mergers with blank-check companies—some of which soared during the pandemic—have dropped sharply.
All Eyes on the Futures – What’s Up for Crypto Derivatives in 2022?
Shares in Coinbase rose by 1.2% on January 12 after the company announced it had acquired FairX, a newcomer futures exchange regulated by the US Commodity Futures Trading Commission. It represents a late move on the part of the US trading giant. Competitors FTX, Binance, and Kraken were all in the crypto derivatives market by 2019.
Even so, a late entry doesn’t mean there’s nothing left on the table. The cryptocurrency derivatives markets have undergone rapid exponential growth over recent years. As Bitcoin rose to new all-time highs in October 2021, the aggregated open interest of Bitcoin futures hit its own peak above $28 billion, up 600% from the previous year. The options market, while slightly less established than futures, is on a similar trajectory.
Deutsche Börse expands its analytics suite with ‘Eurex Open Interest Insights’; New offering provides unique and actionable insights into futures and options markets
Deutsche Börse Group
Deutsche Börse’s Market Data + Services department has launched a new data offering, ‘Eurex Open Interest Insights’, providing customers with unique insights into market positioning and dynamics, as well as allowing an in-depth view into the distribution of exposure in futures and options. Eurex Open Interest Insights captures proprietary data from behind the exchanges network and provides a daily analysis of the positions of market participants such as agents, market makers and proprietary traders. The offering is also supplemented with ‘Open Interest’ measures, enabling users to gauge trading participants’ risk appetites and convictions.
Cboe to give ASX a run for its money
Cairn Post (Paywall)
Competition in the equities market should step up when Cboe launches its Australian operation within days and moves towards electronic block trades.
Miami International Holdings Reports Trading Results for December and Full-Year 2021; MIAX Exchange Group Sets Multiple Volume and Market Share Records
Miami International Holdings, Inc. today reported December and 2021 full-year trading results for its U.S. exchange subsidiaries – MIAX , MIAX Pearl and MIAX Emerald (together, the MIAX Exchange Group™) and Minneapolis Grain Exchange (MGEX™) with multiple market share and volume records reached over the course of the year.
OCC Receives Best Place for Working Parents Dallas Designation for Second Consecutive Year
OCC is proud to share that in 2022, for the second year in a row, we have earned the Best Place for Working Parents™ Dallas designation in recognition of our family-friendly policies and practices. Fostering an inclusive and welcoming environment for working parents is part of OCC’s Diversity, Equity & Inclusion Value and ensures OCC continues to attract, retain and develop talent with a wide range of backgrounds and perspectives.
Coinbase Buy Increases Competition in Crypto Derivatives
Shanny Basar – MarketsMedia
Coinbase, the listed US cryptocurrency exchange, is acquiring regulated derivatives platform FairX following acquisitions last year by other venues in order to launch crypto derivatives. FairX is regulated by the Commodity Futures Trading Commission as a designated contract market.
Regulation & Enforcement
Hedge funds oppose SEC’s reform plans after GameStop debacle; Regulator’s ‘misguided’ securities lending proposals risk fuelling volatility, say managers
Chris Flood and Harriet Agnew – FT
Hedge fund managers fear the painful losses they suffered in the meme stock trading frenzy of January 2021 will be repeated if US regulators press ahead with reforms to securities lending, one of the most opaque practices in financial markets. Melvin Capital, Light Street and White Square all lost heavily when their bets against meme stocks, such as the struggling video game retailer GameStop, were pulverised by retail investors who swap trading ideas on bulletin boards such as Reddit’s r/wallstreetbets.
Digital Asset Regulation in the United States: An Opportunity for Progress or a Threat to Innovation?
Stephen Gannon, James Goldfarb and Matthew Comstock – TABB Forum
How should digital assets be regulated and what is the path forward? In this essay, Murphy & McGonigle Partners Stephen Gannon, James Goldfarb and Matthew Comstock outline the current state of regulation for digital assets and the uncertainty that exists in the government and in the digital asset industry, raising the question of whether innovation could in fact be hindered without rules that give the industry clearer direction. This article highlights four recommendations that could jumpstart the discussion.
Something’s Not Quite Right – VIX And The Market’s Breadth Trend In The Same Direction
Complexity is best defined as a process that has many moving parts (agents). These agents are always interacting with one another and the environment. And although you can say the same thing about chaos, the difference between the two is that the ultimate goal of chaos is disorder, while that of complexity is the opposite – the creation and perpetuation of nonlinear order.
In other words, while chaos is a complete dysfunctional mess, complexity is all about function. In other words, in terms of complexity, perfection is relative and is more akin to function rather than aesthetics or ideal outcomes.
Net growth in ETF numbers almost doubles to a record 1,239 last year
Steve Johnson – Financial Times
The global exchange traded fund industry not only attracted record inflows it also racked up extraordinary growth in the breadth and depth of its offering last year.
An overall total of 1,503 ETFs and exchange traded commodities were launched, far ahead of the previous record of 873 recorded in 2018, according to data from Morningstar.