VIX Creator Robert Whaley Backs Grayscale GBTC Bid in Bitcoin (BTC) ETF Battle

Jun 1, 2022

Observations & Insight

Bevon Joseph Updates JLN on Greenwood Project Progress at OIC
JohnLothianNews.com

Greenwood Project Founder and Executive Director Bevon Joseph was interviewed by John Lothian News at the 2022 Options Conference in San Antonio, TX about the progress of the program and the success the young people in it are experiencing.

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Lead Stories

VIX Creator Robert Whaley Backs Grayscale GBTC Bid in Bitcoin (BTC) ETF Battle
Katherine Greifeld – Bloomberg
The man who created Wall Street’s favorite fear gauge is throwing his support behind Grayscale Investments LLC’s bid to turn the world’s biggest Bitcoin fund into an exchange-traded product.
Robert Whaley, who created the Cboe Volatility Index in 1993, said in a May 25 letter to the Securities and Exchange Commission that officials should approve the firm’s application to convert the $20 billion Grayscale Bitcoin Trust (ticker GBTC) into an ETF. He joins thousands of other letter-writers after Grayscale launched a campaign to solicit comments to the SEC.
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Spiking interest rates sees listed derivatives volumes reach record highs; According to options market maker Mako, rates have seen substantially more two-way trading compared to the systematic trading from a few years ago.
Annabel Smith – The Trade
Listed derivatives volumes have continued to reach record highs throughout the course of this year on the back of spiking interest rates and fears of inflation. Energy prices caused by the Ukrainian conflict, the rising cost of living and supply shortages post-pandemic have forced monetary policy decision makers to turn to interest rate hikes to counteract the threat of inflation and a recession.
/jlne.ws/3x8yFSU

JPMorgan chief says ‘hurricane’ is bearing down on economy
Joshua Franklin – Financial Times
JPMorgan Chase chief executive Jamie Dimon on Wednesday warned investors to brace themselves for an economic “hurricane” as the war in Ukraine and policy tightening by the Federal Reserve roil markets.
Dimon struck a gloomier tone on the economic outlook than in remarks he made just last week during JPMorgan’s first investor day in two years, when he referred to the threats as “storm clouds”.
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Exchanges

Goldman Sachs Is Eyeing a Derivatives Trading Deal with Crypto Exchange FTX
Jack Denton – Barron’s
Goldman Sachs GS +0.08% is in talks with crypto exchange FTX to integrate some aspects of their derivatives businesses, according to a person familiar with the matter. FTX is one of the world’s largest crypto exchanges. It currently offers crypto trading to U.S. investors through an arm called FTX.US, and recently acquired a U.S.-regulated derivatives exchange. Now, the company is seeking a license modification from the Commodity Futures Trading Commission (CFTC) to act as both an exchange and middleman between counterparties in leveraged derivatives trades—handling the collateral and margin requirements in-house when borrowed money is in play.
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Subject – Consolidated Audit Trail (CAT) Full Customer Account Information System (CAIS) Production Certification and Compliance Deadlines Extended
NYSE
MARKET: NYSE, NYSE AMERICAN, NYSE AMERICAN OPTIONS, NYSE ARCA EQUITIES, NYSE ARCA OPTIONS, NYSE CHICAGO, NYSE NATIONALSERVICETRADING
The Participants have determined to delay the full Customer Account Information System (“CAIS”) compliance deadline from July 11, 2022, to a new date projected to be in Q4 2022, which will be subsequently announced.
/bit.ly/3NM9V8D

Navigating a New Era of Cross-Asset Volatility
Eurex
The big theme of the last few months has been rates going up and the repricing of what constitutes most of the S&P500’s market cap. The low rates environment, the WFH trend and the retail frenzy are all reversing as we go back to normal and get rid of monetary policy excess.
While we have had huge drawdowns on world indices, mostly from tech, a shortage of commodities has sent the energy sector up massively.
/jlne.ws/3Mave2D

Cboe FX reports strong rebound in May volumes, up 27% YoY
abdelaziz Fathi – FinanceFeeds
Cboe FX disclosed a total trading volume of $870 billion, up 12 percent on a month-over-month basis from $777 billion in April?. Excluding March’s $1.02 trillion turnover, this figure is the best reading for the exchange’s monthly turnover since March 2021. In addition, it was higher by 27 percent year-over-year when weighed against $683 billion in May 2021.
The exchange’s institutional FX trading venue saw its average daily trading volumes amounting to $39.5 billion in May 2022, up 7 percent month-over-month from $37 billion the previous month.
/jlne.ws/3M2kumQ

Regulation & Enforcement

CFTC Considers FTX’s Democratized Clearing Proposal
Peter Malyshev – JD Supra
On May 25, 2022, the U.S. Commodity Futures Trading Commission (“CFTC”) conducted a public hearing to consider a request from LedgerX, LLC, d.b.a. FTX US Derivatives (“FTX”), to amend its order of registration as a derivatives clearing organization (“DCO”) to allow direct clearing of listed futures contracts on Bitcoin and Ethereum and other digital assets by retail participants. This is a dramatic departure from a traditional clearing model where retail participants can trade and clear futures only through professional intermediaries – registered and heavily-regulated futures commission merchants (“FCMs”).
/jlne.ws/3GAxhfa

Strategy

Protecting Against A July Volatility Spike
Steven Baster – Barchart
Market volatility has dropped slightly in recent weeks as measured by the CBOE Volatility (VIX) Index. VIX is a real-time index that represents the market expectation for near-term volatility in the S&P500 index.
Investors and traders have long used VIX as a measure of the level of risk, fear or stress in the market.
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Education

The Investor’s Guide to Crypto Options Trading
Emily Weber – Blockworks
Crypto options trading can be confusing, especially in a sea of derivatives. But for traders looking to hedge risk on a long or short trade, this derivative is a powerful tool.
The mechanics of options trading are similar in both the stock and crypto markets. In this guide, you’ll learn how crypto options trading works and the benefits and risks of popular strategies.
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