Observations & Insight

Cboe Digital is coming out with a new offering, Cboe Digital TV. This is another example of a commercial entity producing high quality content in their sweet spot, but missing the important element of independence that professional journalists have. Interestingly, Cboe Digital TV does feature former JLN journalist and executive Jessica Darmoni and she has been aided with her social media promotion of the new offering by Cboe digital media specialist and former JLN journalist Spencer Doar. So the new offering does have that going for it, but I still value independent journalism over quality in-house production, no offense to my former colleagues. While I am talking about my own book, I am also talking about the principles in which I believe. ~JJL

Lead Stories

VIX Soars as SVB Panic Grips Markets Over Financial Contagion Risk
Lu Wang – Bloomberg
Fears that failures at US regional lenders including Silicon Valley Bank could portend a much bigger issue are sweeping across the globe, prompting Wall Street traders to seek shelter in the options market.
The Cboe Volatility Index, a gauge of options cost tied to the S&P 500 known as VIX, jumped Monday to briefly exceed 30 for the first time since last October, while the equity measure sank as much as 1.4% before paring.
/jlne.ws/3J5QMhi

**** JB: See also MarketWatch’s story, VIX keeps climbing after government intervention fails to ease investor anxiety.

Wall Street examines risks around short-dated options as warnings rise-sources
Carolina Mandl and Laura Matthews – Reuters
An explosion in trading in a type of equity derivative security in recent months has prompted Wall Street players and a major clearing house to examine the potential risks it poses, according to two sources familiar with the matter. So-called zero day to expiry options (0DTE), which refers to contracts that expire in less than 24 hours, offer retail and institutional traders a relatively cheap, though high-risk, way to bet on intra-day swings in stock prices. They could be tied to the price of indices, exchange traded funds or single stocks.
/jlne.ws/3T8qe3n

Blindsided by SVB, Credit Traders Are Rushing Toward Safety; SVB failure causes risk premiums on junk debt to jump; Credit derivatives volumes surge as investors seek hedges
Jill R Shah – Bloomberg
The rapid failure of Silicon Valley Bank is threatening to upend a rebound in credit markets that had been luring investors back to even some of the riskiest corporate borrowers. With phones ringing nonstop on credit trading desks Friday as traders and money managers sought to understand the potential fallout from the biggest US bank collapse in more than a decade, investors across the globe rushed to derivatives markets that offered a hedge against losses, trading data show.
/jlne.ws/3JfV59M

Tech Stocks Can’t Escape Wild Swings Amid SVB Collapse, Fed Outlook
Subrat Patnaik and Jeanny Yu – Bloomberg
Investors hoping for a reprieve from abrupt swings in technology stocks now are facing renewed crosscurrents from the collapse of Silicon Valley Bank.
Just Monday, the Nasdaq 100 Index rose as much as 0.6% in choppy trading. Futures contracts had jumped as much as 2.1%, only to erase most of their gains.
/jlne.ws/3ZKuuc4

SVB Collapse: It’s Clear More Banks Are Going to Fail
Jennifer Sor – Markets Insider
The dust is still settling following the collapse of Silicon Valley Bank, but there’s one thing that’s clear: more banks are probably going to fail.
SVB’s operations were shuttered on Friday by state regulators, and Signature Bank was closed shortly after. While market commentators say the failures don’t mark a Lehman-style crisis, more bearish prognosticators say the risk of contagion across the banking industry remains high.
/jlne.ws/3Jhgb7X

How the Silicon Valley Bank Failure is Rippling Through Markets
Gunjan Banerji – WSJ
Silicon Valley Bank’s collapse has exacerbated a bout of recent volatility, quickly sweeping through stock, bond and derivatives markets.
Here’s how the bank failure is cresting through financial markets.
/jlne.ws/3Fnqt5g

One-fifth of CME clearing members hit by Ion hack; Advisory committee heard CFTC believed it could “play a more direct role” in cyber security practices
Luke Clancy – Risk.net
Around 20% of all CME Group clearing members were affected by the Ion ransomware event, an executive at the clearing house has told a public hearing. Ion Group, which supplies software used to process cleared derivatives trades, had to shut down access to some of its services on January 31 after hackers seized control of its servers.
/jlne.ws/3ZZ21Pm

The Bear Market Has Entered a New Phase
Gunjan Banerji – WSJ
Investor anxiety is jumping.
At the start of the year, many investors seemed cautiously optimistic that the market downturn would soon end, pushing the stock rally higher and higher.
That optimism has quickly abated. The past week’s banking crisis—which included three banks shutting down—has rapidly crested through financial markets.
/jlne.ws/3YPwuOJ

Exchanges

CME Group FX Futures and Options Reach New Volume and Open Interest Records
CME Group
CME Group, the world’s leading derivatives marketplace, today announced its foreign exchange futures and options reached a new single-day volume record of 3.15 million contracts on March 8, 2023, equivalent to $296 billion in USD notional. In addition to the overall futures and options volume record, which represents a 5% increase over the previous record of 3 million contracts set in September 2022, CME Group also reached trading records in several individual currencies, including a record of 1.1 million Euro FX futures and a record 264,000 Canadian Dollar FX futures.
/jlne.ws/3ZYOdEx

Euronext promotes from within for equity, derivatives, structured products and buy-side sales head in Italy; New head joined Euronext two years ago, after spending 13 years at the London Stock Exchange Group, and Borsa Italiana before its eventual acquisition by Euronext.
Wesley Bray – The Trade
Euronext has promoted Massimo Giorgini to the role of head of Italy, equity, derivatives, structured products and buy-side sales. Giorgini has been promoted to the role after serving at Euronext for the last two years, initially joining as head of equity and derivatives markets business development.
/jlne.ws/3Jxp4dJ

Regulation & Enforcement

Statement by SEC Chair Gary Gensler on Current Market Events
Chair Gary Gensler – SEC
“In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly. Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws.”
/jlne.ws/405fXXY

Strategy

Watch For Wednesday’s Data
Cboe (Video)
Joel Hawthorne @louiswinthrop updates us on $SPX, $VIX, #equity options, and upcoming data. #Vol411
/jlne.ws/4242lOR