Wall Street is ‘doomsday prepping’ for the election. It might not be necessary; Secretive High-Speed Trading Firm Hits Jackpot With TikTok

Oct 1, 2020

Observations & Insight

Tim McCourt from the CME Group – Micro E Mini Options
JohnLothianNews.com

Tim McCourt, Managing Director and Global Head of Equity Products at the CME Group, discusses the launch, reception, and use of the CME’s new options contracts on its Micro E Mini S&P 500 and Nasdaq 100 futures.

Watch the video »

Wall Street Rides is Virtual and Expanding
JohnLothianNews.com

This is the 6th year Wall Street Rides has held its event to raise money for autism research. Rides Far has raised over $1.5 million and has more than 35 corporate sponsors this year, including Cboe as a Diamond Sponsor. In this JLN video, Cboe Executive Vice President and Head of Markets Bryan Harkins talked with John Lothian about how the event is different this year in response to COVID, the community of people who sponsor and take part in the ride, and how it benefits those on the autism spectrum. This year, the opening ceremony will be streamed live on Facebook and Twitter and participants will ride individually wherever they are throughout the world.

Watch the video »

Lead Stories

Wall Street is ‘doomsday prepping’ for the election. It might not be necessary
Matt Egan – CNN Business
The first presidential debate of 2020 didn’t exactly scream “peaceful transfer of power.” If anything, the debate debacle and President Donald Trump’s false claims of a “rigged” election, underscore why investors have been bracing for election-related market turbulence.
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Secretive High-Speed Trading Firm Hits Jackpot With TikTok; Susquehanna International Group is sitting on stake in app’s owner estimated at more than $15 billion
Rolfe Winkler, Jing Yang and Alexander Osipovich – WSJ
No matter the outcome of the struggle between China and the U.S. over video-sharing app TikTok, an unlikely winner will be a secretive trading firm based outside of Philadelphia. Susquehanna International Group LLP, an options-trading giant, has largely avoided publicity during its three-decade history. Susquehanna’s core business is using quantitative models and computers to execute rapid-fire trades in various markets. Such firms tend to rake in profits by making thousands of small trades a day, often holding securities for fractions of a second.
/jlne.ws/2HEnWIG

Trump-Biden Volatility Is Giving Traders Butterflies: QuickTake
Katherine Greifeld – Bloomberg
Heading into presidential elections, traders typically try to hedge their bets based on which candidate might win. This time around, U.S. markets are increasingly trying to gauge how big of a mess the aftermath might be. With President Donald Trump all but promising to dispute the results if he loses — on top of coronavirus case counts creeping higher and stalled stimulus negotiations — the Nov. 3 election has already become the most expensive event to hedge against ever. Here’s a look at the factors driving trades not just in the so-called volatility markets, but in currencies, gold and even the Treasuries markets.
/jlne.ws/34eqS6G

‘Contagious pessimism’ hitting recovery, warns Bank of England economist
Andrew Jack – Financial Times
Andy Haldane, the Bank of England’s chief economist, warned on Wednesday that “contagious pessimism” in the UK was undermining the economic recovery, as the Office for National Statistics revised its estimate of the depth of the recession in the second quarter.
Official figures now show that the economy contracted 19.8 per cent in the second quarter compared with the previous three months, marginally better than the first estimate of a 20.4 per cent decline.
/jlne.ws/3n30buh

Investors at CNBC conference anticipate more market volatility but see opportunities
Svea Herbst-Bayliss and Chibuike Oguh – Reuters
Investors including Steven Schwarzman, Mary Callahan Erdoes and Barry Sternlicht are bracing for more market volatility as the U.S presidential vote nears but see opportunities to make money in commercial real estate and financial companies.
The S&P 500 index has slipped almost 5% this month after recovering for months amid the economic crisis sparked by the coronavirus pandemic, and some speakers at the CNBC Institutional Investor Delivering Alpha Conference on Wednesday forecast bigger market swings ahead.
/jlne.ws/36mrJVk

‘Safety trades’ fail to offset stock market’s turbulent September
Michael Mackenzie and Eric Platt – Financial Times
Assets including gold and US Treasuries failed to provide the hedge in September that they normally do in a stock market rout, compounding investors’ woes in the worst month for global equities since the coronavirus nadir in March.
Global equities, as measured by the MSCI All-Country World index, fell 4 per cent last month as the pandemic flared again in Europe and nerves grew about a potentially destabilising presidential election in the US.
/jlne.ws/2HJrQQB

Why this frustrated value stock pro sees shades of 1999 in the market now — and bargains in the future
Vitaliy Katsenelson – MarketWatch
A year ago, I said the U.S. stock market was “partying like it’s 1999.” I was off by a year. Last year was missing the necessary euphoric speculation, which ironically arrived in the middle of a worldwide pandemic.
Just as history doesn’t repeat itself but rhymes, so does U.S. stock market behavior. Though there are a lot of similarities between 1999 and 2020, there are differences, too.
/jlne.ws/2StMxSZ

Target-Dated Funds Grow to Dwarf Nasdaq Whale in Markets
John Authers – Bloomberg
When swimming in the waters of international capital markets, watch out for whales. After JPMorgan Chase & Co.’s infamous “London Whale,” who in 2012 took excessive positions in derivatives and suffered the cost when markets traded against him, this year has seen the “Nasdaq whale” load up on call options in tech stocks. The image of whales thrashing about in a bath of water can accurately capture what happens in a small market when a big player takes too big a position.
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Exchanges and Clearing

Tokyo Stock Exchange Trading Is Halted by System Problem; Shutdown blocks all trades for full day, in worst case since current system started in 1999
Suryatapa Bhattacharya and Kosaku Narioka – WSJ
The Tokyo Stock Exchange halted all stock trading for Thursday’s session due to a system problem, a rare glitch that market participants said could undermine trust in the exchange. After trading was halted for the morning session, the exchange said at midday that no trading would take place for the rest of the day. It later said it expected to resume normal trading Friday.
/jlne.ws/33o7sgx

SGX wins Exchange of the Year again at FOW Asia Capital Markets Awards for pan-Asia waterfront of derivatives
SGX
Multi-asset approach critical in helping clients manage risk amid heightened uncertainty; Focus on customer-first execution across equities, currencies and commodities
Singapore Exchange (SGX) has again won the “Exchange of the Year” accolade at the FOW Asia Capital Market Awards 2020 for its leadership in supporting clients with a pan-Asia waterfront of derivatives, amid heightened uncertainty in global markets.
/jlne.ws/2SgLbus

Cboe’s FX Volume Strongly Rebounds in September
Arnab Shome – Finance Magnates
Cboe FX Markets has released its trading volumes on the platform for September 2020, showing a positive uptick in spot traders’ demand. Last month, the exchange recorded a total foreign exchange (forex) trading volume of $702 billion compared to the previous month’s $602 billion, meaning there was a month-on-month jump of 16.6 percent.
/jlne.ws/3irQHFu

Change to the Market for Underlying Security Used for Openings on MIAX Options, MIAX PEARL and MIAX Emerald for Symbol NWE Effective October 1, 2020
MIAX Options
NorthWestern Corporation (“NWE”) will transfer primary listing from the New York Stock Exchange to the NASDAQ Stock Market (“NASDAQ”) effective Thursday, October 1, 2020. MIAX Options, MIAX PEARL and MIAX Emerald will use NASDAQ as the “market for the underlying security” for the purpose of Openings on the Exchange.
/jlne.ws/34k7NzM

Change to the Market for Underlying Security Used for Openings on MIAX Options, MIAX PEARL and MIAX Emerald for Symbol AEP Effective October 1, 2020
MIAX Options
American Electric Power Company Inc. (“AEP”) will transfer primary listing from the New York Stock Exchange to the NASDAQ Stock Market (“NASDAQ”) effective Thursday, October 1, 2020. MIAX Options, MIAX PEARL and MIAX Emerald will use NASDAQ as the “market for the underlying security” for the purpose of Openings on the Exchange.
/jlne.ws/2HGCFms

MIAX Exchange Group – Options Markets – Delisting of Pfenex Inc. (PFNX)
MIAX Options
Pfenex Inc. (PFNX) will be de-listed from the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange effective on Friday, October 2, 2020. All GTC orders resting on the MIAX order books in PFNX will be canceled at the close of business on Thursday, October 1, 2020. Additional details about the Pfenex Inc. (PFNX) merger are provided in the attached OCC Memo.
/jlne.ws/3kXIuKC

MIAX Exchange Group – Options Markets – Corporate Action Alert: PDL BioPharma, Inc. (PDLI)
MIAX Options
PDL BioPharma, Inc. (PDLI) has announced a distribution effective for Friday, October 2, 2020. On that date, the current PDLI option class will change to PDLI2. The MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange will not list PDLI2 options. Therefore, no options on PDLI will be available for trading on Friday, October 2, 2020. PDL BioPharma, Inc. (PDLI) will resume trading on the the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange on Monday, October 5, 2020.
/jlne.ws/2G8J1ed

MIAX Exchange Group – Options Markets – Corporate Action Alert: NetEase, Inc. (NTES)
MIAX Options
NetEase, Inc. (NTES) has announced a 5 for 1 stock split. Associated strike price adjustments will become effective on Friday, October 2, 2020. NTES options will continue to trade without interruption on the MIAX Options Exchange, MIAX PEARL Options Exchange and MIAX Emerald Options Exchange. All GTC orders resting on the MIAX order books in NTES will be canceled at the close of business on Thursday, October 1, 2020. Additional details about the NetEase, Inc. (NTES) stock split are provided in the attached OCC Memo.
/jlne.ws/3kWlYBY

Data News #2020 – 8 Nasdaq Announces Internal Nasdaq Basic Enterprise License Fee Reduction, Effective October 1, 2020
NasdaqTrader.com
Effective October 1, 2020, Nasdaq will revise the Internal Nasdaq Basic Broker/Dealer Enterprise License, subject to Securities and Exchange Commission (SEC) approval. Nasdaq will reduce the optional Internal Nasdaq Basic Enterprise License for Broker/Dealers to the rate of $155,000 per month. The Internal Enterprise License covers unlimited display usage for Professional employees of a Broker/Dealer who facilitate or directly service the external account holders of the Broker/Dealer, on a Nasdaq-approved system.
/jlne.ws/3na9Teo

CME Globex Notices: September 28, 2020
CME Group
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NOTICE OF SUMMARY ACTION # CME-RSRH-20-5879 Effective Date 01 October 2020
CME Group
FILE NO.: CME-RSRH-20-5879
MEMBER FIRM: Third Coast Options, LLC
CME RULE VIOLATION: 526.F. BLOCK TRADES
/jlne.ws/2ShvaV6

NOTICE OF SUMMARY ACTION # CBOT-RSRH-20-5948 Effective Date 01 October 2020
CME Group
FILE NO.: CBT-RSRH-20-5948
MEMBER FIRM: MAREX NORTH AMERICA LLC
CBT RULE VIOLATION: CBT Rule 807. Open Long Positions During Delivery Month
/jlne.ws/2GubDhr

Technology

Itiviti’s sell-side OMS recognized for Best Equity Trading System of the Year at FOW Asia Capital Markets Awards
Itiviti blog
Singapore, October 1, 2020 – Itiviti, a leading technology, and service provider of electronic trading and connectivity solutions to financial institutions worldwide, today announced that Itiviti’s sell-side OMS has won Best Equity Trading System of the Year at the FOW Asia Capital Markets Awards. The awards are judged by a panel of industry experts from across the market.
/jlne.ws/36roITM

Strategy

Two Ways to Profit From Amazon With Options
Steven M. Sears – Barron’s
When in doubt, invest in Amazon.com.
The Covid-19 crisis, which has harmed so many companies and caused a deep recession, has seemingly made Amazon (ticker: AMZN) even stronger.
In fact, the company has arguably benefited more than any other during an airborne pandemic that has forced many of us to shelter at home. Rather than going to stores to buy clothing and groceries and anything else that they want, people are increasingly ordering from Amazon and having everything delivered.
/jlne.ws/2GjNcnf

Events

Save the Date for the Annual Chicago Conference on Futures and Derivatives
Thompson Coburn LLP
Between the pandemic and the resulting financial devastation, the futures and derivatives markets have displayed unprecedented volatility. Add working from home to the mix and compliance has never been more challenging.
In response, we are offering a two-hour webinar on the current state of regulation and enforcement in our industry. At no cost, you can hear from regulators and enforcement attorneys about the latest developments and earn two hours of CLE.
Tuesday, October 20, 2020
1:00 PM – 3:00 PM CST
/jlne.ws/3ngHKT5

Law & Compliance Division Conference
FIA.org
7 October 2020 – 9 October 2020 • 9:00 AM – 6:00 PM ET
Our virtual Law & Compliance Division conference (L&C-V) will provide a forum to learn and discuss the legal and regulatory issues impacting the derivatives industry. L&C-V meets the needs of multiple levels of practitioners in the industry, from the new law firm associate to the chief compliance officer. Register today & join us, virtually, 7-9 October to explore recent legal and regulatory precedents affecting the futures, options and centrally cleared derivatives markets.
/bit.ly/3jgx2t1

FIA Legal Opinions Primer
FIA.org
13 October 2020 • 2:00 PM – 3:00 PM BST • Webinar
If you are an experienced user of FIA legal opinions, new to the world of FIA netting and other legal opinions for regulatory capital purposes or just curious as to why FIA maintains a library of legal opinions, please tune in to this FIA webinar where experts from Clifford Chance LLP and FIA will explain the types of legal opinions that FIA maintains, their structure and purpose in the context of regulatory capital requirements. Speakers will also discuss practical aspects of how firms can go about accessing FIA legal opinions, how the legal opinions are reviewed and made available to member and non-member firms. This webinar will focus on the FIA legal opinions procured out of Europe and will not cover the US FCM netting opinions.
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Miscellaneous

OPR 333: Notorious RBG Butterfly Review Plus LUV Calendar
Options Insider Podcast
On this episode, Brian first looks at last week’s trade, which was a UNH butterfly. Then he discusses this week’s trade which is a calendar spread in LUV.
/jlne.ws/3nj6x90

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