Observations & Insight
FIA: Monthly Exchange-Traded Volume Up More Than 42% in August; Options Trading Leads
Suzanne Cosgrove – John Lothian News
The Futures Industry Association Tuesday reported global exchange-traded volume volume was up 42.3% from the same period a year ago and 7.7% higher than in July 2021.
Once again, monthly gains were paced by an increase in options trading. The group said a total of 5.29 billion futures and options traded in August, with options making up 2.89 billion of the total and futures comprising 2.39 billion.
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Why another mid-month stock-market stumble has investors bracing for ‘quadruple witching’ options expiration
William Watts – MarketWatch
The stock market is repeating a pattern of midmonth stumbles some analysts tie to options expiration. That dynamic could be amplified this week ahead of “quadruple witching,” the simultaneous expiration Friday of individual stock options, stock-index options, stock-index futures and single-stock futures.
“Almost like clockwork, over the past six months the S&P 500 has fallen in the week leading into OpEx, so the risk is we see this flow repeat and come into play this week, which could mean weakness into Friday’s expiry — although perhaps it’s all too obvious now,” said Chris Weston, head of research at Pepperstone, in a Monday note. OpEx is trader slang for options expiration.
OCC Adds Leaders from ABN AMRO and Cboe to Board of Directors
Mike Nowak and Rob Hocking each bring more than 20 years of industry experience
OCC, the world’s largest equity derivatives clearing organization, today announced two new members of its Board of Directors: Mike Nowak, Chief Financial Officer at ABN AMRO Clearing Chicago LLC (AACC), and Rob Hocking, Senior Vice President, Head of Multi-Asset Solutions and Derivatives Strategy for Cboe Global Markets.
“Adding Mike and Rob to OCC’s Board of Directors further strengthens our resiliency and our ability to ensure confidence in the financial markets,” said Craig Donohue, OCC Executive Chairman. “Their invaluable experience and insight will support our continued efforts to bring operational excellence, growth and innovation to our participant exchanges, clearing member firms and the broader economy.”
Will high inflation kill the bull market in stocks? History says probably not
William Watts – MarketWatch
U.S. inflation didn’t run as hot as expected in August, but remains elevated and a source of worry for investors and policy makers. But by itself, a jump in inflation is hardly ever enough to derail a bull market in stocks, according to a top Wall Street technician.
“We can’t find much evidence that spiking inflation figures are bearish for equities,” said Jeff deGraaf, founder of Renaissance Macro Research, in a Wednesday note.
Exclusive-China brokers drop yuan forecasts to avoid regulators’ ire
Brokerages in China have dropped detailed currency forecasts from their research notes, or have restricted access to them, underlining the growing sensitivity in the financial sector to a regulatory clampdown on speculative investment.
CME Group to Launch E-mini Russell 2000 Monday and Wednesday Weekly Options on October 4
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will launch E-mini Russell 2000 Monday and Wednesday Weekly options on October 4, pending regulatory review. These new options contracts will complement the existing Friday Weekly, End-of-Month and Quarterly options on Russell 2000 futures.
“As the demand for more short-dated options continues to grow, we are expanding our product suite to allow our clients to hedge or trade with enhanced flexibility around major market-moving events,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.
Cboe FX expands into algo execution with XTX Markets; As part of the new hosted algorithmic execution service, Cboe FX participants will have access to XTX Markets’ Execution Algo via its electronic communication network (ECN).
Annabel Smith – The Trade
Cboe FX has launched a hosted algorithmic execution service in partnership with London-based market maker XTX Markets to meet rising demand for algo trading in the FX markets. The service will be supported via Cboe FX’s electronic communication network (ECN), giving users access to XTX Market’s Execution Algo, which aims to reduce slippage to arrival price.
****SR: Here is the Cboe press release on the launch.
Russell 2000 Index Seasonality and the Treacherous September – October Time Frame
Russell Rhoads – Cboe
In partnership with Cboe™ and FTSE Russell, Russell Rhoads, Head of Research and Consulting at EQDerivatives, is publishing a series of articles about the Russell 2000 Index. In this article, Rhoads analyzes Russell 2000 Index performance and strategies during its historically treacherous September to October time frame.
The financial markets have an organic nature to them and tend to follow patterns when we look back over time. Regardless of how much electronic trading and portfolio construction has caught on, the organic nature of the markets is likely driven by buy and sell decisions made by people. Historically, several negative equity market events have occurred between September and October. With September in full swing, I decided to explore how the Russell 2000 Index behaves by month, using data going back to 1989.
MIAX to Launch Suite of BRIXX™ Commercial Real Estate Futures on MGEX
MIAX, creator and operator of high-performance securities exchanges, products and services, will launch cash-settled futures contracts on BRIXX™ Commercial Real Estate (CRE) Indexes developed by Advanced Fundamentals. The first contract to be listed will be the BRIXX Retail Index futures contract which is expected to begin trading on October 4, 2021. Three additional BRIXX CRE Index futures are expected to be listed in the fourth quarter of 2021. Cash-settled options on the BRIXX CRE Indexes will launch on MIAX, also targeted for fourth quarter of 2021. The launch of the futures and options contracts remain subject to regulatory approval.
Cryptocurrency Exchange Huobi Expands Its Suite of Trading Services
The company announced the extension of Huobi Derivatives Warrant trading services.
Bilal Jafar – Finance Magnates
Huobi, one of the leading cryptocurrency exchanges, today announced that the company is expanding its trading services through the extension of Huobi Derivatives Warrant. Launched in Vietnam on 3 September, Huobi introduced the product in different markets including India and Europe. Now, the company is planning to extend the Huobi Derivatives Warrant trading services to all its global markets by the end of September.
In an official press release, Huobi mentioned that its Derivatives Warrant service enables users to increase their potential. The mentioned service also facilitates clients through a sound and liquid market. Huobi Derivatives Warrant is a featured option product created by Huobi Futures, a derivatives trading platform under Huobi Global.
MCX Sees Dip In Futures Turnover Amid Bullion Trade Losing Sheen; Options Trade Up
The country’s top commodity derivatives exchange MCX has seen its average daily turnover plunging sharply amid declining trade in bullion trading even as some of its rivals appear to be steadily making inroads in a market once seen as a virtual monopoly.
The month-wise average daily turnover of MCX (Multi Commodity Exchange) for futures trade fell to nearly Rs 24,709 crore in August this year from more than Rs 43,262 crore in August 2020, the exchange data shows.
Regulation & Enforcement
Gensler Says SEC Plans More Swaps Disclosures Post-Archegos
Akayla Gardner – Bloomberg
The U.S. Securities and Exchange Commission is considering more disclosures for complex derivative transactions like those that led to the collapse of Bill Hwang’s Archegos Capital Management earlier this year.
SEC Chair Gary Gensler said in a Wednesday CNBC interview that the regulator wants to publish aggregate data on the securities that underlie investment firms’ swap positions. Gensler has already said the agency is considering rules to make hedge funds, family offices and other money managers disclose big derivative bets on stocks in quarterly SEC filings.
CFTC Charges Texas Resident and Six U.S. and Costa Rican Companies with Engaging in Two Fraudulent Schemes Totaling $6 Million
The Commodity Futures Trading Commission today announced the filing of an enforcement action in the U.S. District Court for the Northern District of Texas, charging defendants Rudy Avila and six U.S. and Costa Rican companies with fraudulent solicitation to trade in commodity futures, options on commodity futures, and retail off-exchange foreign currency (derivatives and forex), misappropriation of funds, and issuing false statements.
Understanding the SEC’s evolving derivatives regulatory framework
Part of the L&C webinar series
23 September 2021 • 10:00 AM – 11:00 AM ET
Futures Industry Association
With the finalization of both the SEC’s regulatory framework for derivatives use by RICs and BDCs and the SEC’s capital, margin and segregation rules regarding security-based swaps, the OTC derivatives regulatory landscape is expected to shift yet again. Join us as we explore how these developments are likely to affect firms’ trading programs and learn how to prepare for the changing landscape.
Details: Host Michael Sorrell, Deputy General Counsel, FIA. Speakers: Jaime Madell, Partner, Derivatives, Kirkland & Ellis; Aaron Schlaphoff, Partner, Investment Funds, Kirkland & Ellis
Date/Time: Thursday, 23 September 2021 | 10:00 a.m. – 11:00 a.m. ET