| | | | | | | | January 07, 2025 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Intercontinental Exchange (ICE) reported record-breaking trading volumes in 2024, with annual average daily volume (ADV) rising 24% year-over-year (y/y) and notable growth across commodities, energy, and interest rate derivatives. In energy markets, WTI crude oil futures achieved a record open interest (OI) of 883,000 lots on Dec. 13, with ADV increasing 40% y/y. TTF gas futures set a record OI of 2.2 million lots on Dec. 30, with ADV up 30% y/y, while Asia gas futures reached a record OI of 137,000 lots on Dec. 11, with ADV surging 48% y/y. In interest rates, SONIA futures posted a record OI of 2.9 million lots on Dec. 16, with annual ADV climbing 61% y/y. Environmental markets also saw strong performance, with ADV increasing 37% y/y, driven by rising demand for sustainable risk management solutions. Gasoil futures recorded a 24% y/y increase in ADV, while ICE's NYSE Cash Equities and Equity Options also posted robust growth, with ADVs up 9% and 19% y/y, respectively.
Cboe reported its annual volumes and that it achieved record-breaking trading volumes in 2024, marking its fifth consecutive year of growth in U.S. options with 3.8 billion contracts traded and an average daily volume (ADV) of 14.95 million contracts. Highlights included proprietary index options trading 1.03 billion contracts (ADV 4.1 million), with S&P 500 Index (SPX) options reaching 784.2 million contracts (ADV 3.1 million) and Cboe Volatility Index (VIX) options trading 209.2 million contracts (ADV 830,000). Mini-SPX (XSP) options also set a record with 17.6 million contracts (ADV 69,000). In Q4, zero days to expiry SPX options accounted for 51% of SPX volumes. Additionally, Cboe's Global FX segment set a new annual record with a spot average daily notional volume (ADNV) of $45.4 billion, surpassing the previous year's $43.6 billion.
Eurex achieved a key milestone by receiving CFTC approval to trade its EURO STOXX 50 Index Dividend Options and EURO STOXX Banks Index Dividend Options directly in the U.S. starting on January 6, 2025. This approval allows U.S. market participants to efficiently manage their exposure to European equity markets, expanding Eurex's global reach. Robbert Booij, CEO of Eurex Frankfurt AG, highlighted the importance of removing access barriers, stating, "U.S. investors have another efficient tool to manage their exposure to the European market." Eurex's dividend derivatives segment continues to grow, with a record-breaking 2024 that saw over 21 million contracts traded, a 14% year-on-year increase in dividend options. Open interest in the segment reached 8.9 million contracts with a capital value of EUR 63 billion.
The London Metal Exchange (LME) achieved its fourth-highest annual average daily volume (ADV) on record in 2024, reaching 664,698 lots, an 18.2% increase from 2023. LME Nickel led the growth with a 58.8% year-on-year (y/y) rise, while LME Tin grew 25.9% y/y. Ferrous contracts saw exceptional gains, including a 186.1% surge in Steel HRC FOB China (Argus) and a 48.4% increase in Steel Scrap CFR Turkey (Platts). LME CEO Matthew Chamberlain attributed the progress to increased market activity, noting that nickel volumes rebounded to 2021 levels and ferrous products gained traction as firms sought to manage risk exposures effectively. ~JJL
| | | | | | Lead Stories | | | Currency Options Trading Is Skyrocketing as Politics Upend Bets; Hedge funds are unwinding euro-dollar parity and below trades; Some investors using dollar-yuan weakness to buy call options
David Finnerty and Ruth Carson - Bloomberg
Monday started quietly in the $300 billion-plus currency options market until political headlines triggered the most hectic trading day in nearly two months - a taste of what may lie in store for 2025. Volumes surged to $108 billion by the close of trade, surpassing even the activity seen on the Federal Reserve and Bank of Japan monetary policy announcement days last month, according to data from Depository Trust and Clearing Corp. Two of the drivers for the spike-up in trading: headlines on Canadian Prime Minister Justin Trudeau's resignation and potential US tariffs.
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Nvidia Traders Bail on Bullish Option Bets as Shares Slide; About 200,000 lots of $140 calls expiring Jan. 17 traded; Nvidia shares fall more than 5%, erasing Monday's gains
Natalia Kniazhevich and David Marino - Bloomberg
Investors sold large volumes of Nvidia Corp. call options Tuesday as shares faltered after hitting the first record high since November.
Early in the session some 200,000 lots of $140 calls expiring Jan. 17 traded along with 600,000-700,000 contracts of Feb. 21-expiry calls that allowed holders to buy shares at levels ranging from $159 to $165. The calls were mostly sold, according to Chris Murphy, co-head of derivatives strategy at Susquehanna International Group.
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Derivatives Trading and Innovation "Stays Hot"
Shanny Basar - Morningstar
Derivatives exchanges have reported record volumes for 2024 and demand is set to continue. The industry is investing in post-trade infrastructure to ensure growth is not hampered by inefficiencies and unnecessary operational risk.
Demand for derivative products seems "insatiable" as futures tracking interest rates and equity markets saw record volumes in 2024 according to consultancy Coalition Greenwich's report, Top market structure trends to watch in 2025.
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Yuan Short Sellers Squeezed by Soaring Hong Kong Funding Costs; PBOC may deploy liquidity tools to support the yuan, OCBC says; Overnight offshore yuan rate jumps to highest since 2021
Bloomberg News
Yuan funding costs in Hong Kong surged to levels unseen in years, signaling concern that Beijing's efforts to stabilize the currency may lead to tighter liquidity in the offshore market. The offshore yuan's overnight interbank interest rate in Hong Kong rose to 8.1% on Tuesday, the highest since June 2021. The 1-month rate also climbed to highest since April. Tighter cash conditions make it more expensive for traders to short the currency, effectively damping bearish bets.
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U.S. Treasury Volatility Could Pick Up Around Trump's Inauguration
Emese Bartha - Barron's
U.S. Treasury yields have remained steady near their recent high but volatility is expected to increase near term ahead of U.S. President-elect Donald Trump's inauguration on Jan. 20., said DHF Capital S.A.'s Bas Kooijman in a note.
"Volatility is expected to increase in the coming weeks, potentially impacted by Trump's inauguration and the Fed's upcoming rate decision [on Jan. 29]," the asset manager's CEO said.
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Your Fancy, New ETF Might Be a Little Too Fancy; Exchange-traded funds have mostly been great investments, but they are getting too complex for their own good
Jon Sindreu - The Wall Street Journal
History teaches that financial complexity always creeps upward. Lately that trend has reached investor-friendly exchange-traded funds. Last year, U.S.-based ETFs broke a record, surpassing $1 trillion in total inflows. They are cheap, liquid and, crucially, far more tax-efficient than traditional mutual funds. If you want to hold stocks and bonds, the flagship trackers from industry giants BlackRock, Vanguard and State Street Global Advisors already do the trick for very low fees. It is tough, and not especially rewarding, to compete with those industry behemoths head-on.
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Fidelity to convert $180mn bond index fund into ETF; The proposed move is thought to be the first conversion in the US of a passively managed index mutual fund to an ETF
Daniel Gil - Financial Times
Fidelity Investments will become the first asset manager to convert an index mutual fund into an ETF, according to industry analysts. The firm's $178mn Municipal Bond Index Fund board intends to refashion the product into an ETF in April, according to a regulatory filing.
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| | | | | | Exchanges | | | Cboe Global Markets and Metaurus Advisors, LLC Collaborate on New U.S. Equity Index, First of Four in Planned Dispersion Product Suite
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, and Metaurus Advisors, LLC (Metaurus), an asset management company focusing on financial innovation, today announced their collaboration on the Cboe U.S. Large-Mid Cap 100 Index (CEQX). The CEQX Index, which launched on December 20, 2024, is the first of four indices jointly developed by Cboe and Metaurus.
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Outlook 2025: Catherine Clay, Cboe Global Markets
Anna Lyudvig - Traders Magazine
Catherine Clay
What was the highlight of 2024?
Amid geopolitical tensions and macro uncertainty including the Fed's shifting monetary policy, we saw investors globally increasingly turning to options for the risk management and income generating capabilities they offer. In fact, the industry is on pace for its fifth record year in a row. Part of this growth was due to the increased demand for single-stock and index options. Within Cboe's proprietary index options, S&P 500 Index (SPX) and Cboe Volatility Index (VIX) options are on track to surpass last year's record volume. Institutional and retail investors from across the globe have found value in the broad exposure, precise hedging ability and cash-settled nature these products provide.
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Cboe Global Markets Reports Trading Volume for December and Full Year 2024
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, today reported December and full year 2024 trading volume statistics across its global business lines and provided guidance for selected revenue per contract/net revenue capture metrics for the fourth quarter of 2024. The data sheet "Cboe Global Markets Monthly Volume & RPC/Net Revenue Capture Report" contains an overview of certain December and full year 2024 trading statistics and market share by business segment, volume in select index products, and RPC/net capture, which is reported on a one-month lag, across business lines.
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CME Group Inc. Announces Fourth-Quarter and Year-End 2024 Earnings Release, Conference Call
CME Group
CME Group Inc. will announce earnings for the fourth quarter and full year of 2024 before the markets open on Wednesday, February 12, 2025. Written highlights for the quarter will be posted on the company's website at 6:00 a.m. Central Time, the same time it provides its earnings press release. The company will also hold an investor conference call that day at 7:30 a.m. Central Time, at which time company executives will take analysts' questions.
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ASX Group Monthly Activity Report - December 2024
ASX
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SPAN 2 Framework Energy Model Parameter Changes - Effective January 07, 2025
CME Clearing
As per normal review, CME Clearing has undertaken a review of the hypothetical stressed scenarios parameter used in the SPAN 2 framework's Natural Gas pod. In particular, within the SPAN 2 framework, the hypothetical stressed scenarios parameter is incorporated in the stress value-at-risk sub-component of the market risk component. Following this review, CME Clearing has determined it will introduce hypothetical stressed scenarios parameter changes to align with current volatility across the term structure for natural gas. While the impact to production portfolios will vary depending upon the risk profile for each individual portfolio, CME Clearing expects an increase in margin requirements for outright natural gas contracts and the total margin for futures and options products to increase by under 1%. The associated changes will be effective after the close of business on January 07, 2025.
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Full year and December 2024 figures at Eurex
Eurex
Eurex, Europe's leading derivatives exchange, recorded a total of 2,080.5 million contracts in 2024, which corresponds to an increase of 9 percent compared to the previous year. Interest rate derivatives saw the largest growth with an increase of 26 percent, followed by equity derivatives with an increase of 16 percent for the full year. On a monthly basis, the Eurex volume in December amounted to 166.1 million contracts compared with 165.8 in the same month of the previous year. Equity derivatives rose by 13 percent in December year-on-year, followed by interest rate derivatives with an increase of 10 percent.
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B1G Numbers 2024: Key Figures from SIX Swiss Exchange
SIX
A look back on 2024 from a SIX Swiss Exchange perspective features many highlights, from one of the biggest IPOs in Europe to increased trading activity as well as various new records being established in the product segments.
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TMX Group Consolidated Trading Statistics - December 2024
TMX Group
TMX Group Limited today announced December 2024 trading statistics for its marketplaces - Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange (Alpha), including Alpha-X & Alpha DRK, and Montréal Exchange (MX).
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Tradeweb Reports December 2024 Total Trading Volume of $48.2 Trillion and Average Daily Volume of $2.18 Trillion
Tradeweb
Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported total trading volume for the month of December 2024 of $48.2 trillion (tn)[2]. Average daily volume (ADV) for the month was $2.18tn, an increase of 48.9 percent (%) year-over-year (YoY). For the fourth quarter of 2024, total trading volume was $151.7tn and ADV was $2.29tn, an increase of 36.7% YoY, with preliminary average variable fees per million dollars of volume traded of $2.28[3]. Excluding the impact of the ICD acquisition, which closed on August 1, 2024, total ADV for the month of December was up 29.5% YoY, total ADV for the fourth quarter of 2024 was up 20.0% YoY and total ADV for the full year 2024 was up 36.6% YoY.
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OCC Earns Placement on Built In 'Best Places to Work For' Lists for the Fourth Consecutive Year
OCC
Today, OCC was recognized by Built In - a candidate generation platform for global technology professionals - in its 'Best Places to Work' Awards for the fourth consecutive year. The annual awards program includes companies of all sizes, from startups to enterprises, across the U.S. OCC was recognized on the following lists:
100 Best Places to Work in Dallas
100 Best Places to Work in Washington, D.C.
100 Best Large Places to Work in Chicago
100 Best Large Places to Work in Dallas
100 Best Large Places to Work in Washington, D.C.
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| | | | | | Regulation & Enforcement | | | US regulator warns of oversight 'gap' on cryptocurrencies; CFTC chair Rostin Behnam will step down on day of president-elect Donald Trump's inauguration
Stefania Palma - Financial Times
The top US derivatives watchdog has warned against a regulatory "gap" for cryptocurrencies and called for more scrutiny of political betting markets. Rostin Behnam, chair of the Commodity Futures Trading Commission, told the Financial Times he would step down on January 20, the day of president-elect Donald Trump's inauguration. Behnam led the CFTC for four years as it finalised the first federal guidelines for carbon offsets and deepened scrutiny of crypto and so-called event contracts, including those allowing bets on elections. He oversaw the watchdog's 2023 lawsuit against crypto exchange Binance, which led to a $4.3bn settlement with US authorities.
/jlne.ws/4gIWXYe
CFTC Chief Who Sought Lead Role for Bitcoin Regulation Quits; Behnam has led US derivatives regulator since January 2022; Agency waged court fight with political derivatives firm
Nicola M. White - Bloomberg
US Commodity Futures Trading Commission Chairman Rostin Behnam plans to resign from the role on Jan. 20.
Behnam will leave the commission on Feb. 7, according to a statement Tuesday from the derivative-market regulator.
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| | | | | | Strategy | | | Trump trade uncertainty exposes stretched markets to volatility shocks
Jamie McGeever - Reuters
U.S. financial markets last year were more sensitive to economic surprises than usual, and as Donald Trump prepares to begin his second term as U.S. president investors should buckle up for more of the same in 2025.
Especially in Treasuries.
The 10-year yield's sensitivity to inflation and activity data surprises last year was the highest in more than 20 years, according to Goldman Sachs. Although inflation has fallen, growth fears have ebbed, and the Federal Reserve has started cutting interest rates, these sensitivities persist.
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| | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
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