| September 13, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Gambling on Options Is Fun; Also a Sculptor lawsuit, Jamie Dimon on bank capital rules and a 2x levered Bitcoin ETF.
Matt Levine - Bloomberg
There was just a very strong case that, if you wanted to make long-term retirement investments, buying stocks was the good and sensible way to do it, endorsed by academic theory and common sense. But you had to pick the stocks: In the olden days, stock investing meant buying individual stocks, and retail stock investing meant not buying that many of them, because stocks traded in round lots of 100 expensive shares so you could only buy so many different stocks.
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****** Yes, there are gamblers who trade. And yes, there are young, lower-net worth venture capitalists who are prevented from investing in startups because of regulations that apply the same type of mentality to options trading as they do VC investing. There are all kinds of ways to look at the options trading explosion.~JJL
Hedge Funds' Big Bet Against Treasurys Isn't What You Think; Inflation, bond issuance and Fed tightening are spurring a Treasury derivative bonanza
Eric Wallerstein - The Wall Street Journal
The basis trade, an innocuous-looking practice at the center of some of Wall Street's historic blowups, is back. A popular way for hedge funds to profit from bond trading while minimizing their exposure to swings in the market, the basis trade exploits the price difference between Treasurys and Treasury futures. The resurgence is attracting fresh scrutiny from Wall Street because previous meltdowns have rattled global markets.
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'Higher for longer' rates remain a threat to U.S. stocks after inflation data
David Randall - Reuters
The latest U.S. inflation data is unlikely to ease worries over persistently high Treasury yields that have gnawed on stocks over the last few weeks, investors said, although many believe the longer-term trend of cooling consumer prices remains intact.
U.S. consumer prices climbed by 0.6% in August, broadly in-line with economists expectations. In the 12-months through August, the CPI jumped 3.7%, though year-on-year consumer prices have come down from a peak of 9.1% in June 2022.
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US 'Playing With Fire' As Oil Reserves Plunge to 40-Year Low: McDonald
Zahra Tayeb - Markets Insider
The US is "playing with fire" as its oil reserves plunge to a 40-year low at a time when global crude prices are rallying again, markets guru Larry McDonald said.
The founder of "The Bear Traps Report" has taken to X, formerly known as Twitter, to warn about the steep drop in US oil inventories.
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| | | | | | Exchanges | | | How Periodic Auctions Enhance Trading in Europe and the U.S.
Adam Inzirillo - Cboe
Periodic Auctions - an alternative and complimentary market model to continuous limit orderbooks - offer frequent short-duration price forming auctions for investors seeking liquidity throughout the course of the trading day.
Cboe launched Periodic Auctions in Europe in 2015, ahead of the MiFID II regulations which changed equity market structure in the region. Cboe introduced Periodic Auctions in the U.S. in the spring of 2022 to offer an on-exchange model for block-sized liquidity that can compete with various off-exchange solutions. Our North American Execution Consulting Team published a study this year on the growth in off-exchange trading which highlights the benefits of using Periodic Auctions. In this new study, we leverage Cboe's global footprint to showcase the similarities and differences between Periodic Auctions in both regions, and how the product can assist investors' execution quality and liquidity sourcing.
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ICE to Collaborate with Meridia to launch the ICE Commodity Traceability Service to Support Commercial Trade Affected by the EU Deforestation Regulation
Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure, and home to the largest soft commodity futures and options markets in the world, today announced that ICE Benchmark Administration Limited (IBA) is collaborating with Meridia Land B.V (Meridia), an agricultural technology company specializing in the verification of farm origin and supply chain data, to launch the ICE Commodity Traceability (ICE CoT) service.
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Premia Blue, the Future proof DeFi Options Exchange, is now live on Arbitrum
Premia Press Release via CoinTelegraph
Road Town, British Virgin Islands, 13th September, Chainwire - Premia Blue, the first-of-its-kind DeFi options exchange, is now live on Arbitrum.
Designed for traders and liquidity providers across all experience levels, Premia Blue offers unparalleled capital efficiency, user functionality, and composability in the DeFi space. Traders are now open to fully customizable European-style crypto options with market-driven pricing and dual trading modesâAMM and Orderbook. The only options platform in DeFi where products are composable no matter the preferred trading method.
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SGX Group reports market statistics for August 2023; Strong derivatives volume growth as China stimulus stokes institutional risk management; SGX Securities is first in Asia to list Structured Certificates
SGX Group
Singapore Exchange (SGX Group) today released its market statistics for August 2023. Derivatives volume rose strongly as more international investors turned to SGX Group's trusted and liquid platform to manage risk, amid China's efforts to boost its economic recovery. Derivatives traded volume increased 16% in August on both a month-on-month (m-o-m) and year-on-year (y-o-y) basis to 23.7 million contracts, with broad-based gains across equities, foreign exchange (FX) and commodities. Derivatives daily average volume (DAV) climbed 7% m-o-m to 1 million contracts.
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Meaghan Dugan Marks One Year as NYSE Options Head
Anna Lyudvig - Traders Magazine
It has been a year since the New York Stock Exchange (NYSE) appointed Meaghan Dugan as Head of Options. "It has been an honor to serve as Head of Options at the NYSE during an impactful period for us and the industry," she told Traders Magazine.
Just in the last year, the options market has experienced strong growth, and the NYSE's "best-in-class" technology has been able to process this growth in volume with ease, she said.
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| | | | | | Regulation & Enforcement | | | SEC accuses Virtu of failing to protect client trade information; Lawsuit says market maker's flawed system gave proprietary traders 'nearly unfettered access' to material data
Jennifer Hughes - Financial Times
Market maker Virtu has been sued by US regulators for allegedly giving misleading statements and omitting information about its protections against the potential misuse of sensitive customer information it held. The Securities and Exchange Commission's lawsuit on Tuesday said a database containing post-trade information generated from customer orders through Virtu's institutional business was accessible via two widely-known passwords to "practically anyone" at Virtu Americas - including in its proprietary trading business, which trades for its own account and profit rather than for clients.
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SEC Says It's Using AI to Surveil Markets and Assist Investigations
Dave Michaels - The Wall Street Journal
The Securities and Exchange Commission is using artificial-intelligence models to conduct market surveillance and assist some enforcement investigations, SEC Chair Gary Gensler told Senate lawmakers on Tuesday. While the SEC has sometimes touted its data-driven approach to spotting manipulative or fraudulent trades and talked about how AI is used by hedge funds and other investors, it hasn't referred much to its own use of AI.
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Deutsche Bank continued to push risky derivatives years after probe found mis-selling
Internal investigation from 2019 uncovered rule-breaking and lax controls in sales of complex products to Spanish SMEs
Olaf Storbeck - Financial Times
Deutsche Bank continued to sell risky foreign exchange derivatives to companies in Spain that had suffered big losses from such products even after an internal inquiry found long-standing mis-selling. An internal probe that began in 2019 after a whistleblower complaint found that staff exploited flaws in the bank's controls and broke EU rules, pushing small and medium-sized Spanish companies to buy highly complex products that were promoted as safe and cheap hedges against foreign exchange risks.
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| | | | | | Strategy | | | Understanding What's Moving Your Options Strategy
Dr. Jim Schultz - tastylive
With options, position profits always come down to three main things: direction, time, and volatility. Or more specifically, delta, theta and vega. But given the vast number of different strategies you could implement in the marketplace, from defined-risk to undefined-risk and directionally biased to directionally neutral, different strategies will inevitably have different drivers of profitability.
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Interactive Brokers Is an AI Play That's Hiding in Plain Sight
Steven M. Sears - Barron's
The mere mention of artificial intelligence, no matter how superficial its ties to a company, hypnotizes investors into a stock-buying frenzy that makes sharks devouring chum seem peaceful.
No one really knows if AI will really create anything profound, or if it is more proof of how corporate chieftains and their spin doctors constantly create narratives to entice investors to push their stock prices higher.
/jlne.ws/3sJOUWT
Interest Rates React to CPI
Cboe (Video)
@JoeTigay talks #CPI, a spike in #interestrates, and what to look for with tomorrow's #PPI and next week's #Fed meeting. #vol411
/jlne.ws/3sPWmQl
| | | | | | Events | | | CME Group Opens Registration for its 20th Annual Global University Trading Challenge
CME Group
CME Group, the world's leading derivatives marketplace, today announced registration is now open for the 20th annual CME Group University Trading Challenge, which will be held from Sunday, October 1 to Friday, October 27. Interested students must register by 5 p.m., CT, on Thursday, September 28, and are encouraged to familiarize themselves with the challenge rules, as well as brush up on their market knowledge, through the wide range of resources available at the trading challenge portal.
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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
Publisher | | | Sarah Rudolph
Editor-in-Chief
| | | Jeff Bergstrom
Editor
| | | Asma Awass
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