| October 21, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Volatility Insight of the Week: The Treasury Yield (TVL) CVOL is nearing August 2024 highs, currently led by the long end of the curve as the market assesses the upcoming U.S. elections, economic data, and Fed decisions. To track how the market is responding to key events, please visit here.
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Sir Brian Williamson died last Thursday morning, sources have shared with me. The former two-time chairman of the London International Financial Futures and Options Exchange was reported not to be feeling well for a couple of days and saw his doctor ahead of a planned hip operation. He felt unwell quickly after the appointment and suffered a severe heart attack shortly thereafter, a source shared.
No details about any services are available at this time. We will share them when they become available.
Williamson was a 2007 inductee into the FIA Futures Hall Of Fame. He is featured in the JLN video series, The History of Financial Futures: Game Changers, Part II. He is the first person you see on the screen speaking in an interview conducted by the veteran journalist John Parry back in 2011. We launched the series at the time, contracting with Parry to interview the early heads of the European exchanges, because we were afraid of losing their stories. It was the death of former Chicago Corp. CEO Jack Wing in August of 2011 that spurred us into action and launched our historical video work.
When I return to Illinois at the beginning of November, I will look for the raw video from the interview we did with Williamson and see if we can repackage it as a stand alone interview or podcast.
Cboe Global Markets Executive Vice President and COO Chris Isaacson was named by Ingram's Magazine as one of Kansas City's 250 most influential business leaders in 2024. Also named to the list was Dave Cummings, the owner of Tradebot Systems and the founder of BATS Trading. The Chiefs' Patrick Mahomes was also on the list. ~JJL
| | | | | | Lead Stories | | | How Susquehanna's Jeff Yass mastered the options game; Obsession with odds spawned a trading giant - and shaped the industry's approach to markets
Nicholas Megaw - Financial Times
Jeff Yass used to see options trading as a "game". Now he sees it as a "mission from God". The billionaire co-founder of Susquehanna International Group has claimed he was a socialist during his student days at the State University of New York, but now he talks about capitalism with the zeal of a convert. "Throughout history, the money lenders have always been viewed with suspicion," he told a student group dedicated to the promotion of free markets in 2021. "When you're against finance, you're fundamentally against all human progress." Having flown under the radar for years, Yass has recently gained prominence as a major donor to Republican political candidates and as one of the largest investors in ByteDance, the Chinese owner of TikTok. But despite the newfound scrutiny, less attention has been paid to the trading business at the heart of SIG's "mission".
/jlne.ws/3BTE9WN
The SEC greenlit Bitcoin ETF options trading. Here come the big fish; Spot Bitcoin ETF options trading will further increase Bitcoin's adaptability among investors
Vinamrata Chaturvedi - Quartz
The Securities and Exchange Commission (SEC) has granted approval for the NYSE American LLC and CBOE to list options on spot Bitcoin exchange-traded funds (ETFs), marking a significant development in cryptocurrency history. This approval paves the way for institutional investors, or "big fish," to gain greater access to Bitcoin through more traditional financial products.
/jlne.ws/4hiqB7t
Hazard-Obsessed Stock Investors Risk Missing a Year-End Rally; Money seen coming in from volatility control funds, buybacks; Volatility, skew signal hedging for US election, Fed, earnings
Jan-Patrick Barnert - Bloomberg
Investors laser-focused on the risks looming in the next few weeks may be left unprepared if their worst fears don't come to pass. Volatility is elevated for options on stocks, bonds and currencies alike as investors pay up for protection. The risks are clear: a hotly contested US election, interest-rate decisions in the US and Europe, the threat of a wider Middle East conflict and quarterly earnings. In the stock market, implied volatility is outpacing actual swings, and puts protecting against a selloff are favored over bullish calls.
/jlne.ws/4hh3ObV
China stimulus creates hedging headaches for HK warrants; Dealers say options liquidity issues during Hang Seng's rollercoaster ride made the products tricky to risk manage and price
Chris Davis and Jiefei Liu - Risk.net
Gyrations in Chinese stocks in recent weeks - driven by central bank stimulus - have sent index volatility soaring, creating hedging headaches for market-makers and widening Hong Kong warrants' traditionally paper-thin bid-offer spreads. "Unsurprisingly, warrant issuers have been facing a lot of challenges," says a listed products sales head at one warrants issuer in Hong Kong.
/jlne.ws/48hpdOe
Janus Henderson launches first European active ETF; The $360bn manager has built an active ETF name in the US with CLO funds, but this taps into its Japan equities expertise
Steve Johnson - Financial Times
Janus Henderson will today join the throng of asset managers launching actively managed exchange traded funds in the European market. The move comes five months after the $360bn Anglo-American fund house bought London-based Tabula Investment Management in a push to expand its ETF franchise outside of the US. The Janus Henderson Tabula Japan High Conviction Equity Ucits ETF (JCPN) is scheduled to be followed by a raft of follow-up launches as Janus Henderson responds to what it says is strong client demand.
/jlne.ws/48fR6pM
The Climate Short: Hedge Funds Pile Up Huge Bets Against Green Future; The $5 trillion industry's move against clean energy and green technology may prove more damaging than political pushback over "woke" capitalism.
Sheryl Lee, Ishika Mookerjee and Christopher Udemans - Bloomberg
The fast money on Wall Street has taken a close look at key sectors in the green economy and decided to bet against them. Despite vast green stimulus packages in the US, Europe and China, more hedge funds are on average net short batteries, solar, electric vehicles and hydrogen than are long those sectors; and more funds are net long fossil fuels than are shorting oil, gas and coal, according to a Bloomberg News analysis of positions voluntarily disclosed by roughly 500 hedge funds to Hazeltree, a data compiler in the alternative investment industry.
/jlne.ws/4heZGt1
| | | | | | Exchanges | | | Live from HOOD - Cboe's Index Options Coming Soon to Robinhood
David Howson - Cboe
I'm thrilled to share some exciting news from the HOOD Summit 2024 in Miami. As recently announced in our press release, Robinhood will soon bring Cboe Global Markets' index options trading to its customers on its trading platform. This initiative marks a significant milestone in our goal of empowering retail investors and democratizing access to versatile trading tools like options.
HOOD Summit 2024 has been an incredible event so far, bringing together financial enthusiasts, tech innovators and industry leaders. I've thoroughly enjoyed speaking with so many individuals that are truly excited about growing their financial futures.
/jlne.ws/3YvSscJ
Robinhood CEO outlines opportunities in options trades, redesign
Brian Sozzi - Yahoo Finance
At its first annual HOOD Summit in Miami this week, Robinhood Markets (HOOD) unveiled new futures and index options trades for active investors. Robinhood CEO Vlad Tenev sits down with Yahoo Finance executive editor Brian Sozzi to speak more about this new suite of trading tools.
/jlne.ws/3YssSFz
Options Growth Among Retail Investors 'Absolutely Tremendous': Cboe Global President
Erica Kollmann - Benzinga
Cboe Global Markets, Inc. CBOE has partnered with Robinhood Markets, Inc. HOOD to offer Robinhood customers access to index options, expanding their trading capabilities on its platform. Benzinga's Zunaid Suleman sat down with Cboe's Global President Dave Howson at HOOD Summit 2024 to discuss the partnership.
Growth Of Retail Investors: Howson highlighted the growth of retail investors and the expansion of individual investors' knowledge and skills in the years before and after the COVID-19 pandemic. He said retail investors are excited and eager for additional market tools.
/jlne.ws/3NA253Z
OCC Stories: Bailey Moberly on Celebrating Culture; Bailey Moberly is part of the Software Development Test team supporting ENCORE risk management. In her OCC story, she appreciates how OCC celebrates each colleague's unique culture. Read it below!
OCC
Since joining OCC more than five years ago, I have watched the company become more inclusive in its activities. OCC provides a welcoming space for coworkers to learn about different cultures and honor them within the workplace. The uniqueness of each and every employee's culture is something to be highlighted. OCC does a great job of recognizing cultural traditions, and it's wonderful to see how people of different backgrounds and lifestyles come together to celebrate. I have learned a lot about different cultures and my coworkers, which makes it even more exciting to be able to mark important events with them.
/jlne.ws/3AfeLdm
CDS clearing rates hit 71% high around September iTraxx roll; CFTC data shows tilt away from bilateral settlement mainly in Europe-referencing instruments
Lorenzo Migliorato - Risk.net
The US clearing rate for credit default swaps jumped to a record 71% in the third week of September, coinciding with the roll date for several of Markit's CDS indexes. Derivatives notional of $4.14 trillion was being funnelled through a central counterparty as of September 20, up 31.5% from the previous week. Over the same period, non-cleared notional slid 12.3% to $1.69 trillion.
/jlne.ws/3BIzjeH
| | | | | | Regulation & Enforcement | | | SEC Approves Options on Bitcoin ETFs
SEC - Traders Magazine
The US Securities and Exchange Commission has approving listings of options on bitcoin ETFs from the New York Stock Exchange and the Chicago Board Options Exchange.
The NYSE filing said:
"The Exchange proposes to amend Rule 915 (Criteria for Underlying Securities). Specifically, the Exchange proposes to amend Rule 915, Commentary .10 to allow the Exchange to list and trade options on the following exchange-traded products: the Grayscale Bitcoin Trust (BTC) (the "Grayscale Fund" or "GBTC"), the Grayscale Bitcoin Mini Trust BTC (the "Grayscale Mini Fund" or "BTC"), and the Bitwise Bitcoin ETF (the "Bitwise Fund" or "BITB" and, collectively, the "Bitcoin Funds" or "Funds").6
/jlne.ws/3NBp5PW
| | | | | | Strategy | | | US Elections Day Risk Rises as Trump Gains in the Polls
Ed Tom - Cboe
Volatility traders flattened the S& Index skew following OPEC's lowered revision for oil demand growth (its 3rd consecutive downward revision), shaving 1 volpt of geopolitical risk premium off of the VIX Index. Nonetheless, skew remains steep (84th percentile highs) and we estimate that the current VIX Index level of 18 still embeds a total of 3.5pts of geopolitical risk premium (i.e., if MidEast tensions were to dissipate entirely, VIX would fall to 14.5).
/jlne.ws/40iTASB
The S&P 500's golden decade of returns is over, Goldman says
Filip De Mott - Business Insider
The stock market's decadelong golden age will soon be a thing of the past, Goldman Sachs said.
A new report from the firm's portfolio-strategy research team forecast that the S&P 500 would see an annualized nominal return of 3% over the next 10 years. That would put it in the 7th percentile of performance since 1930. It would also badly lag the 13% annualized figure put up by the benchmark index over the prior decade, Goldman data showed.
/jlne.ws/3Yv5zuU
Funds rejuvenate CBOT corn, soy bearishness after short covering streak
Karen Braun - Reuters
Each week since late August, speculators covered short positions across U.S. grains and oilseeds as weather and geopolitical risks increased supply uncertainties worldwide.
But funds snapped that stretch of short covering in the week ended Oct. 15, adding new gross short positions in CBOT corn, soybean meal and soybeans. That flipped overall grain and oilseed sentiment back to bearish after the establishment of a net long in the prior week, the first in 13 months.
/jlne.ws/3BStJXn
Earnings From Big Banks
Cboe (Video)
/jlne.ws/4dYkySx
| | | | | | Miscellaneous | | | What the US Election Means for Markets
Esha Dey and Ye Xie - Bloomberg
One of the most crucial events of the year - the US presidential election on Nov. 5 - is days away. For Wall Street, the race between Vice President Kamala Harris, the Democratic candidate, and Republican former President and nominee Donald Trump adds a layer of volatility at a time when uncertainty about interest rates, the labor market and conflicts in Europe and the Middle East are already testing investor nerves. While polls have the two candidates neck-and-neck, so far the uncertainty isn't bothering investors. The S&P 500 Index has inched ever higher this year, notching 47 record highs in 2024 - and stocks may get another boost after the election, as has historically been the case.
/jlne.ws/4hdTrpd
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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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