| November 14, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Investors pump record sums into leveraged ETFs
Steve Johnson - Financial Times
Investors have poured record sums into high-risk leveraged funds this year in spite of the collapse in financial markets.
The funds, designed to magnify any market gains, also deepen any losses if asset prices fall, meaning many investors are likely to have been left badly out of pocket as stock markets have tumbled this year.
/jlne.ws/3hEzptQ
ECB Will Warn of Market Correction Risk This Week, Guindos Says
Alexander Weber and Craig Stirling - Bloomberg
The European Central Bank's semi-annual assessment of financial stability this week will highlight how threats to the region have increased yet again, Vice President Luis de Guindos said.
"Repricing risks and liquidity difficulties render financial markets and non-bank financial institutions vulnerable to disorderly risk adjustments," Guindos said in a speech in Frankfurt on Monday. "Investment funds' liquid asset holdings remain low and could thus amplify a market correction in a forced selling scenario."
/jlne.ws/3g8hSKk
Biggest Crypto Fund (GBTC) Hits Record 42% Discount to Bitcoin (BTC) Value
Katherine Greifeld - Bloomberg
Problems are multiplying for the world's biggest crypto fund as chaos engulfs the industry in the wake of exchange FTX's shock bankruptcy filing.
The $11.4 billion Grayscale Bitcoin Trust (ticker GBTC) has plunged more than 74% this year, outpacing the cryptocurrency's 64% decline. That gap has widened dramatically over the past week, dragging the price of GBTC to an unprecedented 42% discount to the value of the Bitcoin it holds, according to Bloomberg data.
/jlne.ws/3UYL3OO
FTX Collapse Sparks Billions of Dollars of Outflows From Crypto Exchanges
Sidhartha Shukla and Tanzeel Akhtar - Bloomberg
The spectacular collapse of 30-year-old Sam Bankman-Fried's crypto empire has fueled a spike in outflows across global crypto exchanges. Users yanked a net $3.7 billion worth of Bitcoin and $2.5 billion of Ether in the week from Sunday, Nov. 6 to Sunday, Nov. 13, according to data provider CryptoQuant.
They withdrew more than $2 billion worth of many of the largest stablecoins over the same timeframe, according to CryptoQuant, which tracks data from most major exchanges.
/jlne.ws/3GflWms
FTX's Chapter 11 bankruptcy unlikely to cause financial-market contagion, Citi says
MarketWatch
The swift unraveling of cryptocurrency exchange FTX, which culminated in a Chapter 11 bankruptcy announcement on Friday, is raising questions about whether it might produce a spillover into broader financial markets.
/jlne.ws/3g7vyoO
FTX's Failure, Fears Over Crypto.com Highlight Trust Lost From Bitcoin Universe
Jack Denton - Barron's
Cryptocurrency exchanges are rushing to reassure investors that they are solvent as customers withdraw funds, underscoring how much the collapse of FTX last week has shaken trust in the crypto space.
FTX, once one of the largest and most respected crypto trading venues, sought bankruptcy protection last Friday, less than a week after concerns began circulating in earnest that the group faced trouble from losses at Alameda Research, a related trading firm. That has shocked markets and the crypto industry alike.
/jlne.ws/3tsgfdx
Fed Official Warns Inflation Fight Has 'Ways to Go'
Nick Timiraos - WSJ
The Federal Reserve needs to keep raising interest rates to get inflation under control, even after last week's report that it slowed in October, a central bank official said Sunday.
Markets rallied after the Labor Department reported Thursday that so-called core prices, which exclude volatile food and energy items, rose 0.3% from September, the smallest monthly gain in a year, and by 6.3% on a year-over-year basis, down from 6.6% in September. Investors and policy makers watch core readings closely as a reflection of broad price pressures and as a predictor of future inflation.
/jlne.ws/3UYv1o3
The Democrats' election outperformance suggests the economy is not as bad as many think - and that's just one reason stocks are headed for a big year end rally, Fundstrat says
Matthew Fox - Business Insider
The surprise outperformance of Democrats during last week's midterm elections represents a signal for investors that suggests there is more upside for the stock market heading into year-end, according to Fundstrat's Tom Lee.
/jlne.ws/3Eb3pFv
| | | | | | Exchanges | | | EuroCCP rebrands to Cboe Clear Europe following 2020 acquisition; Since acquiring the clearing house, Cboe has grown the number of venues it provides clearing services to from 37 to 47.
Annabel Smith - The Trade
Cboe has rebranded its clearing house EuroCCP to Cboe Clear Europe, after acquiring it in July 2020. Cboe Clear Europe claims to favour an open access approach to its operations and market structure, growing the number of venues it provides clearing services to from 37 to 47. It also launched an equity derivatives clearing offering to support Cboe Europe Derivatives (CEDX), Cboe's new venue launched at the end of last year.
/jlne.ws/3O3qL4a
SGX Group reports market statistics for October 2022; Derivatives daily average volume rises to highest since March 2020; SGX MSCI Singapore Index Futures, SGX USD/CNH Futures set multiple volume records
SGX
Singapore Exchange (SGX Group) today released its market statistics for October 2022. Derivatives volume across multiple asset classes climbed to new highs amid increased trading activity by global institutions, as optimism that central banks may moderate their interest-rate hike cycles countered concerns over China's economic outlook.
/jlne.ws/3XbPcki
| | | | | | Regulation & Enforcement | | | LedgerX Withdraws Clearing Application
CFTC
On Friday, November 11, 2022, counsel for LedgerX LLC, d/b/a FTX US Derivatives (FTX), submitted to the Commodity Futures Trading Commission's Division of Clearing and Risk a formal withdrawal of FTX's request, originally submitted on December 6, 2021, to amend FTX's Amended Order of Registration as a derivatives clearing organization to allow FTX to offer products that are not fully collateralized. The application was not approved.
/jlne.ws/3tLPQaN
Bankman-Fried's FTX Collapse Shows CFTC Needs More Crypto Sway, Chairman Says
Katherine Doherty and Isis Almeida - Bloomberg
The collapse of Sam Bankman-Fried's FTX crypto exchange adds urgency to a Washington push to transform the Commodity Futures Trading Commission into a top crypto watchdog, according to the head of the derivatives regulator.
CFTC Chairman Rostin Behnam said the implosion of FTX, whose swift and dramatic downfall culminated in a bankruptcy filing last week, is an example of why his agency needs more power to oversee cryptocurrency operations and trading.
/jlne.ws/3Ewm0wT
How Prosecutors Could Pursue a Case Against FTX
Carleton English - Barron's
After the FTX implosion come the legal challenges.
Crypto exchange FTX, which filed for bankruptcy last week following reports that it used client money to fund risky ventures in its trading-arm Alameda Research, is now facing the prospect of potential criminal liability for alleged misuse of client funds.
/jlne.ws/3EwbiXn
| | | | | | Technology | | | Trading Technologies expands risk management offering with availability of KRM22 Risk Manager on TT platform
Trading Technologies
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and KRM22 plc (AIM: KRM), the technology and software investment company that focuses on risk management for capital markets, today announced that it is making the KRM22 Risk Manager available to customers on the TT platform. The sophisticated real-time post-trade risk service significantly enhances the risk toolset available through TT's growing ecosystem for futures commission merchants (FCMs), brokers and traders. The product's risk scoring system will help users instantly assess real-time margin and liquidity, creating a new way for futures and options on futures traders to generate alpha under the most volatile market conditions.
/jlne.ws/3Eww0GH
| | | | | | Strategy | | | 'Big Short' Investor Michael Burry Reveals 5 Stocks He Bought in Q3
Theron Mohamed - Business Insider
Michael Burry bolstered his US stock portfolio from one holding to six in the third quarter, a Securities and Exchange Commission filing revealed on Monday.
The investor of "The Big Short" fame quadrupled his stake in Geo Group, which invests in private prisons and mental-health facilities, to just over 2 million shares worth $15.5 million at the end of September.
/jlne.ws/3X0sQ55
Bitcoin derivatives data reflects traders' mixed feelings below $17,000
Marcel Pechman - Cointelegraph
Bitcoin lost 25.4% in 48 hours, bottoming at $15,590 on Nov. 9 as investors rushed to exit positions after the second-largest cryptocurrency exchange, FTX, halted withdrawals. More importantly, the sub-$17,000 levels were last seen almost two years prior, and the fear of contagion became evident.
The move liquidated $285 million worth of leverage long (bull) positions, leading some traders to predict a potential downside of $13,800.
/jlne.ws/3ACwZCT
| | | | | | Miscellaneous | | | Silicon Valley's Elite Burned By FTX Implosion
Katie Roof - Bloomberg
Earlier this month, many venture capitalists were proud backers of FTX.com. Today, they're saying they only wrote "tiny checks" in Sam Bankman-Fried's now-bankrupt crypto business.
While some VCs can afford mistakes worth millionsâif not hundreds of millionsâof dollars, the same won't be true of FTX's employees, customers and many others in the crypto market now facing the threat of contagion from the debacle.
/jlne.ws/3hJoEGR
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