| May 02, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | CME Group reported a significant performance for April 2024, with a record-setting average daily volume (ADV) of 26.5 million contracts, marking a 33% increase from the previous year. This growth was observed across all asset classes, including new April ADV records in interest rates, equity indexes, metals, foreign exchange, and options. Notably, U.S. Treasury options and metals options reached all-time monthly ADV records, alongside substantial rises in copper futures and silver options.
Key ADV increases included a 37% rise in interest rates, with notable growth in 10-Year and 5-Year U.S. Treasury Note futures. Equity Index ADV rose by 36%, driven by significant gains in E-mini S&P 500 and Micro E-mini Nasdaq 100 futures. The options segment saw a 33% increase, with equity index options up by 76%. Energy and agricultural segments also reported gains, with energy options and soybean oil futures seeing considerable increases.
Internationally, ADV grew by 43%, with significant contributions from EMEA, Latin America, and Asia. Micro E-mini Equity Index futures and options represented a significant portion of overall Equity Index ADV, and Micro WTI Crude Oil futures accounted for a notable percentage of the overall Energy ADV. Additionally, BrokerTec U.S. Treasury and U.S. Repo ADNV showed increases, and EBS Spot FX ADNV rose by 16%. The customer average collateral balances for Q1 2024 also reported substantial figures for both cash and non-cash collateral.
The Options Clearing Corporation (OCC) reported significant increases in trading volume for April 2024 across various segments. Equity options saw a 27.7% rise from the previous year, totaling 490,980,112 contracts compared to 384,604,951 in April 2023. ETF options also experienced a substantial growth of 40%, with volumes rising from 308,942,605 to 432,600,457 contracts. Index options had an impressive 44% increase, with the volume rising from 67,261,317 to 96,856,178 contracts. Overall, the total options volume for April 2024 reached 1,020,436,747, marking a 34.1% increase from 760,808,873 in the previous year.
Futures trading saw the most dramatic growth, surging 92.4% to 6,807,771 contracts, up from 3,538,461. Combining options and futures, the total trading volume for the OCC in April 2024 was 1,027,244,518, representing a 34.4% increase from 764,347,334 in April 2023. Year-to-date average daily volume (ADV) also saw increases across the board, with the total volume rising by 5.7% from the previous year.
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| | | | | | Lead Stories | | | Nasdaq Plans More Short-Term Options on Commodity, Treasury ETFs; Nasdaq says it plans to file for Monday expiry in coming weeks; Approval would tack onto Wednesday contracts launched in 2023
Carly Wanna - Bloomberg
In the latest sign of booming interest in short-duration options, Nasdaq Inc. plans in coming weeks to seek regulatory approval for Monday expiries on contracts tied to a suite of commodities and Treasuries exchange traded funds.
/jlne.ws/44nVLnC
FROM OIC: Buy-Side Perspective on Options
Editorial Staff - Traders Magazine
Investment managers have always been the holy grail for options brokers, exchanges and technology providers, as one multi-billion-dollar institution that buys and sells puts and calls can generate more volume than hundreds of retail traders. The institutional perspective was in focus Wednesday afternoon at the Options Industry Conference in Asheville, North Carolina, in a panel entitled "Behind the Curtain: A Buy Side Conversation". Panel moderator Joe Lewis, Head of Corporate Hedging & FX Solutions at Jefferies, opened the discussion with a question about innovation in buy-side use cases in options.
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Earnings Buoy Risk Sentiment as Volatility Falls
Mandy Xu - Cboe
Implied volatilities fell meaningfully across asset classes last week, with the exception of FX (led by USDJPY on BOJ intervention fears). US rates vol is back down to the 13th percentile low (over the past year) ahead of this week's FOMC meeting as investors come to terms with "higher for longer". Stronger-than-expected earnings buoyed the equity market, with the VIX down 3.7 pts wk/wk. Oil volatility fell to near a 1-year low despite ongoing geopolitical tensions.
/jlne.ws/3UlwTsh
SocGen trader fired for 'unauthorised' bets blames 'risk team and bosses'; Kavish Kataria complains of losing his bonuses and claims his options trades made money
Sarah White - Financial Times
A Societe Generale trader dismissed over unauthorised risky bets has hit out at the French bank, saying the "entire risk team and other bosses" were equally responsible and complaining his bonus had been withheld. Kavish Kataria wrote on LinkedIn on Thursday that he was being made a "scapegoat" and said all his trades were correctly recorded and visible to his superiors in Hong Kong and Paris.
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The Treasurys Market Is Getting Squeezed From All Sides; Inflation and deficits are lifting yields and jarring the stock market
David Uberti - The Wall Street Journal
Pressure keeps building in the bond market. Stickier-than-expected inflation this year has boosted yields on U.S. debt enough to dent the stock-market rally. Soaring spending by Washington shows few signs of slowing. And the latest plan to finance it all promises a flood of Treasurys in the coming months that will need to find buyers. Those factors are forcing investors to ditch some of their optimism from early this year and reopen their playbooks for a world of higher yields. With the Federal Reserve on Wednesday signaling it has the stomach to keep interest rates elevated to tame price pressures, many worry the pain will continue for some time.
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Bitcoin ETF Discounts Reach Records After Late-Day Selloff; BlackRock's IBIT fell 1.7% below NAV; Fidelity's FBTC slid too; It's 'more an accounting quirk than a real issue:' Bitwise CIO
Isabelle Lee - Bloomberg
Prices of some of the biggest spot-Bitcoin exchange-traded funds closed Tuesday at their largest discounts to the value of their underlying assets since they were launched.
While that type of dislocation is typically a troubling sign for an ETF, the chief investment officer of one issuer called it "more an accounting quirk than a real issue" due to the unusual way in which the funds track the value of their assets.
/jlne.ws/4blsyMp
Record Bitcoin-ETF Outflow Buffets BlackRock, Fidelity Funds; Investors pulled $564 million from Bitcoin ETFs on Wednesday
Richard Henderson and Sidhartha Shukla - Bloomberg
US spot-Bitcoin exchange-traded funds suffered their largest daily outflow as the digital token heads for its worst week since August 2023.
Investors pulled a net $564 million from the batch of almost a dozen funds on Wednesday, the biggest drawdown since the products debuted in January. The prospect of higher-for-longer interest rates has hurt risky assets like crypto.
/jlne.ws/4aXQdD2
India equity options pricing in a no-surprises election verdict
Nimesh Vora - Reuters
Investors do not expect India's national elections to spark major volatility in the country's stock market, unlike prior occasions, based on the low cost of insuring against a slide if Prime Minister Narendra Modi does not win a third straight term.
The Nifty 50 (.NSEI), opens new tab, India's main equity gauge, is trading at record-high levels amid surveys predicting Modi's Bharatiya Janata Party (BJP) will emerge victorious in the elections that started on April 19 and runs through June 4, when results are due.
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Traders Face Wildest US Jobs Day in a Year, S&P 500 Options Show; Bets on biggest S&P move after a jobs report since March 2023
Jess Menton - Bloomberg
The options market is betting that stocks will swing widely after Friday's US jobs report, which traders expect will offer more clarity on how much the Federal Reserve may cut interest rates this year.
The S&P 500 Index is expected to move 1.2% in either direction after the release, based on the cost of at-the-money puts and calls expiring Friday, according to Stuart Kaiser, Citigroup Inc.'s head of US equity trading strategy. That figure, based on the prices of S&P straddles as of Wednesday's close, is the largest implied swing ahead of an employment report since March 2023, he said.
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| | | | | | Exchanges | | | Renaissance Initiative Update with Ganesh Hariharan
OCC (video)
If you couldn't join us at this year's Options Industry Conference, watch this video for an update on our forthcoming clearing Platform, Ovation, from Ganesh Hariharan, Managing Director, Organizational Transformation at OCC.
/jlne.ws/3UlwIx7
CME Group Reports Record April ADV of 26.5 Million Contracts, with Double-Digit Growth Across All Asset Classes
CME Group
CME Group, the world's leading derivatives marketplace, today reported its April 2024 market statistics set a new average daily volume (ADV) record of 26.5 million contracts for the month, up 33% from April 2023, with double-digit growth across all asset classes. Additionally, interest rate, equity index, foreign exchange and options products set new April ADV records. Metals also reached a new April ADV record, including monthly records for metals options, copper futures and options, and silver options. U.S. Treasury options also reached an all-time monthly ADV record. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/jlne.ws/3WoyaBn
NYSE-parent ICE's profit rises on record surge in energy market volatility
Reuters
Intercontinental Exchange reported a rise in adjusted profit for the first quarter on Thursday as volumes hit a record on surge in energy markets trading. The conflict in the Middle East has resulted in a reshaping of the global commodities and energy markets, significantly raising volatility as investors assess the impact of shifting supply chains.
/jlne.ws/3WlfIJN
How Cboe European Indices Performed Since 2010
Matt Moran - Cboe
Cboe Europe Derivatives (CEDX) is a pan-European marketplace that enables eligible participants to access a vibrant equity derivatives market through a single access point, creating efficiencies in trading and clearing. Among its offerings are futures on these 10 indices:
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| | | | | | Regulation & Enforcement | | | US lawmakers urge SEC to approve Bitcoin options trading; Representatives Mike Flood and Wiley Nickel urged the SEC's chair Gary Gensler to stop discriminating against Bitcoin funds in a letter.
Ana Paula Pereira - CoinTelegraph
United States lawmakers are reportedly pressing the Securities and Exchange Commission to approve options trading on Bitcoin exchange-traded products (ETPs).
According to a report by Axios, Representatives Mike Flood and Wiley Nickel recently wrote a letter to the Commission's chair, Gary Gensler, urging the SEC to stop discriminating against crypto funds.
/jlne.ws/3wh3ffM
Hong Kong launches insider trading prosecution of Segantii Capital; Regulator brings criminal proceedings against hedge fund, its founder Simon Sadler and former trader Daniel LaRocca
Ortenca Aliaj in London and Chan Ho-him - Financial Times
Hong Kong's financial regulator has launched criminal proceedings in an insider dealing case against hedge fund Segantii Capital Management and its founder and director, Blackpool Football Club owner Simon Sadler. The Chinese territory's Securities and Futures Commission said on Thursday it had also started proceedings against former Segantii trader Daniel LaRocca.
/jlne.ws/3wetBit
U.S. Financial Markets Regulator Names First Chief Artificial Intelligence Officer; Commodity Futures Trading Commission has promoted Ted Kaouk to the chief data and artificial intelligence officer role
Mengqi Sun - The Wall Street Journal
The Commodity Futures Trading Commission has named its first chief artificial intelligence officer, responding to the Biden administration's push to govern the use of AI across the federal government. The derivatives markets regulator has named Ted Kaouk, who currently serves as its chief data officer and director of its data division, to the role. Kaouk will help develop the agency's strategy to oversee and enforce the financial markets.
/jlne.ws/3QrQvd6
SEC Ends Probe of Barry Diller, David Geffen Trades Before Activision-Microsoft Deal; SEC, Justice Department looked into options purchases of the videogame maker in 2022
Katherine Sayre, Jeffrey A. Trachtenberg and Dave Michaels - The Wall Street Journal
Securities regulators have ended an investigation into large bets that Barry Diller, Alexander von Furstenberg and David Geffen made on Activision Blizzard days before the videogame company agreed to be acquired by Microsoft in 2022.
The Securities and Exchange Commission this week sent letters to Diller, von Furstenberg and Geffen saying it doesn't plan to accuse them of insider trading tied to their purchase of Activision options.
/jlne.ws/3Usi4nw
| | | | | | Strategy | | | Bitcoin 'Call Writing' Back in Vogue as Cash And Carry Strategy Loses Shine
CoinDesk via Business Insider
Writing or selling bitcoin {{BTC}} call options, one of the most favored yield-generating strategies a year or so ago, is back in vogue as the recent market swoon has dented the appeal of the cash and carry arbitrage.
Selling a call option is a way of offering insurance to the buyer against bullish price moves in return for compensation, called a premium. The premium received is the maximum profit a call option seller stands to make.
/jlne.ws/4bDLh6j
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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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