 | | | | | | | | December 12, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | 
Eurex's Matthias Graulich Highlights Growth and Advantages of Credit Index Futures
JohnLothianNews.com
Matthias Graulich, head of strategy at Eurex, discussed in an interview with John Lothian News at the FIA Expo in Chicago the success and growth of Eurex's credit index futures, emphasizing the product's competitive advantages and market adoption. "When we restarted this whole credit initiative back in 2021, there were some fundamental changes in regulation, like margin rules for OTC derivatives," Graulich said. He noted that technological advancements and increased electronic trading created an opportunity to introduce a more efficient product for buy-side firms.
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| | | | | | Lead Stories | | | Options expiry triggers $4bn liquidity shortfall at NSCC; Second-largest simulated shortfall on record mitigated by extra liquidity deposit and OCC commitment
Joshua Walker - Risk.net
The National Securities Clearing Corporation reported a simulated liquidity shortfall of $4 billion in the third quarter, coinciding with September's options expiration day. The shortfall represents the gap between the central counterparty's (CCP) qualifying liquid resources (QLRs) and the payment obligation triggered by the hypothetical default of any single clearing participant and its affiliates under extreme but plausible market conditions. It marks the eighth liquidity deficit recorded by
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The Reason Certain Options Trade in Penny Increments
OIC
Every listed option has a minimum permitted trading increment. However, due to a program that started several years ago as an experiment and is now a permanent feature of the market, this increment can be as low as 1 penny.
In 2007, the Securities and Exchange Commission (SEC) authorized a six-month test called the Penny Pilot Program. This program applied to 13 classes of options, allowing them to be quoted and traded in penny increments to assess whether the reduced tick size would benefit investors.
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Short Sellers' Secret Talks and Alliances Emerge in Court Battle; Hedge fund boss says research was shared with half-dozen bears
Tom Schoenberg - Bloomberg
When short sellers knock down stocks, a debate often breaks out: Was there more than one bear involved? After years of such conjecture among embattled corporate chieftains, a little noticed lawsuit in Toronto is exposing a variety of alleged contacts and even alliances between skeptical researchers and investment firms.
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BlackRock Says Up to 2% Bitcoin Allocation Is 'Reasonable Range'; The asset manager runs the world's largest Bitcoin ETF; Largest cryptocurrency has surged since Trump election victory
Katie Greifeld - Bloomberg
The world's biggest asset manager says that Bitcoin does have a place in multi-asset portfolios - up to a certain point. Giving Bitcoin a 1% to 2% weighting would produce a similar risk profile to the so-called Magnificent Seven technology stocks in a standard 60/40 portfolio of stocks and bonds, according to a BlackRock Investment Institute paper released Thursday. That's a "reasonable range" to devote to Bitcoin, as anything beyond 2% would sharply increase crypto's share of overall portfolio risk, the paper said.
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US bankers cautious on crypto despite expected regulatory easing
Reuters
U.S. bankers struck a cautious tone on cryptocurrencies at the Reuters NEXT conference in New York this week, despite expectations that friendlier rules under President-elect Donald Trump will pave the way for lenders to expand into digital assets.
Trump courted crypto campaign dollars with promises to be a "crypto president" and end the Biden administration's crackdown on the sector, but banks are nevertheless unlikely to rush head-first into the volatile asset, bankers said.
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| | | | | | Exchanges | | | EEX to introduce Japanese Power Options from February
EEX Press Release
The European Energy Exchange (EEX) will expand its Japanese power derivatives offering with the launch of EEX Japanese Power Monthly Options for the Tokyo and Kansai market areas on 3 February 2025. This launch marks an innovative moment for the power trading industry as these are the first so-called average price options contracts on the EEX power derivatives markets. As such, the new instruments will be settled against the average of the JEPX spot prices for the Tokyo and Kansai market areas during the respective delivery month.
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ICE Launches MSCI MarketAxess Tradable Corporate Bond Index Futures to Help Investors Hedge Corporate Bond Exposure
ICE
Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of technology and data, and home to the most liquid markets for trading MSCI futures, today announced the launch of MSCI MarketAxess Tradable Corporate Bond Index futures. The futures contracts will be based on MSCI and MarketAxess' newly created corporate bond indices. These tradable indices aim to provide a benchmark for the performance of the corporate bond market, incorporating sector and credit allocation to ensure low tracking error to the MSCI parent indices and reliable replication of the credit market.
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Greater connectivity driving Hong Kong's capital markets forward: SFC Quarterly Report
SFC
Hong Kong's capital markets have continued to reap benefits since the third quarter from the success of Connect schemes with the Mainland and breakthroughs in Middle East market connectivity, according to the Securities and Futures Commission's (SFC) Quarterly Report published today. Marking the tenth anniversary of the scheme, the Mainland-Hong Kong Stock Connect had notched up strong net southbound inflows up to end-November, amounting to RMB664.3 billion year-to-date and RMB3.2 trillion cumulatively. Driving the growth of the city's exchange-traded fund (ETF) market, the enhanced ETF Connect boosted the number of eligible Hong Kong ETFs to 16 with a total market capitalisation of more than $300 billion (Note 1).
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Global ETF assets soar to $15tn as shift from mutual funds gathers pace; US leads inflows as investors pour into Wall Street equities
Will Schmitt - Financial Times
Assets in global exchange traded funds have soared to $15tn, powered by a stampede away from mutual funds that underscores how the vehicles are reshaping the asset management industry. Investors have poured $1.7tn into ETFs this year, pushing the industry's total assets up 30 per cent compared with 2023, according to data from research group ETFGI. The US has been at the centre of the influx of new cash, notching up inflows of more than $1tn as traders have sought to tap into a big rally in Wall Street equities.
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| | | | | | Regulation & Enforcement | | | Andreessen Crypto Policy Lead Quintenz in Running for CFTC Chair; Quintenz interviewed for derivatives regulator job recently; Agency expected to undergo more favorable crypto policy shift
Lydia Beyoud and Stephanie Lai - Bloomberg
Brian Quintenz has emerged as a top contender to lead the Commodity Futures Trading Commission on what could be a dramatic shift in crypto regulation under President-elect Donald Trump.
Quintenz, a former Republican CFTC commissioner, has been interviewed for the position, according to people familiar with the matter, who asked to speak on background about private discussions.
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US CFTC Democrat says she could be a 'gadfly' to Republican majority
Isla Binnie and Laura Matthews - Reuters
Kristin Johnson, a top Democratic official at the Commodity Futures Trading Commission, signalled on Wednesday she would be willing to stay on at the agency under new Republican leadership, serving as a "gadfly" on key issues like crypto and artificial intelligence.
President-elect Donald Trump is expected to replace the current Democratic CFTC chair Rostin Behnam with a Republican pick, eventually giving the governing party control of the five-member commission.
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| | | | | | Strategy | | | Investors Should Hold Bitcoin 'But Not Too Much,' Peterffy Says
Sally Bakewell - Bloomberg
Thomas Peterffy, the billionaire founder of retail brokerage Interactive Brokers Group Inc., said investors should own some Bitcoin though limit their holdings given the asset's volatility. "I would recommend that people put maybe 2% to 3% of their net worth into Bitcoin," he said Wednesday in a Bloomberg Television interview. "We for example will not allow anyone to invest more than 10% of their assets into Bitcoin because I think that would be very dangerous."
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