| December 20, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Opinion: Class-Action Lawsuit Against CME Group Holds Disruptive Potential to Membership Prices, Future Deals and CME Leadership
JohnLothianNews.com
A long-standing certified class-action lawsuit against CME Group, filed by members of the Chicago Board of Trade and Chicago Mercantile Exchange, poses a potential threat to the exchange group's membership market. A mediated settlement, encouraged by the judge, could reshape how trading rights are offered at the exchange and potentially benefit a class of shareholders, whose B-shares have declined while A-share values rose.
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| | | | | | Lead Stories | | | ProShares to launch S&P 500 ETF with zero-day call options
Suzanne McGee - Reuters
(This Dec. 19 story has been corrected to say that the fund replicates writing daily call options rather than using this strategy in paragraphs 3, 5; also corrects a typo in paragraph 4)
ProShares expects to launch an exchange-traded fund (ETF) Wednesday that uses the short-dated options commonly referred to as "zero days to expiry" on the Standard & Poor's 500 index.
/jlne.ws/48lma73
Did This Options Trade Help Drive Stocks Lower?
Gunjan Banerji - The Wall Street Journal
For the most part, it was a pretty sleepy day in the stock market ahead of Christmas. Then a late-day selloff pushed the S&P 500 down more than 1%.
Some traders said a wave of one-day options trading tied to the S&P 500 may have helped exacerbate the volatility.
/jlne.ws/48qfynn
VIX Index At Three-Year Lows: Does Wall Street's Fear Gauge Foresee A 2024 Stock Rally?
Benzinga via Markets Insider
The Chicago Board Options Exchange's VIX volatility index is often referred to as "Wall Street's fear gauge," and it is currently showing that investors aren't scared.
The VIX currently stands close to its lowest rate since January 2020 â before all the turmoil of the COVID-19 pandemic â and at these levels investors have been happy to push along the equity rally for seven or eight weeks so far.
/jlne.ws/3ti5IFn
A Wunderkind Hedge Fund Strayed Beyond Value Investing. Here's What Happened Next; Spruce House, founded by two friends from Penn, expanded to bet on growth stocks. The strategy flopped last year, and the hedge fund is still making its way back.
Juliet Chung and Peter Rudegeair - The Wall Street Journal
In college, Benjamin Stein and Zachary Sternberg devoured Warren Buffett's annual letters, embracing his value-driven approach to investing. This guided the undergrads when they started a hedge fund, Spruce House Investment Management, in 2006. It would go on to mint profits and manage billions for clients like the Massachusetts Institute of Technology, the University of Notre Dame and wealthy individuals like hotelier Barry Sternlicht.
/jlne.ws/3NC8hbY
The Hedge Fund Traders Dominating a Massive Bet on Bonds; A small bunch of hedge fund traders dominates the massive basis trade. They've made billions for their firms â and alarmed financial supervisors.
Nishant Kumar, Donal Griffin, and William Shaw - Bloomberg
Jonathan Hoffman, John Bonello and Jonathan Tipermas share more than just similar first names. They're the driving force behind a gigantic wager on government debt that's been giving regulators sleepless nights.
They and their teams are top players in the "basis trade," a bet by a few of the world's biggest hedge funds that profits from the tiny price gaps between Treasuries and derivatives known as futures, people active in the market say. That makes them some of the most important individuals in finance today.
/jlne.ws/3RoFmsY
Surging Trading In VIX Options May Suggest A Market Sentiment Shift
Press Release - Cboe via Yahoo Finance
In recent months, a shift has been observed in the trading volume of volatility-linked options, as renewed appetite for stocks drove investors' interest in volatility-linked options to help buffer their portfolios against stock swings. This change, primarily seen with the Cboe Volatility Index (VIX) options, is a direct response to evolving market sentiment and increasing adoption of volatility as an asset class.
/jlne.ws/3RynvQp
| | | | | | Exchanges | | | Trader Alert 23-62: Next MEMX Options symbol rollout date is Thursday, December 21, 2023
On Thursday, December 21, 2023, MEMX Options plans on adding the following underliers: NVDA, TSLA
/jlne.ws/4awEBqz
| | | | | | Regulation & Enforcement | | | Statement of Commissioner Christy Goldsmith Romero on Strengthening Swap Dealer Reporting Requirements for Commodity-Based Swaps to Promote Financial Stability
CFTC
The CFTC proposes to strengthen swap dealer reporting requirements for commodity-based swaps-reporting that the CFTC uses for surveillance, oversight, and to avoid systemic risk. Swaps markets contributed to the 2008 financial crisis, and were previously opaque, leaving regulators blind to emerging risks.[1] Dodd Frank Act reforms required swap dealers to report transaction-level data to swap data repositories and the CFTC.
/jlne.ws/3RpXRNQ
Concurring Statement of Commissioner Caroline D. Pham Regarding Proposed Amendments to Clearing Member Funds Requirements
CFTC
I concur on the Notice of Proposed Rulemaking on Protection of Clearing Member Funds Held by Derivatives Clearing Organizations (DCOs) (Proposed Amendments to Clearing Member Funds Requirements or Proposal) because it seeks to protect the proprietary funds of futures commission merchants (FCMs), and I understand that it essentially codifies the existing good practices most of the CFTC's registered DCOs already follow. However, with respect to retail participants, I believe that the Commission should consider whether there should be a new registration category for direct clearing retail DCOs. I also renew my call for an Office of the Retail Advocate. Both of these steps would better ensure customer protection in our regulated markets.
/jlne.ws/3v3nGeZ
FINMA Aligns Derivatives Rules with EU, UK: Extends Transitional Period for Equity Options
Jared Kirui - Finance Magnates
In response to legal developments in financial hubs like the EU and the UK, the Swiss financial markets regulator has extended the transitional period for exchanging collateral for non-centrally cleared over-the-counter (OTC) derivative transactions involving options on equities and indices.
This decision extends the transitional period of such transactions until January 2026 as a strategic response to aligning with global legal developments. The initiative aims to protect Swiss derivatives traders from any potential disadvantages from evolving international regulations.
/jlne.ws/3TQHIUH
| | | | | | Strategy | | | What to Do Now if You're Late to the Stock Rally
Steven M. Sears - Barron's
If investing were a mixed martial arts cage match, the undisputed heavyweight champion of the world would surely be Tina Fomo.
/jlne.ws/4amnsQm
Index Options
Cboe
In #Vol411, Scott Bauer @cboesib runs through how settlement & tax treatment of index options differs from equity & ETF options.
/jlne.ws/3vaLFJu
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