| April 26, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | The ebb and flow of exchanges continues. Yesterday we heard more about FMX's plans to take on the big bad CME Group, using a plan similar to one that has failed during assaults on the Chicago powerhouse in the past. BGC Group, Inc. yesterday announced that Bank of America, Barclays, Citadel Securities, Citi, Goldman Sachs, J.P. Morgan, Jump Trading Group, Morgan Stanley, Tower Research Capital, and Wells Fargo have become minority equity owners of FMX, with a post-money equity valuation of $667 million. I think Eurex US got a better deal for $1, but we shall see.
Also yesterday, Cboe Global Markets announced a realignment of its digital asset business, rolling its digital asset futures into CFE and announcing plans to wind down the Cboe Digital Spot Market in the third quarter of 2024. This brings Cboe's digital asset derivatives trading and clearing into existing derivatives and clearing business lines.
So long to Cboe Digital. Welcome to the mainstream Cboe's digital asset products.
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Options Discovery Episode 33: Multi-leg Options Strategies, Volatility, and Corporate Actions; Mark Benzaquen, Principal of OCC Education, Discusses This and More With JLN's Asma Awass.
JohnLothianNews.com
In this episode of Options Discovery, Asma Awass talks about topics that newer and intermediate traders should familiarize themselves with. This episode includes a breakdown of a few multi-leg options strategies, volatility, and the most common corporate actions. Asma then sits down with Mark Benzaquen, Principal of OCC Education, who goes deeper into these topics. You can learn more about OCC Education here: https://www.theocc.com/company-information/investor-education
Watch the video »
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Multi-leg Options Strategies, Volatility, and Corporate Actions; Mark Benzaquen, Principal of OCC Education, Discusses These Topics In This Options Discovery Full Interview
JohnLothianNews.com
In this Options Discovery full interview, Asma Awass speaks with Mark Benzaquen, the Principal of OCC Education. Mark talks more about his career in the options industry as well as the educational curriculum that he has launched with the OCC. Mark also digs deeper into different multi-leg strategies, how traders can approach volatility, and how common corporate actions can affect options pricing. You can learn more about OCC Education here: https://www.theocc.com/company-information/investor-education
Watch the video »
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JLN Podcast: Navigating Fintech's Evolution: Liquiditybook's Journey Through Technological Advances and Regulatory Shifts
JohnLothianNews.com
The fintech landscape has seen a remarkable evolution over the past decades, marked by technological advancements and regulatory changes. That progress and those obstacles were opportunities for firms like Liquiditybook to automate workflows and establish itself as a dependable partner to a diverse group of market participants. John Lothian News interviewed Terrence Cheung, director of post trade product management, and Shawn Samuel, CTO of Liquiditybook, in this podcast about its history and how it is managing the quickly shifting technological and regulatory landscape.
Listen to the podcast »
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MEMX Celebrates Five Years of Innovation and Growth in the Financial Exchange Market
JohnLothianNews.com
As MEMX marks its fifth anniversary, CEO Jonathan Kellner reflected on the company's significant strides in reshaping the financial exchange landscape through cutting-edge technology and a robust corporate culture in an interview at the FIA International Futures Industry Conference in Boca Raton, FL in March. Kellner spoke to John Lothian News for the JLN Industry Leader video series sponsored by .
Watch the video »
| | | | | | Lead Stories | | | Rooting for Trump to fail has made his stock shorters millions
Bernard Condon - Associated Press
Rooting for Donald Trump to fail has rarely been this profitable. Just ask a hardy band of mostly amateur Wall Street investors who have collectively made tens of millions of dollars over the past month by betting that the stock price of his social media business - Truth Social - will keep dropping despite massive buying by Trump loyalists and wild swings that often mirror the candidate's latest polls, court trials and outbursts on Trump Social itself.
/jlne.ws/4aSLphZ
Quinn Emanuel Battles Former Allies in Jane Street Options Case
Tatyana Monnay - Bloomberg
Quinn Emanuel, a law firm with a reputation for driving hard-nosed litigation, is squaring off against former partners on behalf of Jane Street Group, which claims a theft of its trading strategy. Alex Spiro, Elon Musk's go-to lawyer, leads Jane Street's outside legal team from Quinn Emanuel Urquhart & Sullivan, along with firm partner Deborah Brown.
/jlne.ws/3JAOveI
Wall Street's 'fear gauge' on track for biggest weekly drop of the year
Joseph Adinolfi - MarketWatch
Wall Street's 'fear gauge' is on track for its biggest weekly drop this year, according to Dow Jones Market Data.
The Cboe Volatility Index, better known as the Vix, is headed for an 18% drop this week, its biggest since the week ended Nov. 3, when it fell more than 29%. The drop comes as the S&P 500 has rallied following three weeks of losses.
/jlne.ws/4aVcC3U
Financial analysts discuss growth of options, derivatives in the crypto market; Experts debated crypto's future in a recent interview, comparing its current simplicity to the potential for complex trading options.
Rob Nelson - TheStreet
Amid the whirlwind of activity that defines today's cryptocurrency market, a discussion led by Roundtable anchor Rob Nelson featured the insights of financial analysts Jon Najarian and Alex Mascioli.
Nelson probed the intricacies of crypto trading, comparing and contrasting it with traditional finance (TradFi). The conversation explored whether the simplicity of current crypto trading might soon evolve to better incorporate the complex instruments typical of TradFi, such as options and futures.
/jlne.ws/4aTUJSO
Yen Traders See Risk of Intervention at Highest Since Late 2022; Japanese currency extended losses after BOJ policy decision; Traders add option exposure that pays out on sizable yen rally
Vassilis Karamanis - Bloomberg
Traders are preparing for Japanese authorities to step in and prop up the yen, with demand for derivatives that benefit from volatility at the highest since officials last intervened in 2022.
Appetite for options that pay out on a sizable move in the Japanese currency in either direction is at the highest level since October 2022. So-called risk reversals, a barometer of market positioning and sentiment, show this is down to hedging against a sharp rally.
/jlne.ws/3Ql08ua
Bonds Have Had a Wild Ride. The Roller Coaster Is Coming to a Stop.
Harley Bassman - Barron's
Soon after the Federal Reserve raised its interest-rate target in March 2022, the MOVE Index, which measures the implied volatility for interest-rate options, diverged from its typical relationship with the similar VIX index for equity options. Since then, interest rates have moved dramatically reflecting an uncertain Fed rate path.
/jlne.ws/44hd2ih
| | | | | | Regulation & Enforcement | | | Ban on non-compete agreements sends shockwave across Wall Street; Financial companies scramble to rework contracts and tie down personnel after US Federal Trade Commission rule
Amelia Pollard, Brooke Masters and Joshua Franklin - Financial Times
The US Federal Trade Commission's action to ban non-compete agreements has left Wall Street businesses rushing to restructure contracts and find new ways to tie down the high-priced personnel that their business models rely on. The contracts, which constrain a worker's ability to work for a competitor for a certain period of time after leaving their current employer, have long been a hallmark at big banks, brokers, asset managers and hedge funds. But led by chair Lina Khan, FTC commissioners voted 3-2 on Tuesday to invalidate existing contracts for most employees and for all new contracts starting in August.
/jlne.ws/4d8WywV
SEC Initiates Consultations on Rule Change for Bitcoin Trading Options
Hassan Shittu - CryptoNews
The United States Securities and Exchange Commission (SEC) initiated a new phase of discussions on April 24 regarding a proposed rule alteration for the trading of options on Bitcoin exchange-traded funds (ETFs) while also inviting public input on the matter.
Multiple exchanges are looking to trade options on the newly approved spot bitcoin ETFs, though they have been met with delays.
/jlne.ws/3QmSUFI
Opening Remarks of Commissioner Kristin N. Johnson at FIA L&C Panel: Futureproofing Financial Markets: AI and Derivatives Markets
CFTC
During my tenure as a Commissioner, conversations among global regulators, market participants, customers, and investors have reached a fever pitch. Innovations such as generative AI have the power and the potential to alter many aspects of our markets and lives. These innovations offer exciting hope for more effective disease screening, more accurate and timely disease diagnosis and mapping, and exceptional potential to solve complex questions that have posed challenges in math, science, and medicine for centuries. At the same time, without appropriate guardrails that ensure responsible adoption of AI, the risks of integrating this technology may outweigh the benefits in some contexts.
/jlne.ws/3JHpWwt
| | | | | | Strategy | | | Sustainable bond markets miss an options trick; A derivatives mindset could boost lagging sustainability-linked market, argues climate think-tank
Ben St. Clair - Risk.net
Sustainability-linked bonds - a large part of the financial industry's arsenal in the war on fossil fuel usage - are failing to hit their mark. Not least, says the head of think-tank Anthropocene Fixed Income Institute (AFII), because traders have not appreciated how the products should trade.
/jlne.ws/44hmEcU
Rebalancing
Cboe (Video)
In the #RUTreport, @AngieMiles reminds us that the Fed meets next week to decide on interest rates, PCE inflation data came out today and more.
/jlne.ws/3wbjzyq
| | | | | | Education | | | Options Playbook: Exploring 3 Iron Condor Trade Ideas Amid Market Volatility
Gavin McMaster - Barchart via The Globe and Mail
With volatility on the increase, option premiums are elevated which could mean it's a great time for iron condor trades.
An iron condor aims to profit from a drop in implied volatility, with the stock staying within an expected range.
When implied volatility is high, the wider the expected range becomes.
/jlne.ws/3wc2NiM
| | | | | | Miscellaneous | | | Futures Exchanges Are for Traders; FMX, private credit undisintermediation, Trump Media short complaints, index fund bank ownership and buying the customers' yachts.
Matt Levine - Bloomberg
The stylized history of financial exchanges is something like: Once, a dozen or so big brokers met under a tree or whatever to trade their stuff. They collectively set some rules for trading the stuff, which evolved into a nonprofit membership organization - an "exchange" - run by the big brokers. The exchange charged fees to trade, it invested in technology, and it eventually made sense for the exchange to restructure and go public as a for-profit company. The dozen or so big brokers, who once owned and ran the exchange, don't anymore: It's a public company, they've sold whatever shares they had in it, it's just an arm's-length counterparty now. They don't like paying the fees. They get to talking with each other. "At the end of the day," they say, "this exchange is really just us. It's a venue - now a computer system, not a tree, but still - where the 12 of us get together to trade stuff with each other. Why are we paying these fees to a for-profit exchange? Why don't we just meet together somewhere else, trade with each other, and save on fees?" They can't literally meet under a different tree, since now everything is computerized, but if they talk about this enough eventually an entrepreneur will go and build it for them.
/jlne.ws/3UxSONZ
****** Matt Levine has it all today.~JJL
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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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