| February 09, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Soaring Credit Risk May Be Canary in Coal Mine for Europe Assets
Giulia Morpurgo - Bloomberg
Surging risk in the European credit market is signaling tough times ahead, clashing with a calmer scene in equities.
Measures of risk have soared for both investment-grade and high-yield borrowers after the European Central Bank's unexpectedly hawkish tilt last week, even as a gauge of euro-area stock volatility has stayed below earlier peaks.
/jlne.ws/3GJ5Kq5
Black Swan Manager Spitznagel Says Market Dangers Unappreciated
Erik Schatzker - Bloomberg
Even after a correction in tech stocks and surging yields on U.S. government bonds, investors still don't understand the risks they're taking in equity and debt markets, according to Mark Spitznagel, manager of the best-known fund protecting against so-called black swan events.
"There's a profound lack of appreciation for how dangerous the market is and how embedded all of this liquidity is in the financial system," Spitznagel, the founder and chief investment officer at Miami-based Universa Investments, said in an interview Tuesday on Bloomberg Television.
/jlne.ws/3GAnsfv
The boss of a 'Black Swan' fund says Jeremy Grantham is right about the huge risks in markets â but warns 'Cassandras' are often terrible investors
Theron Mohamed - Business Insider
Michael Burry, Jeremy Grantham, and other elite investors have rung the alarm on a historic asset bubble and predicted a devastating crash. Mark Spitznagel also flagged massive risks in markets, but warned against trying to time the next downturn, in a Bloomberg interview this week.
Spitznagel runs Universa Investments, a hedge fund that specializes in profiting from rare, significant market events. He previously ran a "tail-risk" fund with Nassim Nicholas Taleb, the author of "The Black Swan: The Impact of the Highly Improbable," and counts Taleb among Universa's advisors.
/jlne.ws/3LmECAX
Traders Cut Dollar Bets With Fed Interest Rate Hikes Endangering U.S. Growth
Payne Lubbers - Bloomberg
The Federal Reserve's campaign to hike rates is turning out to be enemy No. 1 for the U.S. dollar -- upending Wall Street consensus heading into this year.
While conventional logic suggests rising yields should buoy the greenback, traders are now betting the Fed's policy tightening will crimp economic growth down the road. Demand for dollar call-options has plummeted to the lowest in nine months with the currency erasing its year-to-date gains. That's the putting dollar bulls at Morgan Stanley, Bank of America Corp. and Citigroup Inc. on the defensive.
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| | | | | | Exchanges | | | Cboe's European Derivatives Market Beats Expectations
Shanny Basar - MarketsMedia
Volumes on Cboe Europe Derivatives (CEDX) in January 2022 have overtaken last year after the platform launched in September 2021 and the product suite is being expanded. CEDX, an Amsterdam-based futures and options venue, launched with clearing provided by EuroCCP, Cboe's pan-European clearing house. Ed Tilly, chairman, president and chief executive of Cboe Global Markets, said on the results call that the number of participants trading and volume on CEDX continued to grow month over month in 2021.
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CME Group Inc. Reports Fourth-Quarter and Full-Year 2021 Financial Results
CME Group
CME Group Inc. (NASDAQ: CME) today reported financial results for the fourth quarter and full year of 2021.
The company reported revenue of $1.1 billion and operating income of $632 million for the fourth quarter of 2021. Net income was $625 million and diluted earnings per common share were $1.71. On an adjusted basis, net income was $608 million and diluted earnings per common share were $1.66. Financial results presented on an adjusted basis for the fourth quarter of 2021 and 2020 exclude certain items, which are detailed in the reconciliation of non-GAAP results.1
Total revenue for full-year 2021 was $4.7 billion and operating income was $2.6 billion. Net income was $2.6 billion and diluted earnings per common share were $7.29. On an adjusted basis, net income was $2.4 billion, and diluted earnings per common share were $6.67.
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Reminder on Payment Obligations of Clearing Participants
HKEX - THE SEHK OPTIONS CLEARING HOUSE LIMITED
SEHK Options Clearing House Limited (SEOCH) considers it appropriate to remind all participants of the importance of having proper risk management and robust funding arrangements in place to adequately monitor their exposures and fulfill their payment obligations to SEOCH on time to ensure the smooth operations of the derivatives market.
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| | | | | | Regulation & Enforcement | | | Looming court battle could void SEC's market data efforts Litigation preview: What will the big exchanges argue in a court case to reverse the SEC's initiatives?
Joanna Wright - Waters Technology
Next month the industry will see the culmination of a legal battle between the largest exchange groupsâthe New York Stock Exchange (Nyse), Cboe, and Nasdaq (the petitioners in the case)âand the Securities and Exchange Commission (SEC). The exchanges want the US Court of Appeals for the District of Columbia to void two initiatives by the SEC aimed at modernizing the way National Market System (NMS) data is disseminated to subscribers. On March 18, the court will hear oral arguments in the case
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CFTC Chair to Testify on Cryptocurrencies as Congress Weighs Legislation; Lawmakers are considering whether agency needs additional authority to police market
Paul Kiernan - WSJ
The nation's top derivatives regulator is set to testify Wednesday about cryptocurrencies before a congressional panel that is weighing the need for new legislation to bring the volatile asset class under government oversight. Rostin Behnam, the recently confirmed chairman of the Commodity Futures Trading Commission, is appearing before the Senate Agriculture Committee for a hearing examining risks, regulation and innovation in the cryptocurrency industry. Additional witnesses include billionaire cryptocurrency entrepreneur Sam Bankman-Fried.
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SEC seeks to bolster disclosure rules for private equity and hedge funds
Stefania Palma, Eric Platt and Antoine Gara - Financial Times
Wall Street's top regulator is seeking to compel hedge funds and private equity groups to disclose quarterly performance and fees charged to investors, as the agency pushes back against activities it warned were "contrary to the public interest".
The Securities and Exchange Commission on Wednesday voted in favour of a string of proposed rules that would require annual audits of private funds, ban certain fees that buyout shops charge and prohibit preferential terms for certain investors. The watchdog also advanced a proposal that would accelerate the time it takes for stock and bond trades to be finalised.
/jlne.ws/339Oblz
The SEC Has an 'Aggressive' Agenda. Here's What Buyside Traders Think It Will Regulate.
Alicia McElhaney - Institutional Investor
Institutional investors believe the retail trading frenzy in stocks like AMC and GameStop should usher in a new era of regulation, including those that cover equity market structure.
Among the retail trading-related topics the SEC is considering, payment for order flow was a clear standout for buy-side traders. In fact, 41 percent of participants surveyed by Coalition Greenwich said it's the most important set of practices that the Commission should address.
/jlne.ws/3ssEIhU
| | | | | | Technology | | | OptionMetrics moves to novel methodology for international options calculations
HedgeWeek
OptionMetrics, an options database and analytics provider for institutional investors and academic researchers worldwide, implementing new options implied methodology, offering even greater accuracy in options calculations in the US, Europe, Asia Pacific.
OptionMetrics replaces the zero curve (used by other providers) with its implied yield curve, constructed with a term structure of overnight rates and implied risk-free rates from options on major indices, for more accurate implied volatility, forward price, index dividend, and borrow rate calculations.
/jlne.ws/3sMYNQf
| | | | | | Miscellaneous | | | Todd settles into life at Trading Technologies
Luke Jeffs - FOW
There aren't many people in derivatives who know more about building a software business than Keith Todd.
Cutting his teeth in telecoms where he rose to become head of ICL before it rebranded Fujitsu Services, Todd arrived in derivatives as executive chairman and chief executive of FFastFill, which he sold in 2013 to TT's main rival ION Group.More recently, he founded and ran KRM22, a tech firm with an innovative take on risk, and then became on December 21 chief executive of Trading Technologies, when private equity consortium 7Ridge comprising Cboe Global Markets and Singapore Exchange (SGX) completed its acquisition of TT.
/jlne.ws/3gDwiyp
***** Keith and the investors have big plans for TT. Now comes the execution.~JJL
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