| December 16, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | The undying options boom
Robin Wigglesworth - Financial Times
If you assumed that the end of the "Everything Rally" and life-shredding losses for extremely online trading bros would end the massive options boom then think again.
JPMorgan's Nikolaos Panigirtzoglou and Peng Cheng have published a brace of reports this week that explore how the wild options phenomenon of 2020-21 has surprisingly held up in the 2022 bear market.
/jlne.ws/3Ypes7j
Dow Falls 400 Points: Stock Market Set For Worst Week In Months As $4 Trillion Options Expiration Fuels Major Volatility
Jonathan Ponciano - Forbes
The stock market fell for a third-straight session on Friday after manufacturing data added to concerns the economy is headed into a recessionâputting major indexes on track for their worst week since September as investors gear up for major volatility stemming from a swath of options set to imminently expire.
/jlne.ws/3W8O53Y
To hedge or not to hedge?
Mark Hulbert - MarketWatch
Interest rate hedges cut both ways.
I'm referring to bond market strategies that protect investors from rising interest rates, which they do purchasing derivatives that make money when interest rates rise. While these hedging strategies were a boon to investors over the last couple of years as rates soared, the last several weeks serve as a powerful reminder that they detract from performance when rates fall.
There's no free lunch when it comes to protecting yourself from interest rate fluctuations, in other words.
/jlne.ws/3hrmf3T
Retail investors turn to ETFs as recession fears knock down meme stocks
Medha Singh - Reuters
Retail investors are doubling down on Exchange Traded Funds (ETFs) as rising interest rates and volatile markets curb their appetite for risky assets such as meme stocks, SPACs and cryptocurrencies.
Global financial markets have taken a beating as central banks try to combat runaway inflation with aggressive rate hikes, thereby ending years of loose monetary policy that had underpinned a record rise in the prices of such assets.
/jlne.ws/3HJ21xc
Podcast: The New Year May Just Bring the Same Old Volatility
Bloomberg
Don't expect volatile equity-market swings to go away when the calendar flips to 2023, says Edward Jones senior investment strategist Mona Mahajan, who advises focusing on defensive and value stocks in the new year. But there is hope for later in the year, she says, when the market will be looking forward to lower inflation and a stabilizing US economy.
/jlne.ws/3Wtcnp3
Podcast: Volatility May Be the Price of Future Profits with Tom Slater
Bloomberg
Tom Slater, co-manager of the UK's most popular investment trust, Scottish Mortgage, joins this week's episode of Merryn Talks Money. Shares in the trust are down 40% year-to-date. What went wrong? Maybe nothing, says Slater. For real growth, he argues investors must be prepared to pay an "unreasonable price" and be prepared for a lot of volatility.
/jlne.ws/3BGQrPd
Quant Hedge Funds Post Historic Returns in Ugly Year for Wall Street, Markets
Justina Lee and Nishant Kumar - Bloomberg
The math wizards of Wall Street are notching dream returns in this nightmare year for global markets.
Famous quant firms like AQR Capital Management, Man Group and Aspect Capital are riding high as inflation-fueled turmoil trashes many of their human counterparts in the stock and bond world.
/jlne.ws/3hEBhD8
Wall Street's slump continues as recession fears mount
Chuck Mikolajczak - Reuters
U.S. stocks were poised for their third straight session of declines and second straight week of losses on Friday as fears grew that the Federal Reserve's quest to stifle inflation would push the economy into a recession.
Equities have been under pressure since the U.S. central bank's decision to raise interest rates by 50 basis points (bps), as expected. But comments from Fed Chair Jerome Powell's signaled more policy tightening, and the central bank projected that interest rates would top the 5% mark in 2023, a level not seen since 2007.
/jlne.ws/3YxBsAM
| | | | | | Exchanges | | | ETD Volume - November 2022
FIA
This month FIA is releasing the November data on futures and options trading in two formats: the established spreadsheet format and a new format called the FIA ETD Tracker. The ETD Tracker consists of interactive visualizations on the FIA website that allow users to view data on volume and open interest, with filters based on year and month, region and jurisdiction, asset group and type of product. The ETD Tracker also includes visualizations that rank exchanges by total volume in the latest month and year to date as well as open interest in the latest month. Click here to access the ETD Tracker.
/jlne.ws/3FYASEY
ICE warns it may pull gas market from EU over Brussels price cap; Exchange operator cautions the rapid imposition of a cap would allow no time to test risk management systems
Philip Stafford and Alice Hancock - Financial Times
Intercontinental Exchange has warned it may pull its gas trading market out of the Netherlands if Brussels presses ahead with a plan to introduce a cap on prices. The stark threat comes as tensions among EU ministers rise following a month of divisive talks over a European Commission proposal to cap the derivatives price of gas traded in Amsterdam.
/jlne.ws/3Wp7ZHC
Why has Big Tech fallen in love with exchanges? Microsoft's deal with London Stock Exchange Group follows moves by Amazon Web Services and Google into capital markets
Nikou Asgari and Kaye Wiggins in London and Richard Waters - Financial Times
Big Tech is cosying up to capital markets. The announcement this week of a partnership between Microsoft and the London Stock Exchange Group is the third such alliance to be formed in a little over a year. In November 2021, Google spent $1bn and signed a 10-year cloud computing agreement with Chicago-based CME. Amazon Web Services and New York's Nasdaq agreed a similar deal later that same month, and last week, Nasdaq completed moving one of its US options exchanges on to AWS.
/jlne.ws/3FX0nGM
Embattled Crypto Firm FTX Wants to Sell Its Functioning Units, Including LedgerX
Nikhilesh De - CoinDesk
Crypto exchange FTX petitioned a federal court for permission to sell several subsidiaries on Thursday, including U.S.-based derivatives wing LedgerX. In a document filed to the Bankruptcy Court of Delaware, attorneys for FTX said it was a priority for the company's current management to "explore" the sale or find other strategic transactions for certain subsidiaries. "Based on their preliminary review, the Debtors own or control a number of subsidiaries and assets that are regulated, licensed and/or largely not integrated into the Debtors' operations, within and outside of the United States," the filing said.
/jlne.ws/3FSM2Kv
Position Limits - Government Of Canada Bond Listed Products (All Months)
TMX
The applicable position limits for the Government of Canada Bond futures and options on the Government of Canada Bond futures have been updated and are reflected in the position limit file. The position limit file is available in Annex 1 and retrievable here.
/jlne.ws/3V4nqnl
MIAX Business Continuity And Disaster Recovery Plans TestingAand Member Designation Standards
Mondo Visione
As required by Regulation Systems Compliance and Integrity and MIAX Options Rule 321, which is incorporated by reference into both the MIAX Pearl and MIAX Emerald Exchange Rule Books, and thus applicable to Members of both Exchanges, certain Members of the MIAX Exchanges will have mandatory participation requirements in the annual SIFMA Business Continuity Planning Disaster Recovery ("BC/DR") test. Please refer to the following for more information on designation standards and requirements for Designated Members.
/jlne.ws/3PwntXU
| | | | | | Regulation & Enforcement | | | SEC doubles down on decision to reject Grayscale spot ETF
Ben Miller - Financial Times
The Securities and Exchange Commission doubled down last week on its decision to reject Grayscale's bid to launch a bitcoin ETF, repeating its stance that such products are prone to fraud and manipulation, court records show.
Grayscale had claimed over the summer that the SEC was applying an unfair double standard by allowing bitcoin futures ETFs on the market and repeatedly denying proposals for ETFs that invest in spot bitcoin.
/jlne.ws/3HI2qQu
| | | | | | Moves | | | Goldman to cut thousands of staff as Wall Street layoffs intensify -source
Saeed Azhar and Lananh Nguyen - Reuters
Goldman Sachs Group Inc (GS.N) is planning to cut thousands of employees to navigate a difficult economic environment, a source familiar with the matter said.
The layoffs are the latest sign that cuts are accelerating across Wall Street as dealmaking dries up. Investment banking revenues have plunged this year amid a slowdown in mergers and share offerings, marking a stark reversal from a blockbuster 2021 when bankers received big pay bumps.
/jlne.ws/3FBCEdM
Wall Street Layoffs 2022: Finance Companies Cutting Jobs Ahead of Downturn
Paige Smith - Bloomberg
With investment-banking revenue plummeting and a recession looming, Wall Street is in retrenchment mode. The job cuts and hiring freezes that struck the tech world have made their way to the finance industry, with banking executives preparing for what's expected to be an austere year ahead.
/jlne.ws/3Yua9HL
| | | | | | Strategy | | | VIX Futures Trading at Parity to Cash
Cboe (Video)
In today's #Vol411, Dan Deming @djd551 talks about realized vol, movement in the $VIX futures term structure and $VIX options trading action in advance of next week's expiration
/jlne.ws/3PywCPO
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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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| | | Jeff Bergstrom
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