| July 18, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Wolfgang Eholzer: The History of Financial Futures
JohnLothianNews.com
In 1997, Wolfgang Eholzer decided there were not enough students studying physics and mathematics in Germany to make a career in academia and that maybe finding a job would be a good thing. The question was where was there enough going on. That question led him to Deutsche Boerse, which was starting a new electronic derivatives exchange and hiring like mad. He has been there since.
Today, Eholzer is the chief technology officer of Eurex. JLN interviewed Eholzer for The History of Financial Futures video series from John Lothian News and MarketsWiki Education.
Watch the video »
| | | | | | Lead Stories | | | Wall Street Set for New ETF Gold Rush as Single-Stock Era Begins; New generation of funds to amplify, invert equity performance; SEC warns on risks as day traders reel from market volatility
Katherine Greifeld and Elaine Chen - Bloomberg
A new ETF-for-everything era may have just begun on Wall Street, swelling an industry that already boasts nearly 3,000 products and $6.2 trillion in assets. The booming world of exchange-traded funds is about to get even more crowded after the very first single-equity ETFs launched Thursday -- despite a torrent of regulatory warnings over their risks while retail investors are still reeling from the crash in speculative trades from crypto to meme stocks.
/jlne.ws/3zaBDrg
****I am not sure I understand the purpose of this product. Is this a new single stock future in a different form?~JJL
Personal Finance: Single-Stock Levered ETFs Are Financial Mutants
Jared Dillian - Bloomberg
Exchange-traded funds have been around since the 1990s. They started out as a cheaper alternative to mutual funds for investors just wanting to track broad stock indexes. As is typical, their success prompted Wall Street bankers to come up with riskier iterations that offered the potential for bigger returns by employing derivatives. Hence, the "leveraged" ETF was born. Many traders and investors have become disillusioned with these products because of the hidden risks and "decay" around the daily rebalancing. Nevertheless, the Securities and Exchange Commission has just approved leveraged and inverse ETFs on single stocks. As they say on social media, I'm left SMH.
/jlne.ws/3zeXMEJ
Fed Officials Preparing to Lift Interest Rates by Another 0.75 Percentage Point
Nick Timiraos - WSJ
Federal Reserve officials have signaled they are likely to raise interest rates by 0.75 percentage point later this month, for the second straight meeting, as part of an aggressive effort to combat high inflation.
Policy makers left the door open to a larger, full-percentage-point increase at the July 26-27 gathering. But some of them simultaneously poured cold water on the idea in recent interviews and public comments ahead of their premeeting quiet period, which began Saturday.
/jlne.ws/3RI9bUV
Oil positions steady after heavy hedge fund selling ends
John Kemp - Reuters
Investors purchased small volumes of petroleum last week, after exceptionally heavy sales the week before, squaring up short positions after an unusually sudden and steep pull back in prices on recession fears.
Hedge funds and other money managers purchased the equivalent of 8 million barrels in the six most important petroleum futures and options contracts in the week to July 12.
/jlne.ws/3OvvTNn
Oil market sees support from physical tightness
Alex Lawler, Julia Payne and Stephanie Kelly - Reuters
Benchmark oil prices have dropped by about $15 a barrel in the past 10 days as the threat of recession clouds the demand outlook, but the physical oil trade and the futures market structure tell a quite different story.
Growing concern about the economic outlook pushed Brent crude below $100 a barrel last week for the first time since April.
/jlne.ws/3uYwUpY
| | | | | | Exchanges | | | Cboe Expands Implied Correlation Index Suite, Adds Eight Additional Volatility-Related Indices
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced the expansion of its Cboe Implied Correlation Index suite with the recent addition of eight new indices. Market participants can now access a full suite of volatility-related indices across a range of maturities and skews to help gain a more complete view of the potential factors driving volatility in the equity markets.
The Cboe Implied Correlation Indices are the first widely disseminated market estimates of the average correlation of the stocks that comprise the S&P 500 Index (SPX). The benchmark indices are designed to offer insight into the relative cost of SPX options compared to the price of options on individual stocks that comprise the SPX, and help market participants to identify the potential drivers of implied volatility for the SPX and evaluate the potential implications of major macroeconomic events on market expectations.
/jlne.ws/3PDfdEA
SEOCH Reserve Fund Variable Contributions
HKEX
Please be advised that The SEHK Options Clearing House Limited (SEOCH) has re-calculated the Reserve Fund Requirement pursuant to SEOCH Rule 407 and Clearing House Procedures. The new market total Variable Contribution ("VC") of HK$426 million after the recalculation will be shared by all the SEOCH Participants based on their daily average total margin requirement and net premium paid during the period from 19 April 2022 to 15 July 2022 in accordance with Chapter 11 of the Operational Clearing Procedures for Options Trading Exchange Participants of SEOCH.
/bit.ly/3OkXTmp
| | | | | | Regulation & Enforcement | | | CFTC labels 34 crypto and forex firms as unregistered foreign entities
Turner Wright - Coin Telegraph
The United States Commodity Futures Trading Commission, or CFTC, has added 34 unregistered foreign entities to its Registration Deficient List, including at least six providing crypto-related services. In a Thursday announcement, the CFTC said it had expanded its list of firms that it requires to register with the CFTC for providing services including trading binary options, foreign currency or other products such as cryptocurrencies.
/jlne.ws/3zgc1cF
Federal Court Imposes Over $29 Million in Restitution and Penalties Against California and Colorado Residents for Binary Options and Forex Fraud, Registration Violations, and Failure to Comply with Commodity Pool Operator Regulations
CFTC
The Commodity Futures Trading Commission today announced the U.S. District Court for the Eastern District of California entered an order granting the CFTC's motion for entry of default judgment against California-based John D. Black and his affiliated entities Financial Tree (d/b/a Financial Tree Trust); Financial Solution Group (d/b/a Financial Solution Group Trust); and New Money Advisors, LLC; and his associates Christopher Mancuso and Joseph Tufo; as well as Colorado-based John P. Glenn and his law firm, The Law Firm of John Glenn, P.C. The order finds they are liable for solicitation fraud in connection with binary options and retail foreign currency (forex) transactions, fraud by commodity pool operators (CPOs) and associated persons (APs), multiple CFTC registration violations, and failure to comply with CPO regulations.
/jlne.ws/3cjx059
| | | | | | Strategy | | | Embracing and Harnessing Volatility: Feeling Confident in Your Strategy
Cboe
Volatility can sometimes be misunderstood as something to avoid, however, understanding volatility strategies can be useful in many trading environments. To quantify this, we look to the Cboe Volatility Index (the VIX index), which is a calculation designed to estimate the 30-day expected volatility of the U.S. stock market by aggregating the weighted prices of S&P 500 Index (SPX) call and put options over a wide range of strike prices. In most scenarios, the VIX Index is inversely correlated with the S&P 500 Index, meaning investors typically observe the VIX Index rising when the S&P 500 Index declines.
/jlne.ws/3yLS2RD
Warren Buffett's Advice for a Bear Market? Ride the American Tailwind
Catherine Brock - Nasdaq
Billionaire investor Warren Buffett has lived through a few bear markets in his day. The aptly nicknamed "Oracle of Omaha" has experienced 13 market declines greater than 20%. That's if you include the early 1940s downturn and this year's market dip.
In those bear markets, Buffett watched the stock market wipe out billions in wealth, with share prices dropping as much as 56%. And yet, 80 years after he bought his first stock at age 11, he's still in the business of buying companies.
/jlne.ws/3IN4cy4
| | | | | | Events | | | SEC/CFTC Sustainability-related proposals: Views from Exchanges: Webinar
WFE
Thursday, 21 Jul 2022 13:00 - 14:00
Dublin, Edinburgh, Lisbon, London
Host: The World Federation of Exchanges
Agenda, Introduction: Nandini Sukumar, CEO, The World Federation of Exchanges
Moderator: Christine Brentani, Senior Manager, Regulatory Affairs - Sustainability Lead, The World Federation of Exchanges
Panellists: Brian Matt, CFA, Head of ESG Advisory, New York Stock Exchange; Angelo Evangelou, Chief Policy Officer, Cboe Global Markets; Cesar Sanches, Head of Sustainability, B3.
Global supervisors have now ranked sustainability risk and reporting high on the regulatory agendas. Both the SEC and the CFTC are in the process of gathering information from market participants and key stakeholders on regulatory proposals that will impact the identification and assessment of climate-related risks and opportunities. Representatives from NYSE, Cboe and B3 discuss the SEC proposals for climate-related disclosures and the CFTC's request for information on climate-related financial risk and share perspective on how exchanges are approaching these regulatory initiatives.
/jlne.ws/3zfOXug
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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
Editor
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