| October 07, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | 
Volatility Insight of the Week: WTI Crude Oil volatility (CLVL) and skew (CLSK) spiked to multi-year highs amidst escalating tensions in the Middle East.Track the market's risk expectations in real-time with CVOL.
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 Indexing the Future: How AI and ESG are Reshaping Asset Management JohnLothianNews.com In the ever-evolving world of finance, asset managers are facing a new frontier: the intersection of artificial intelligence, environmental, social, and governance (ESG) concerns, and the growing appetite for private markets. Rick Redding, CEO of the Index Industry Association, offers a glimpse into this brave new world. Watch the video »
| | | | | | Lead Stories | | | '100%' Yields Are Fueling a Retail Boom in New Quick-Buck ETFs; Amateur investors are plunging into the complex world of derivatives-powered ETFs that can dangle huge payouts riding big-name stocks, among other goodies. Industry pros and regulators urge caution.
Denitsa Tsekova and Vildana Hajric - Bloomberg
Across platforms like TikTok, YouTube and Reddit, financial influencers are promoting a new way to speculate in the stock market - touting payouts that, at first blush, can top 100%, or more. Known in the industry as derivatives-enhanced exchange-traded funds, they've become a big hit with retail investors who are piling into a slew of bold-faced trades, including those that amp up the daily returns of the hottest stocks on the planet.
/jlne.ws/4eOwiYy
Investment Industry Loves Active ETFs. You Probably Shouldn't; Launches of actively managed exchange-traded vehicles are surging, but their performance is often poor
Jon Sindreu - The Wall Street Journal
For most investors, exchange-traded funds are synonymous with passive investment. The asset-management industry is trying to change that-and likely not for the better. ETFs are the big market story of the past few years: Over the past decade, assets managed by these vehicles in the U.S. have leapt from roughly $1.5 trillion to more than $10 trillion, according to Wall Street analysts.
/jlne.ws/3NfwOmJ
New titans of Wall Street: how Jane Street rode the ETF wave to 'obscene' riches; A quirky and opaque New York firm has rapidly expanded to become the most profitable trader of all
Will Schmitt and Robin Wigglesworth - Financial Times
âEURâ¹Ã¢EURâ¹When Wall Street scrambled to launch bitcoin funds earlier this year, there was just one trading company named in regulatory filings as an anchor market-maker for every single one: Jane Street. The move underscored how a quirky and opaque New York firm has used its dominance in exchange traded funds and embrace of more finicky financial securities as a springboard to become the most profitable of all the trading firms that are now a significant force in markets.
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Interactive Brokers Rolls Out Election Contracts As Kalshi Resumes High-Stakes Congressional Bets
Michael Cohen - Benzinga
Interactive Brokers IBKR launched a new range of political betting contracts, allowing U.S. investors to hedge their portfolios against election-related risks. The contracts, which are available through the company's ForecastEx exchange, give traders the opportunity to speculate on the outcomes of the 2024 U.S. elections, including key races for the presidency and Congress.
/jlne.ws/4ezy2Fn
The Oil Market's Bumper Volatility Won't Go Away Anytime Soon; Brent crude futures posted their biggest gain in almost two years last week.
Alex Longley - Bloomberg
A week is a long time in the oil market.
When traders hit their desks last Monday, Brent crude was trading closer to $70 a barrel. Their concerns largely centered on shaky supply-and-demand balances next year and additional OPEC+ barrels in the coming months.
/jlne.ws/4eybzso
Brace for stock-market volatility this week if inflation comes in hot after the September jobs report, BofA says
Kelly Cloonan - Markets Insider
The September jobs report was good news, but it gives investors more reason to brace for the next inflation reading, Bank of America analysts say.
The analysts say last week's blockbuster jobs report puts more pressure on this week's consumer price index data, with a big surprise to the upside now more likely to usher in a wave of market volatility. They say the CPI reading, due Thursday, is "no longer a 'non-event.'"
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| | | | | | Exchanges | | | September 2024 figures at Eurex
Eurex
Total volume on Eurex rises by 11 percent in September compared to September 2023
Interest rate derivatives at Eurex up 33 percent this September year-on-year
Notional outstanding in OTC Clearing increased by 13 percent compared to September 2023
Eurex, Europe's leading derivatives exchange, announced an 11 percent growth in total trading volume, reaching 196 million contracts in September, up from 176.6 million contracts in the same month last year. Interest rate derivatives led the surge, climbing 33 percent from 71.7 million to 95 million contracts. Equity derivatives expanded by 15 percent, amounting to 27.3 million contracts, while index derivatives decreased by 11 percent, from 80.8 to 71.7 million traded contracts.
EMIR 3.0 active accounts are set to change the European clearing landscape: are you ready?; By the end of 2024, EMIR 3.0 is expected to enter into force, starting a six-month implementation period for firms that are active in certain euro or zloty-denominated interest rate derivatives to comply with the new rules.
Eurex
A centerpiece of EMIR 3.0 is the so-called "active account" proposals, which mandate that EU market participants that are active in-scope products and are subject to the EMIR clearing obligation must have an "active" account with a clearing house based in the EU. Firms should prepare now for the new rules not only to ensure compliance, but really turn the requirement into an opportunity to optimize margin and capital requirements across products under the Euro Yield Curve.
/jlne.ws/3XRTcHP
Euronext strengthens European derivatives offer with new German, Irish and Portuguese Single Stock Options
Back
Euronext
Euronext, the leading pan-European market infrastructure, announces the launch of an expanded range of Single Stock Options from Germany, Ireland and Portugal, effective today. This expansion further strengthens Euronext's position as a key player in the European derivatives market. Euronext is introducing 21 new German Single Stock Options, completing its coverage of all DAX 40 Index constituents, six Irish and four Portuguese Single Stock Options. The new Single Stock Options are the first that Euronext has listed on Irish stocks.
/jlne.ws/3YaXLy6
Australian brokers gain new referral options with AFX platform; New tool allows brokers to choose from multiple asset finance specialists
Mav Rodriguez - MPA
Australian brokers now have access to a new platform designed to streamline asset finance referrals. Asset Finance Exchange (AFX) by LMG aims to give finance professionals like mortgage brokers greater flexibility and control when connecting with asset finance specialists.
The platform enables brokers to select from a range of asset finance partners through a state-based and national referral network, simplifying the process of placing deals for business, commercial, or consumer asset funding.
/jlne.ws/4dBzQfK
| | | | | | Regulation & Enforcement | | | UK task force proposes excluding ETFs in event of early T+1 move; If endorsed, and Britain moves to one-day settlement before the EU, UK ETFs would wait until the EU also moves
Alf Wilkinson - Financial Times
The UK could exclude exchange traded funds from the shortening of trade settlement cycles in the event it makes the transition ahead of the EU, if proposals from a government-appointed task force are adopted. The Accelerated Settlement Taskforce has put forward its draft recommendations for the cutting of settlement cycles from two days after the trade date to one day, or T+1. The task force recommended earlier this year that, following the US shift to T+1, the UK should follow suit no later than the end of 2027 and should work closely with European jurisdictions to see if a "co-ordinated move to T+1 is possible".
/jlne.ws/3Yevreg
CFTC Staff Issues Supplemental Letter Regarding No-Action Position Related to Reporting and Recordkeeping Requirements for Fully Collateralized Binary Options
CFTC
The Commodity Futures Trading Commission's Division of Market Oversight and the Division of Clearing and Risk today announced they have taken a no-action position regarding swap data reporting and recordkeeping regulations in response to a request from KalshiEX LLC, a designated contract market, and Kalshi Klear LLC, a derivatives clearing organization, to modify CFTC Letter No. 21-11 to cover transactions cleared through Kalshi Klear LLC.
/jlne.ws/4gRLN3V
| | | | | | Education | | | OIC 2024 Educational Series: 0DTE Positions, Volatility, the Greeks ... and More
OIC
For the final quarter of 2024, The Options Industry Council (OIC) has a robust schedule of new events being prepared, including discussions of zero days to expiration (0DTE) positions, volatility products and a creative method for thinking about the Greeks.
/jlne.ws/3NdYvMG
| | | | | | Miscellaneous | | | The Math That Explains How Multi-Strat Hedge Funds Make Money; Dan Morillo explains pod shop design.
Tracy Alloway and Joe Weisenthal - Bloomberg
Multi-strategy hedge funds are still all the rage on Wall Street, but what does it actually mean to be a pod shop and how are they being set up? On this episode, we speak with Dan Morillo, co-founder of Freestone Grove Partners and formerly a partner and head of equity quantitative research at Citadel (one of the most successful multi-strats out there.) While lots of people tend to talk about multi-strategy hedge funds as one big blob, he argues that there are important differences in their business models. We talk about how he identifies top portfolio managers, managing crowding risk, and the math behind compensation, scale and returns.
/jlne.ws/3YdxJdL
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