| April 19, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Bank of England stumbles over FX trading gold mine; Watch out Masters of Mayfair, the Old Lady of Threadneedle Street is coming for you
Eva Szalay and Delphine Strauss - FT
Last week, Bank of England researchers published a blog outlining a new study into the predictability of exchange rates. They stumbled over a simple strategy that appears to churn out results that would be the envy of any hedge fund trader. It's simple: buy currencies against the dollar which attract little interest in options markets, and sell those with high volumes of options trading. We're not sure if the UK central bank will chuck in its day-to-day role to turn into a prop trading shop, but the study's results were intriguing.
/jlne.ws/3rwYqt9
Citadel Securities forks out $2.6 billion annually for payment for order flow and most of it's on options
Annabel Smith - TheTrade
Citadel Securities takes the top spot when it comes to payment for order flow (PFOF), forking out $2.6 billion in 2020 and 2021 according to 606 reports gathered by the US' Securities and Exchanges Commission (SEC).
The market maker due to its dominant market share accounted for around a third of the total market spend on PFOF in 2020 and 2021, followed by Susquehanna (G1X global execution brokers), which spent a $1.5 billion and Virtu which spent $654 million in the same period.
Equities makes up a small portion of PFOF, accounting for around $877.5 million of Citadel Securities' spend, with $1.7 billion of its $2.6 billion spent on options flow.
/jlne.ws/3jMfdE0
Inside Volatility Newsletter: The Certainty of Volatility
Kevin Davitt - Cboe
The "death and taxes" idiom traces its roots to the early 18th century play The Cobbler of Preston by Christopher Bullock. It has been referenced in many subsequent discourses by the likes of Daniel Defoe and Benjamin Franklin. Perhaps you've used the quip in recent weeks while preparing your annual statement of account for the government.
Certainty imbues this pithy statement. Death and taxes are certain.
I might add one other unavoidable certainty - volatility! Over the past couple of years, this piece has become a platform for analyzing and interpreting the inescapable idea of volatility.
Volatility just is.
/jlne.ws/3EHqnnz
IMF Cuts Global Growth Outlook. Here Are the Warning Signs.
Reshma Kapadia - Barron's
The ripples from the war in Ukraine are hitting a global economy still recovering from the pandemicâso much so that the International Monetary Fund on Tuesday again cut its 2022 and 2023 economic growth outlook to 3.6%. The estimates are down from its January expectation of 4.4% for this year and 3.8% next year.
/jlne.ws/3uVvxJ3
Cutting-Edge Crypto Coins Tout Stability. Critics Call Them Dangerous.
Alexander Osipovich - WSJ
A new breed of cryptocurrencies is seeking to replicate the stability of the dollar. But critics say they are a disaster waiting to happen.
So-called "algorithmic stablecoins" have surged in popularity in recent months, spurring debate over whether they are good for the crypto industry. They are the edgy upstart sibling of conventional stablecoinsâdigital currencies that seek to maintain a one-to-one relationship with a traditional currency, usually the dollar.
/jlne.ws/3vx9RC8
| | | | | | Exchanges | | | Cboe Europe Derivatives To Launch New Equity Index Products
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced the planned launch of new equity index futures and options products for trading on Cboe Europe Derivatives (CEDX), its Amsterdam-based equity derivatives exchange.
Futures and options will be launched on four additional Cboe Europe single country index benchmarks: the Cboe Italy 40, Cboe Norway 25, Cboe Spain 35 and Cboe Sweden 30. These eight new products are planned to be made available for trading on CEDX starting Wednesday, 27 April, with clearing provided by EuroCCP, Cboe's pan-European clearing house.
/jlne.ws/3KW5eId
All-or-None Transactions
CME Group
Effective Date May 2, 2022 Effective on trade date May 2, 2022, and pending all relevant CFTC regulatory review periods, this Market Regulation Advisory Notice will supersede CME Market Regulation Advisory Notice RA2104-2 from August 30, 2021. It is being issued enable All-or-None ("AON") transactions for open outcry trading of Options on Three-Month SOFR Futures, Options on One-Month SOFR Futures and all Options on Three-Month Eurodollar Futures.
/bit.ly/36u1ZsO
Registration and Identification of Broker Associations
CME Group
Effective trade date May 2, 2022, and pending all relevant CFTC regulatory review periods, this Advisory Notice supersedes CME Market Regulation Advisory Notice RA2103-2 from August 30, 2021. It is being issued to notify CME members that all SOFR options contract months will be added to the list of contracts subject to the intra-association trading restrictions pursuant to CME Rule 515.E. ("Trading Restrictions"), on May 2, 2022.
/bit.ly/3jNvh8O
Position Limits - Equity Listed Products
TMX
The applicable position limits for share futures and options on stocks, exchange-traded funds, and trust units have been updated and are reflected in the position limit file. The position limit file is available in Annex 1 and retrievable here. The position limits will be effective on May 2, 2022 after the markets close.
/bit.ly/3KXcx2y
The FIA released its volume and open interest numbers for March 2022, which include worldwide volume of exchange-traded derivatives of 6.85 billion contracts in the month of March, the highest monthly total ever recorded. You can visit the FIA.org web site here for more of the March 2022 data.~SR
| | | | | | Regulation & Enforcement | | | The IMF weighs in on LMAO's nickel debacle
Robin Wigglesworth - Financial Times
The International Monetary Fund published its Global Financial Stability Report today. The latest one will make for uncomfortable reading at 10 Finsbury Square.
Aside from exploring big topics like Russia's invasion of Ukraine, wobbly emerging markets and cryptocurrencies, the GSFR devoted some virtual ink to the recent nickel pickle at the London Metal Exchange.
/jlne.ws/3JXzQrN
| | | | | | Strategy | | | Crypto Options Traders Adopt New Strategies to Profit From DeFi-Led Volatility Gyrations
Omkar Godbole - CoinDesk
Directional traders betting on bullish or bearish price trends once dominated the crypto market. Since last year, another type, known as volatility traders, has emerged. These traders bet on a rise or drop in implied or expected price volatility over a specific period.
These entities are increasingly employing strategies to profit from market information that is public; notably, the weekly automated options strategies that are auctioned by decentralized option vaults (DOVs). Every Friday at 11:00 Coordinated Universal Time (7 a.m. ET), the vaults allow anyone willing to deposit their coins there to earn double-digit annualized returns.
/jlne.ws/3jQHh9F
Here are 30 stocks that Goldman Sachs likes when the economy stutters and markets gyrate
Barbara Kollmeyer - MarketWatch
Wall Street is finding some traction for Tuesday, as investors wade through big earnings and ample, gloomy distractions.
Fighting has ramped up again in Ukraine as the battle begins for the country's eastern front. Apart from the tragic humanitarian crisis, the conflict is already causing the World Bank and others to cut their global growth forecasts.
/jlne.ws/3jQA7lt
Crypto Stocks Perform Worse Than Cryptocurrencies
Paul Vigna - WSJ
The picks and shovels of the cryptocurrency world have been a worse bet lately than cryptocurrencies themselves.
The cryptocurrency market has been in selloff mode recently even as hundreds of millions of people now trade bitcoin, ether and other digital assets. Bitcoin is down 12% this year. Ether is down 19%. The entire crypto market has fallen about 19%, though prices are off their year lows, according to data from CoinMarketCap.
/jlne.ws/3voNFKu
| | | | | | Miscellaneous | | | Twitter Has a Poison Pill Now
Matt Levine - Bloomberg
Here are some things you could do:
/jlne.ws/3KY3GxD
Jamie Dimon's Subtle Message to Bank Regulators
Marc Rubinstein - Bloomberg
Investors are used to hearing company executives on earnings calls and in presentations sugarcoat the performance of their business. So it's surprising when there's a straight-up admission that "despite our best efforts, the moats that protect this company are not particularly deep." When the speaker is JPMorgan Chase & Co. Chairman and Chief Executive Officer Jamie Dimon in his annual letter to shareholders, attention must be paid.
/jlne.ws/382PbK6
The Real-Life 'Wolf of Wall Street' Is Now a Crypto Guru. That's a Sign of a Looming Reckoning.
Trista Kelley - Barron's
Critics of the cryptocurrency industry have long said that Bitcoin and other digital assets are barely discernible from a Ponzi scheme.
Is that fair? Yes and no.
Some recent headlines surely don't help crypto's image. Take Jordan Belfort, a convicted felon whose penny-stock scams were dramatized in the movie The Wolf of Wall Street.
/jlne.ws/3jSpL4J
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