| December 01, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | If you have not watched Options Discovery with Alex Teng of JLN, you are missing something. This young man, a finance major in his senior year at the University of Illinois at Chicago, is really coming into his own with the interviews he is doing for The Spread video series. Options Discovery is the program Alex created for The Spread, and in it he looks at the options markets from the eyes of someone who does not know anything about them. He explores an options topic in each episode, and also interviews an options industry veteran.
Besides the Options Discovery segment, we are also publishing the entire full length interviews that Alex is conducting with his guests. The latest guest was Allard Jakobs, the founder and CEO of All Options in Amsterdam. Jakobs told me in a call that this was the first interview he has done. Proprietary trading firms are normally very private and Jakobs was no exception. But when we asked him to be a guest of Alex's, he accepted.
Jakobs gave a great interview, sharing his story, the story of All Options and how it operates and what he looks for in employees. Interestingly, All Options went from being all Dutch, white and male in the 1990s to being very international and diverse today. Jakobs has a good story to tell and he leveraged the opportunity to work with Alex well.
Alex has a great opportunity to learn about the markets, our industry and its players through his work with Options Discovery. He is using this opportunity well, learning a lot and sharing that with us. He is just an intern, but he is doing great work and the Jakobs interview is the latest example.
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Jonathan Grodnick of Chicago Trading Company, who has most recently served as chief investment officer, will take over as CEO on January 1, 2023. Grodnick previously opened and led CTC's London Office before returning to Chicago to lead CTC's flagship index options trading business. He later served as global co-head of trading. He is a member of CTC's board of directors.
| | | | | | Lead Stories | | | Big traders flock to US equity options with fleeting lifespans; Concerns grow over market swings as 'zero-day' S&P 500 contract volumes surge
Eric Platt and Nicholas Megaw - Financial Times
Professional traders are plunging into options bets on daily moves in US equities, activity that some experts believe has contributed to recent wild swings in stock markets. Record numbers of so-called zero-day options that track the S&P 500 stock index are changing hands - with volumes of about 1.5mn a day in November - more than double the levels in January and almost four times those at the start of 2020, according to OptionMetrics.
/jlne.ws/3H1q5e3
Traders Reach For Bullish Stock Bets as S&P 500 Jumps
Gunjan Banerji - WSJ
Bullish call options volumes tied to the S&P 500 index hit one of the highest levels of the year as the index surged 3.1%, according to Cboe Global Markets data.
/jlne.ws/3ivxZlI
Wall Street Preps for Year-End Stock Rally as Volatility Plunges
Norah Mulinda and Jess Menton - Bloomberg
In lockstep with powerful market trends that have endured for the past 70 years, Wall Street for once saw it coming: With the midterm elections firmly in the rear-view mirror, the S&P 500 Index has duly enjoyed a rally once again this month -- even as the gauge posted more days in the red than in the green.
/jlne.ws/3ETEUgm
US Stocks Likely to Slump in First Half of 2023, JPMorgan Strategists Say
Sagarika Jaisinghani - Bloomberg
Sharp declines await US stocks in the first half of 2023 against the backdrop of a mild recession and Federal Reserve rate hikes, say JPMorgan Chase & Co. strategists.
The S&P 500 will likely re-test this year's lows in the first half of 2023, they wrote in a note Thursday, implying a decline of about 12% from current levels. Their prediction adds to calls from strategists at Goldman Sachs Group Inc. and Deutsche Bank AG this week that US stocks are in for a wild ride next year.
/jlne.ws/3ufpE8r
LSEG CEO says weak links in markets exposed by recent volatility
Peter Thal Larsen - Reuters
London Stock Exchange Group Plc (LSEG.L) Chief Executive David Schwimmer said on Thursday that large spikes in volume associated with algorithmic trading have worsened recent market volatility, exposing weak links in the global market infrastructure.
/jlne.ws/3VDl6nW
| | | | | | Exchanges | | | OCC's Vishal Thakkar Named Chief Risk Officer
OCC
OCC, the world's largest equity derivatives clearing organization, today announced that Vishal Thakkar, currently Acting Chief Risk Officer, has been officially appointed the Chief Risk Officer (CRO), effective immediately. Thakkar is responsible for implementing OCC's risk management framework and serves on the Management Committee.
/jlne.ws/3iiJDjQ
CME Group and CF Benchmarks to Launch Three New DeFi Reference Rates and Real-Time Indices on December 19
CME Group
CME Group, the world's leading derivatives marketplace, and CF Benchmarks, the leading provider of cryptocurrency benchmark indices, today announced plans to launch three new DeFi reference rates and real-time indices, which will be calculated and published daily by CF Benchmarks, beginning December 19.
/jlne.ws/3Vn4sct
NSE, SGX aim to start joint derivatives project by second quarter
Reuters
The Singapore Exchange and the National Stock Exchange of India said on Wednesday the full-scale operation of their international financial centre, NSE IFSC-SGX Connect, is targeted to be ready by the end of the second quarter of 2023. The transition of trading of SGX Nifty to NSE IFSC through the Connect was expected to take place shortly after the operations begin, with dollar-denominated Nifty contracts to be exclusively traded on the NSE IFSC, the exchange operators said.
/jlne.ws/3B1ifxh
| | | | | | Regulation & Enforcement | | | SEC Chair Gary Gensler on Crypto, Markets, Regulation, and Transparency
Lydia Beyoud - Bloomberg
Gary Gensler has positioned himself as one of the most consequential policymakers in American finance. He didn't start off as a regulator. The Baltimore native and self-Âdescribed "markets person" spent 18 years at Goldman Sachs Group Inc., where he became a partner at 30 and led divisions including fixed income and currency trading in Asia. Gensler left to serve in senior roles in the US Department of the Treasury under President Bill Clinton, where he helped to pass a law that kept over-the-counter derivatives unregulated.
/jlne.ws/3EUV3SB
CFTC chief calls for 'comprehensive' rules to head off another FTX collapse
Robert Schroeder - MarketWatch
The chairman of the Commodity Futures Trading Commission on Thursday made a plea for more rules governing the crypto industry, as lawmakers are probing what went wrong at the crypto exchange FTX.
"If we are going to ensure that FTX and the other firms that are subjecting customers to billions in losses are appropriately regulated and held accountable, we need to act promptly to apply a comprehensive regulatory regime," CFTC Chairman Rostin Behnam said in testimony prepared for delivery to a Senate Agriculture Committee hearing.
/jlne.ws/3uiuRMK
Associations publish papers on client participation in CCP auctions and CCP auction governance
FIA
In the report Central counterparty default management auctions - Issues for consideration, the Committee on Payments and Market Infrastructures (CPMI) and the Board of the International Organization of Securities Commissions (IOSCO) described issues for further industry work to consider the design and conduct of CCP default management auctions. These issues were structured into three categories of work where the policy standing group of CPMI-IOSCO sought industry action.
/jlne.ws/3VkKCia
| | | | | | Technology | | | Listed Derivatives: Modernising Post-trade Processing for Equity Options
Nick Solinger - Derivasource
Surging volumes, cost pressures and legacy infrastructure are driving automation in the equity options post-trade space. In a DerivSource commentary, Nick Solinger, CEO at FIA-Tech, explores these market drivers and describes how FIA-Tech's Atlantis platform can help firms reduce headcount needed for reconciliations and increase accuracy and timeliness in brokerage payments.
/jlne.ws/3AWLv8s
| | | | | | Strategy | | | This trader sees a 43% drop for the S&P 500 and says to take shelter in these ETFs instead.
Barbara Kollmeyer - MarketWatch
A day after the Dow DJIA, -0.78% climbed out of bear territory on hopeful comments by Fed Chairman Jerome Powell, stocks look ready to rethink on that optimsim, even after fresh inflation data showed some easing in prices.
The Fed chief's suggestion of a 50 basis point hike vs. 75 bp in December wasn't new, but investors got excited anyway, says the founder & CEO of BullAndBearProfits.com, Jon Wolfenbarger. But his dovish tone could lead to looser financial conditions, bringing with it higher inflation, and more rate hikes to control that, he tells MarketWatch in an interview.
/jlne.ws/3ufrMwX
| | | | | | Miscellaneous | | | Moron Risk Premium is canon, kind of
Louis Ashworth - Financial Times
FTAV's quant division has worked hard on studying Moron Risk Premium over recent months, as part of our commitment to underpinning snark with solid statistical rigour.
We were delighted to see the Bank of England had undertaken a similar analysis in their November Monetary Policy Report (under heading 2.2):
/jlne.ws/3H7LOkV
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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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