| August 21, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | 
Breaking Records and Comfort Zones: Rama Pillai's Kilt Challenge Journey
JohnLothianNews.com
In a lively interview at FIA's IDX in London, John Lothian News sat down with SGX Managing Director Rama Pillai to discuss his participation in the FIA's IDX Gala Kilt Challenge, a fundraising effort that is part of the charity event supporting Futures for Kids. The conversation explored Pillai's motivations, experiences, and the impressive fundraising success he achieved.
Watch the video »
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Navigating Regulatory Challenges: An Interview with CFTC Commissioner Summer Mersinger
JohnLothianNews.com
In a recent interview at FIA's IDX, John Lothian News sat down with CFTC Commissioner Summer Mersinger for the JLN Industry Leader series. The interview covered a wide range of topics relevant to the current state and future of commodity futures trading regulation.
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 LaSalle Street Move Scouts Forward Fundraiser www.tinyurl.com/LaSalle4Scouts On September 25, the Pathway to Adventure Council of the Boy Scouts of America is hosting the LaSalle Street Move Scouts Forward event at the Chicago Board of Trade Building. This annual tradition, dating back to 1971, brings together professionals from LaSalle Street to support Scouting in our community. The highlight of the evening will be a pinewood derby race. You'll have the opportunity to build your own car or lease one at the event. It's a fantastic way to tap into your competitive spirit while enjoying cocktails and delicious food with colleagues and friends. Your participation will directly benefit Scouting programs that help develop leadership skills and character in our youth. There are various sponsorship levels available to suit your preferences. The event will be held at Ceres, with plans to move outdoors if weather permits. It's a perfect opportunity to network, have fun, and make a difference. Click Here to Register »
| | | | | | Lead Stories | | | Crowded Bitcoin Derivatives Bets Spur Warning of 'Short Squeeze'; K33 says perpetual futures flash a signal last seen in 2023
Sidhartha Shukla - Bloomberg
A signal from the Bitcoin derivatives market points to the growing risk of a "short squeeze" that can stoke sharp rallies in the largest digital asset, according to cryptocurrency specialist K33 Research. The metric is the funding rate for Bitcoin perpetual futures, which helps to gauge how bullish or bearish speculators are. K33 said the seven-day average annualized funding rate on Aug. 20 was the lowest since March 2023 - when US bank failures rattled investors - indicating a prevalence of downside wagers. "Perpetual swap funding rates have averaged at negative levels over the past week, while open interest has sharply increased," K33 analysts Vetle Lunde and David Zimmerman wrote in a note. "This suggests aggressive shorting, structurally creating a setup ripe for a short squeeze."
/jlne.ws/4fRInO6
Yen Carry Trade Data Suggest Cautious Return of Retail Investors; Bets on Mexican peso, Turkish lira against yen rebounding; Japan investors' 'wounds have healed,' Traders' Iguchi says
Daisuke Sakai - Bloomberg
Net short positions in the yen against the Mexican peso and Turkish lira recovered to levels last seen on Aug. 2, according to data on the Tokyo Financial Exchange's Click 365 platform as of Monday. Those positions betting on the yen's drop versus the peso rebounded 19% to 67,808 contracts from Aug. 5, when positions sank 47% in a single day after the Japanese currency surged around the start of the month.
/jlne.ws/3MfpcjF
The 'Carry Trade' Tanked Stocks? Maybe Not, and Why It Matters.
Paul R. La Monica - Barron's
The big stock market drop on Aug. 5 has been largely blamed on the unwinding of the so-called carry trade in Japan. The conventional wisdom is that traders who had been borrowing yen at low interest rates to buy assets such as U.S. tech stocks had to suddenly reverse course after the Bank of Japan raised borrowing costs more than expected.
/jlne.ws/4fLBTAa
Gold hits record highs as investors bet on rate cuts; US and European buyers position for lower borrowing costs after sitting out much of precious metal's rally
Leslie Hook and Harry Dempsey - Financial Times
Western investors have piled back into gold as they position for US interest rate cuts this year, helping to drive prices to record highs this week. Prices reached $2,531 per troy ounce in Tuesday trading, taking gold's gains for the year to more than a fifth, boosted by purchases by institutional investors and bullish hedge fund bets.
/jlne.ws/4cuV8vb
Bond Traders Amassing Historic Level of Risk on Rate-Cut Bets; Investors load up on futures as possible cut cycle nears; Jackson Hole to provide key outlook on Fed's policy path
Edward Bolingbroke - Bloomberg
Bond traders are taking on a record amount of risk as they bet big on a Treasury market rally fueled by expectations the Federal Reserve will embark on its first interest-rate cut in more than four years.
The number of leveraged positions in Treasury futures has risen to an all-time high ahead of the central bank's annual economic symposium in Jackson Hole, Wyoming, which will commence on Thursday. At the event, Fed Chair Jerome Powell will speak and provide more insights into the central bank's monetary policy path for the rest of this year.
/jlne.ws/3YUkkYB
Volatility Normalizes Yet Caution Remains
Mandy Xu - Cboe
WHAT STANDS OUT: Within a span of two short weeks, the US equity markets appear to have made a full recovery from the aftermath of the Aug 5th carry trade unwind. While the VIX index has retraced to sub-15 - not seen since July 23rd - there are significant differences beneath the index surface. Whereas ATM SPX implied vols previously traded at a ~1 vol pt discount to its 1-month realized vol (exponentially weighted), reflecting demand to harvest yield by selling the implied volatility risk premium, SPX implied vols now trade at a +1 vol pt premium to realized vol, indicating a net demand for market optionality by paying the implied VRP. See chart below.
/jlne.ws/3yNB1KI
| | | | | | Exchanges | | | HK Exchange Sees Boost From China Diversification
Bloomberg (video)
Hong Kong Exchanges & Clearing Ltd. Chief Executive Officer Bonnie Chan discusses how the bourse is benefiting from investors from mainland China in need of diversifying their holdings at a time of turbulence in markets from Shanghai to Shenzhen. The stock exchange posted a 9% increase in profit in the second quarter, driven by a jump in trading volumes. She speaks with Bloomberg's Stephen Engle in Hong Kong.
/jlne.ws/3AJ9lan
Thalex Challenges Deribit with New Crypto Derivatives Strategy and $13M Funding Boost
Arun Shakyawara - AlexaBlockchain
Thalex is making waves with its latest strategic moves aimed at positioning itself as a formidable contender to industry leader Deribit. Following a successful integration with Bitfinex and having secured $13 million in funding to date, Thalex is aiming to ramp up its presence in the market as it gears up for a crucial Q4 of 2024. Founded in 2020, Thalex has built a platform offering stablecoin-settled options, futures, and perpetuals. Its unique approach-simplifying complex trades and enhancing user experience-has attracted notable investors including Bitfinex, Bitstamp, Flow Traders, IMC, and Wintermute.
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| | | | | | Regulation & Enforcement | | | Market constituents hope for change in Sebi's derivatives plans
Ram Sahgal - livemint
Market stakeholders suggested mandating a minimum cash requirement for retail investors keen on derivatives trade and permitting multiple product expiries on the same day, in response to the regulator's recent move to tighten the index derivatives framework. Tuesday was the last day for submitting public comments on the discussion paper that Securities and Exchange Board of India (Sebi) floated last month.
/jlne.ws/46TqfPC
European commodities review to support sustainability - Capco
Gregory Rosenvinge - FOW
The European regulator's Markets in Financial Instruments Directive (MiFID) review of commodity derivatives will increase transparency and alignment on sustainability, according to a Capco expert.
/jlne.ws/4cyWxAD
| | | | | | Strategy | | | YieldMax's New Option ETF Strategy Focuses on TSM
Nick Wodeshick - ETF Trends
On Wednesday, YieldMax's latest ETF, the YieldMax TSM Option Income Strategy ETF (TSMY), opened for trading on the NYSE Arca. A strategy that looks at Taiwan Semiconductor Manufacturing Company (TSM), TSMY seeks to provide access to current income. Additionally, the fund aims to remain exposed to the ADR share price for TSM. The actively managed ETF comes with a net expense ratio of 0.99%. As part of the YieldMax strategy, the fund uses a synthetic covered call strategy.
/jlne.ws/4dvQLRP
Bitcoin Derivatives Data Hints At Major BTC Short Squeeze, $70,000 Coming? The Bitcoin funding rates have reached levels last seen in March 2023, while open interest jumps. Bitcoin options traders have been selling the call options and buying the put options recently. The FOMC meeting will be crucial to deciding the next Bitcoin trajectory from here onwards.
Varuni Trivedi - The Coin Republic
K33 Research, the popular crypto market analytics platform, noted that the Bitcoin derivates data points out the growing risk of a major "short squeeze" which can lead to a sharp bounce back in the Bitcoin price to $70,000. To confirm its analysis, K33 Research pointed out the funding rate for the Bitcoin perpetual futures that helps to gauge either the bullish or the bearish sentiment.
/jlne.ws/3Tm1Ug7
| | | | | | Events | | | FIA Forum: Commodities 2024 FIA Forum: Commodity Derivatives: Volatility, Liquidity, Regulation and Enforcement
FIA
16 September 2024 - 18 September 2024, 5:00 PM - 12:00 PM CT at The Houstonian, Houston, TX. Historic market developments fueled by geopolitical events, new technologies and the energy transition are impacting all facets of commodity firm operations. FIA Forum: Commodities 2024 convenes 16-18 September in Houston for in-depth discussions of these trends and their implications for physical commodity and derivatives markets.
/jlne.ws/4cQAnu9
| | | | | | Miscellaneous | | | Time to rethink exchange rate orthodoxy for open economies; The Singaporean model could serve as a valuable template for many countries
Eric Parrado - Financial Times
From the collapse of Argentina's convertibility regime in the early 2000s to recent discussions about the case for greater exchange rate flexibility for China, the past two decades have seen a vigorous debate about the optimal exchange rate regime for economies large and small.
This debate has been underpinned by an influential academic consensus that the only sustainable regimes are hard pegs of one currency to another or free floating exchange rated - the so-called "bipolar view".
/jlne.ws/3Xf5hI1
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