 | August 31, 2021 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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Joe Panfil's Path to Electronic Trading Led Him to Building and Optimizing Globex
JohnLothianNews.com
When Joe Panfil joined the Chicago Mercantile Exchange staff in 1997 as an information technology professional, the CME was still a member-owned, club-like organization focused on open outcry trading. However, the goal of making the CME the largest exchange in the world based on electronic trading was what attracted Panfil to the CME.
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| | | | | | Lead Stories | | | ETFs using options to hedge have raked in $5 billion in the last year. Simplify CEO on his firm's strategies
Lizzy Gurdus - CNBC
ETF Edge: ETFs can provide downside protection as markets climb higher
Options are getting popular in the exchange-traded fund world.
ETFs that use options have raked in around $5 billion in the last year, a sign that investors are growing more interested in alternative strategies that aim to protect or enhance their portfolios even as stocks hit records.
That's according to ETF Trends' Dave Nadig, who told CNBC's "ETF Edge" on Monday that his firm has been tracking these types of products while they've gained traction.
/cnb.cx/2WGPftl
US investors bank on derivatives to guard against stocks slowdown
Money managers seek to protect double-digit gains as Delta variant and slowing global growth temper expectations
Eric Platt and Joe Rennison - FT
Investors are increasingly turning to derivatives strategies to guard against a slowdown in the $51tn US equity market, suspecting that the white-hot rally this year is starting to run out of steam. Large institutional money managers have already shown a nervy tilt in recent weeks, opting for funds likely to do well in tougher economic or market environments.
/on.ft.com/3DwurWC
Fed Now Risks Too-Slow Taper After Too Fast in 2013, Rajan Says
Michelle Jamrisko - Bloomberg
One of the leading global critics of the Federal Reserve's 2013 "taper tantrum" episode is now worried that the central bank could fall behind the curve as it gradually removes Covid-era monetary stimulus.
/bloom.bg/3Buxixi
S&P 500, Nasdaq Set Records Again
Karen Langley and Caitlin Ostroff - WSJ
The S&P 500 notched its 53rd record close of the year Monday as technology stocks lifted major indexes.
The U.S. stock benchmark has gained 21% in 2021 and clinched its highest number of records in a calendar year through August.
/on.wsj.com/3mPlCRC
Natixis Returning to Derivatives at Heart of $300 Million Losses
Donal Griffin - Bloomberg
French investment bank Natixis SA is beginning a fresh push into the complex derivatives that blew up twice in recent years, causing hundreds of millions of euros in losses and helping end the tenure of the lender's former chief executive officer.
The Paris-based bank plans to sell a new batch of so-called autocallables, which are volatile derivatives linked to stocks, people familiar with the matter said. They include products similar to those Natixis suspended after they lost 259 million euros ($303 million) in 2018, the people said. The firm will also offer a product that carries less risk tied to dividend changes after the bank lost at least 250 million euros last year when many companies slashed their payouts, the people said.
/bloom.bg/3BtvR2d
How Powell's Jackson Hole remarks have refreshed a rally in both stocks and bonds
Vivien Lou Chen - MarketWatch
Fed Chairman Jerome Powell's ambiguity around the start date of any tapering in bond purchases this year is giving investors plenty of confidence that continued easy-monetary policy will be in place for at least weeks, if not months.
Friday's Jackson Hole speech by Powell â colloquially referred to as "Jackson Hold" â is what's established the current investing tone: It's why money continued to flow Monday into Treasurys and U.S. stocks, with the S&P 500 and Nasdaq Composite indexes touching fresh intraday record highs, some analysts said.
/on.mktw.net/3gKt1xS
What Happens to Robinhood If the SEC Bans Payment for Order Flow?
Matt Levine - Bloomberg
What if the U.S. Securities and Exchange Commission bans payment for order flow? Robinhood Markets Inc. gets about 80% of its revenue from payment for order flow, selling its customers' orders to market makers like Citadel Securities to execute them. This is controversial for reasons we have discussed ad nauseam; you can read about it here and here and here. But the basic point here is that Robinhood doesn't charge commissions to trade stocks or options or cryptocurrencies, so its customers trade a lot, and it can afford to do that because market makers pay for the privilege of trading with its customers. If they couldn't do that, then Robinhood would have to start charging commissions, and the whole fun Robinhood thing â the whole Robinhood era of excitable retail trading and meme stocks and options-driven price moves and so forth â would come to an end. Or that's the worry. So:
/bloom.bg/3zD3v56
| | | | | | Exchanges | | | Nodal Exchange and IncubEx Collaborate to Launch Ten First of Their Kind Renewable Futures & Options
Business Wire
Nodal Exchange and IncubEx announced today the upcoming launch of ten new Renewable Energy Certificate ("REC") futures and options contracts, adding to the world's largest suite of environmental products.
/bwnews.pr/3mLECkg
Crypto exchange FTX.US wades into derivatives with deal for LedgerX
Declan Harty - Fortune
FTX.US is pushing into the world of digital asset derivativesâand possibly beyondâwith its first purchase. Sam Bankman-Fried's U.S. affiliate of crypto exchange FTX has agreed to buy LedgerX, a derivatives exchange and clearinghouse regulated by the Commodity Futures Trading Commission, for an undisclosed amount. The deal, if completed, will provide FTX.US with the ability to offer options and futures contracts on Bitcoin and Ethereum to big and small investors alike, expanding on its current capabilities of permitting users to trade directly in a handful of cryptocurrencies.
/bit.ly/3yw9Hug
****Also see the Bloomberg story.
SGX welcomes Shanxi Securities International Futures as Derivatives Trading Member
SGX
Singapore Exchange (SGX) today welcomed Shanxi Securities International Futures Limited (SSIFL) as a Trading Member of its derivatives market.
Based in Hong Kong, SSIFL primarily deals in global futures and options for Chinese and international clients. It is a wholly owned subsidiary of Shanxi Securities Co., Ltd, a listed securities firm on Shenzhen Stock Exchange in China, providing securities brokerage, asset management, futures trading, investment management, and financial products underwriting services.
/bit.ly/3ywL4Oa
| | | | | | Regulation & Enforcement | | | SEC Chairman Says Banning Payment for Order Flow Is 'On the Table'
Avi Salzman - Barron's
A controversial practice that has brought in billions of dollars to brokers and high-frequency trading firms is in the crosshairs of the Securities and Exchange Commission, and could be eliminated entirely.
In an interview with Barron's on Monday, SEC Chairman Gary Gensler said that a full ban of payment for order flow is "on the table." Payment for order flow is a practice where brokers send trade orders to market makers that execute those trades in return for a portion of the profits.
/bit.ly/3t3gHh7
Hong Kong plans new risk controls to prevent Archegos-style collapse
Tabby Kinder - Financial Times
Hong Kong's central bank and top financial regulator are developing a system to track dangerously concentrated exposures to stocks as part of efforts to prevent an Archegos Capital-style blow-up, according to two people familiar with the matter.
The project, which was launched in the wake of the debacle at the family office run by Bill Hwang, will use centralised trade databases to identify excessive risk-taking by banks and investment funds trading derivatives on Hong Kong markets.
/on.ft.com/3BtyUaM
Former Netflix engineer pleads guilty to insider trading
U.S. Department of Justice
Provided non-public subscriber information to others and later obtained non-public information to generate more than $1 million in illegal profits from insider trading
Seattle - A former Netflix software engineer, and his brother pleaded guilty today in U.S. District Court in Seattle to securities fraud for their roles in an insider trading ring that generated more than $1 million in illegal proceeds, announced Acting U.S. Attorney Tessa M. Gorman. Sung Mo Jun, 49, of Bellevue, Washington, and his brother, Joon Jun, 45, of Issaquah, Washington, were charged along with two others earlier this month with insider trading in Netflix securities. The Jun brothers are scheduled to be sentenced by U.S. District Judge Richard A. Jones on December 3, 2021.
/bit.ly/3juGwDx
| | | | | | Technology | | | SBI expands smartTrade partnership for crypto derivatives trading
The FX liquidity provider division at Japan's SBI has expanded its relationship with smartTrade Technologies for crypto derivatives trading.
Hayley McDowell - The Trade
Japan's SBI has expanded its long-standing partnership with electronic trading services provider smartTrade Technologies to bolster its crypto derivatives trading operations.
/bit.ly/3DC4dBS
| | | | | | Strategy | | | Here's how Bitcoin options traders might prepare for a BTC ETF approval
Cointelegraph
Bloomberg analysts expect a BTC ETF approval in the next few months, and clever options traders might use this strategy to profit from the possibility.
Very few events can shake the cryptocurrency markets in a sustainable manner that really sends Bitcoin and altcoin prices into a sharp directional move. One example is when Xi Jinping, China's President, called for the development of blockchain technology throughout the country in October 2019.
/bit.ly/2WxJfnj
A Fresh Approach to Minimizing the Nasdaq-100
Tom Lydon - ETF Trends
Home to the likes of Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and an assortment of other well-known growth stocks, the Nasdaq-100 Index (NDX) is a paradise for investors seeking growth exposure.
Importantly, the Nasdaq-100 has a lengthy history of outperforming rival broader benchmarks, such as the S&P 500 and the Russell 1000. However, that out-performance isn't a free lunch, and NDX is historically low-yielding.
A new exchange traded fund could ameliorate those scenarios. The Global X Nasdaq 100 Collar 95-110 ETF (QCLR), which tracks the Nasdaq-100 Quarterly Collar 95-110 Index, debuted last week. QCLR offers a unique approach to NDX by owning the stocks in that venerable index, providing protection by allocating to 5% out-of-the-money (OTM) put options, and generating some income by selling 10% out-of-the-money call options on the same index. That's an options strategy known as a collar.
/bit.ly/3kFeyEB
| | | | | | Events | | | Registration for IDX is open!
FIA
Say goodbye to Zoom and make your plans to connect with FIA and the cleared derivatives community in London at this year's International Derivatives Expo, taking place 27-28 September at the Park Plaza Westminster Bridge. Registration rates go up after 27 August.
/bit.ly/2Y4w3GG
| | | | | | Miscellaneous | | | Options Prices Are About To Change...Thanks To The Fed (Opinion)
Michael Carr, True Options Masters - Banyan Hill
There was some good news in Federal Reserve Chairman Jerome Powell's speech on Friday...
Powell largely confirmed that Fed officials hope to get away with doing nothing. The Fed doing nothing is about the best news the stock market could ask for.
We should learn just how little the Fed plans to do on September 22, after its next meeting. Then again, it will probably be slightly more than nothing. There's likely to be some news about tapering â the word used to describe the end to the Fed's bond-buying binge.
/bit.ly/3mW7ZQC
Crypto derivatives are 'misunderstood' and have made markets more efficient, says crypto billionaire Sam Bankman-Fried
Ethan Wu - Markets Insider
FTX CEO Sam Bankman-Fried defended the derivatives market and explained his rationale for slashing leverage on his crypto exchange in an interview with Forbes on Monday.
Crypto derivatives are a "somewhat misunderstood area," Bankman-Fried told Forbes. "People will note that derivatives trade more volume in crypto than spot, which is true. But that is true of every asset class in the world."
/bit.ly/38pJUcN
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