| | | | | | | April 02, 2025 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | 
WTI Crude Oil Weekly options Q1 2025 ADV reached over 21K contracts as traders look to hedge short-term crude oil price risk associated with continued market uncertainty. WTI Weekly options offer expiries every day of the trading week for the next four weeks. Manage your risk.
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Dr. Richard Sandor, the former chief economist at the Chicago Board of Trade (CBOT), testified before the House Committee on Agriculture on March 25, 2025 at a hearing titled "The CFTC at 50: Examining the Past and Future of Commodity Markets", about his pivotal role in developing financial futures markets and establishing the Commodity Futures Trading Commission (CFTC). He spoke about the volatile economic environment of the early 1970s-characterized by soaring grain prices, inflation, and rising interest rates-when Sandor helped design groundbreaking financial futures contracts, notably the GNMA mortgage interest rate futures, 30-year Treasury bond futures, and 10-year Treasury note futures. These contracts provided critical hedging tools, reducing borrowing costs and enhancing financial stability; for instance, the 10-year Treasury futures alone saved the U.S. government an estimated $1.875 billion in borrowing costs in 2024.
Sandor emphasized the importance of regulatory collaboration, recalling CBOT's leadership in shaping legislation that granted exclusive jurisdiction to the CFTC, crucial for the successful introduction of financial futures. He credited CBOT executives Henry Hall Wilson, Fred Uhlmann, and Les Rosenthal, along with Senate Agriculture Chairman Herman Talmadge, for their foresight. The new regulatory framework established in 1975 enabled innovations like options on Treasury futures, significantly expanding risk management capabilities across global markets.
Sandor estimated that Treasury futures and options generated annual savings of $5 to $10 billion through reduced borrowing costs for the U.S. government. He concluded by recognizing the human capital developed through pioneering education programs in futures and options, affirming that continued innovation and robust regulatory oversight promise even greater financial efficiencies and stability in the future. ~JJL
| | | | | | Lead Stories | | | Liquidity risk spikes at CME and OCC; CCPs revised estimated worst-case payment obligation to highest levels on record in Q4
Joshua Walker - Risk.net
The Options Clearing Corporation and CME Clearing's futures and options division revised upwards their estimates of the largest payment obligation that would be caused by the default of any of their participants and their affiliates, with both reaching all-time highs. The OCC's projected largest same-day payment obligation was set at $13.3 billion in the fourth quarter of 2024, a 32.3% increase from the prior quarter, surpassing its previous record of $12 billion.
/jlne.ws/3YhppJt
Retail Investors Are Reshaping Options Trading
Anna Lyudvig - Traders Magazine
Once dominated by institutional investors, the options market is now seeing a surge in activity from individual traders, thanks to enhanced access to educational resources, advanced trading tools, and more sophisticated execution capabilities, according to Neil McDonald, CEO of Moomoo US. Retail investors are no longer confined to basic stock trading. Many are leveraging multi-leg options strategies, hedging against market volatility, and even generating income through tactics like call overwriting, McDonald said.
/jlne.ws/4lhZMCo
Wall Street's Fear Gauge Is Spiking. But It's Been Worse This Year.
Callum Keown - Barron's
Wall Street's so-called fear gauge jumped Wednesday as investors braced for volatility ahead of a President Donald Trump's tariffs announcement. However, it's not the most scared the market has been this year, suggesting things are a bit calmer than they might have been on such a significant day.
The CBOE Volatility Index (VIX) rose 5.3% to 22.92 early on Liberation Day, as Trump has called it. Any reading above 20 typically signals high future volatility. The index traded below 20 for seven consecutive days until Friday.
/jlne.ws/428V4hq
Option traders now expect more of the S&P 500 tariff reaction to occur Thursday
Jamie Chisholm - MarketWatch
What a difference an hour makes. Option traders have slashed the expected S&P 500 move for Wednesday after the timing of President Donald Trump's tariff announcement was pushed back from 3:00 p.m. Eastern to 4:00 p.m.
It means Trump will deliver his trade news right after the closing bell has rung at the New York Stock Exchange. Zero-day to expiry (0DTE) S&P 500 options expire at the close of the cash session, and so they won't reflect any moves in index futures once Trump starts speaking.
/jlne.ws/41WVicL
Market Makers Shy Away From World's First Catastrophe Bond ETF
Katie Greifeld - Bloomberg
From cryptocurrencies to collateralized loan obligations, there aren't many assets the US ETF market has struggled to embrace. But the $10 trillion industry may have found its limit with Wall Street's newest arrival. The Brookmont Catastrophic Bond ETF (ticker ILS) launches Tuesday without a lead market maker, a linchpin of the trading process who commits to quote both bid and ask prices for the fund in order to keep its shares moving.
/jlne.ws/4l434sC
Grayscale Files To Convert $600 Million Crypto Fund Into ETF, Expanding Access to Bitcoin, Ethereum, and XRP
Ayesha Aziz - CoinMarketCap
Grayscale Investments has filed to convert its private Digital Large Cap Fund into an exchange-traded fund (ETF), allowing public investors to access a portfolio that includes Bitcoin, Ethereum, XRP, Solana, and Cardano. Currently, the fund is only available to accredited investors through private placement. At the time of filing, Bitcoin makes up 79.4% of the fund, followed by Ethereum at 10.69%, XRP at 5.85%, Solana at 2.92%, and Cardano at 1.14%. Cardano was added in January 2025 after the removal of Avalanche due to index rebalancing. Since its launch in 2018, the fund's market price has increased by 478.83%, according to Grayscale.
/jlne.ws/3QZjfd2
Millennium, Citadel Extend 2025 Losses With a Volatile March
Nishant Kumar, Siddharth Vikram Philip, and Katherine Burton - Bloomberg
Izzy Englander's Millennium Management and Ken Griffin's Citadel lost money last quarter amid President Donald Trump's trade wars, even as other hedge funds gained. Millennium's flagship fund slid 1.2% in March and 2% for the quarter, while Citadel's main hedge fund fell 0.5% last month, extending this year's decline to 0.85%.
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| | | | | | Exchanges | | | CME Group Sets New, All-Time Quarterly ADV Record of 29.8 Million Contracts, Driven by Growth Across All Asset Classes
CME Group
CME Group, the world's leading derivatives marketplace, today reported its Q1 and March 2025 market statistics, with average daily volume (ADV) reaching a new, all-time quarterly record of 29.8 million contracts and the second-highest March ADV on record with 30.8 million contracts. In Q1, the company's ADV grew 13% year-over-year, with record volume in interest rate, equity index, agricultural, foreign exchange and cryptocurrency products. CME Group's deeply liquid U.S. Treasury complex hit a quarterly ADV record of 9.2 million contracts and its Henry Hub Natural Gas complex set a quarterly ADV record of 1.1 million contracts.
/jlne.ws/4lskD62
Producer sentiment slips due to rising policy uncertainty
CME Group
Farmer sentiment declined in March as concerns over agricultural trade and farm policy weighed on producers' outlook for the future. The Purdue University/CME Group Ag Economy Barometer fell 12 points to a reading of 140, down from 152 a month earlier. Contributing to the weakened sentiment in March was a 15-point drop in the Index of Future Expectations to 144 and the Current Conditions Index falling 5 points to 132. The drop in sentiment was influenced by falling crop prices since mid-February, along with increasing uncertainty surrounding agricultural trade and farm policy. Despite the decline, producers remained more optimistic about future conditions than the present, with the Future Expectations Index remaining higher than the Current Conditions Index by 12 points. This month's survey was conducted between March 10-14.
/jlne.ws/4caz6z0
CME Group to Launch Spot-Quoted Futures, Providing Innovative New Trading Opportunities for Retail Investors
CME Group
CME Group, the world's leading derivatives marketplace, today announced plans to launch Spot-Quoted futures on June 30, pending regulatory review.
Spot-Quoted futures will allow investors to trade futures positions in spot-market terms (i.e., the price quoted on screen on financial media and investment sites). Contracts will be available for the two leading cryptocurrencies, bitcoin and ether, as well as across the four major U.S. equity indices, including the S&P 500, Nasdaq-100, Russell 2000 and Dow Jones Industrial Average. In addition, investors will be able to hold these contracts for up to five years - without needing to roll - making a long-term position easier to hold than ever.
/jlne.ws/4jhU3e0
Cash market trading volumes in March 2025
Deutsche Borse
Deutsche Borse's cash markets generated a turnover of EUR206.03 billion in March (previous year: 121.13 billion / previous month: EUR144.88 billion). EUR201.09 billion were attributable to Xetra (previous year: EUR117.16 billion / previous month: EUR140.51 billion), bringing the average daily Xetra trading volume to EUR9.58 billion (previous year: EUR5.86 billion / previous month: EUR7.03 billion). Trading volumes on Borse Frankfurt were EUR4.94 billion (previous year: EUR3.97 billion / previous month: EUR4.37 billion).
/jlne.ws/42cNJx9
LME first-quarter volumes jump 5.9% to second highest in 11 years
Reuters
The London Metal Exchange (LME) average daily volumes gained 5.9% in the first quarter of 2025, marking the second highest quarterly level in the last 11 years, the exchange said on Wednesday. The exchange, the world's oldest and largest market for industrial metals, said average daily volumes (ADV) rose to 698,209 lots in the first three months of the year.
/jlne.ws/42rS5BV
| | | | | | Regulation & Enforcement | | | Testimony Before the House Committee on Agriculture
Richard L. Sandor, Chairman of the Board & CEO at Environmental Financial Products, LLC - via LinkedIn
March 25, 2025
Chairman Thompson, Ranking Member Craig, Members of the Committee, thank you for the opportunity to testify today. I joined the Chicago Board of Trade (CBOT) in 1972 as Vice President of Economic Research and Planning. As the exchange's chief economist, my primary responsibility was to revise existing futures contracts and develop new ones in response to evolving economic conditions. I had the opportunity to help design several features of the legislation that established the Commodity Futures Trading Commission (CFTC) and concurrently played a role in the creation of the world's first interest rate futures contract. I subsequently had the privilege of being the principal architect for U.S. Treasury futures and options. I appear today to share my experience with this committee and to congratulate the CFTC, and this committee, for an extraordinary 50 years.
/jlne.ws/4cewGzz
DTCC Announces New Platform for Tokenized Real-time Collateral Management; New platform marks industry-first use of AppChain financial infrastructure to support institutional decentralized finance (DeFi).
DTCC
The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced a digital collateral management platform. DTCC and industry leaders will demo the new platform in a live event, "The Great Collateral Experiment" on April 23, representing a diverse cross-section of financial market assets and participants. It's the first industry demonstration developed on DTCC's digital ecosystem that launched last October - DTCC Digital Launchpad.
/jlne.ws/3Egjnls
| | | | | | Strategy | | | VIX is elevated but still shrugging off economic-policy uncertainty
Jamie Chisholm - MarketWatch
Market angst sees the Cboe VIX index - a gauge of expected S&P 500 volatility - trade around 23, notably above its long-term average of 19.5.
However, as the chart below from Capital Economics' chief market economist John Higgins shows, previous bouts of extreme economic policy uncertainty have seen the VIX trade significantly higher.
/jlne.ws/3YeB5MW
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