| October 05, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Oil's $10 Plunge on Demand Worries Sends Options Into a Tailspin
Devika Krishna Kumar and Alex Longley - Bloomberg
For much of this year, selling oil volatility has been one of the market's most profitable trades. That ended abruptly this week.
Crude volatility surged higher on Wednesday as worries about the outlook for global economic growth and the potential impact on consumption dragged futures prices lower, sparking a flurry of options trading, according to traders and brokers involved in the market.
/jlne.ws/3ZHvLl0
The US may no longer avoid a recession
Mohamed El-Erian - Financial Times
An intense period of rising interest rates, high oil prices and a stronger dollar is pushing the financial market consensus on US economic growth away from the comforting notion of a soft landing.
By my count, this will be the sixth time in the past 15 months that conventional wisdom shifts for the world's most influential economy. It is a pivot that, unfortunately, is likely to stick for longer this time around, threatening what has been an impressively strong US economy, undermining genuine financial stability and exporting volatility to the rest of the world.
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Ex-Point72 Duo Shutters Hedge Fund as One Joins Balyasny; Chris LaSusa, Kevin Cottrell wound down KCL Capital in August; Cottrell moving to Balyasny next month to trade TMT stocks
Nishant Kumar - Bloomberg
Chris LaSusa and Kevin Cottrell have shuttered their stocks-focused hedge fund after nearly six years, with the latter moving to multi-strategy investment firm Balyasny Asset Management. The duo, who previously worked together at Point72 for over a decade, wound down New York-based KCL Capital in August amid a difficult fund-raising environment, according to people with knowledge of the matter.
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| | | | | | Exchanges | | | Cboe Global Markets Reports Trading Volume for September 2023
Cboe Global Markets
Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, today reported September monthly trading volume statistics across its global business lines and provided guidance for selected revenue per contract/net revenue capture metrics for the third quarter of 2023. The data sheet "Cboe Global Markets Monthly Volume & RPC/Net Revenue Capture Report" contains an overview of certain September trading statistics and market share by business segment, volume in select index products, and RPC/net capture, which is reported on a one-month lag, across business lines.
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ICE Announces Largest Sugar Delivery on Record Amidst Strong Sugar Volumes and Open Interest
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, and home to the largest soft commodity futures and options markets in the world, today announced the largest delivery on record of ICE's global benchmark Sugar No.11 contract with 56,470 lots, a total of 2.82 million tons of sugar, headed for delivery following expiry of the October futures contract. The previous largest delivery for ICE Sugar No. 11 occurred in October 2020 where 2.62 million tons went to delivery through ICE's clearinghouse.
/jlne.ws/3ZFZRoK
***** Trabue Bland actually shared this news with JLN in our video interview with him on Wednesday. ~JJL
ICE Announces Record Third Quarter in TTF Natural Gas
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, and home to the broadest range of benchmarks to support the liberalization of natural gas, today announced a record third quarter for TTF with a record 18.7 million TTF futures and options traded, equivalent to 13,598 Terawatt hours. TTF also hit record average daily volume (ADV) during the third quarter of 296,782 across futures and options, with ADV up 101% year-over-year (y/y).
/jlne.ws/45erLcF
****** There is a new line in the description of ICE, "and home to the broadest range of benchmarks to support the liberalization of natural gas." Benchmarks around the world are moving and ICE is responding. I guess that is what you do when you are in the data business.~JJL
New Product Summary: Initial Listing of Monday Weekly Options on U.S. Treasury Note Futures - Effective October 30, 2023
CME Group
Initial Listing of Monday Weekly Options on Short-Term U.S. Treasury Note Futures (2-Year), Medium-Term U.S. Treasury Note Futures (5-Year), U.S. Treasury Note Futures (6 ½ to 7 ¾-Year), Ultra 10-Year U.S. Treasury Note Futures, U.S. Treasury Bond Futures, and Ultra U.S. Treasury Bond Futures Contracts.
/jlne.ws/46vR8rq
EEX Press Release - EEX Group Monthly Volumes - September 2023
EEX
EEX Group reports its September 2023 volumes with the following highlights: Trading volume on the global power markets of EEX Group increased 86% Year-on-Year to 756.6 TWh, with European power derivatives reaching 469.5 TWh, a 111% growth YoY. Trading volumes have returned to a similar level seen in September 2021, prior to the Russian-Ukrainian war, when EEX Group's global power markets were at 771 TWh and European power derivatives trading reached more than 500 TWh. Volumes in September 2022 were strongly affected by the energy crisis.
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September 2023 figures at Eurex
Eurex
Total Eurex volume decreases by 18 percent y-o-y in September; Total repo volumes +58% y-o-y to EUR 385 billion; Strongest growth again in GC Pooling at plus 238 percent y-o-y; Notional outstanding in OTC Clearing up 14 percent. Eurex, Europe's leading derivatives exchange, reports a 15 percent increase in equity derivatives volume to 23.8 million contracts in September from 20.7 million contracts in the same month last year. By contrast, turnover in index derivatives decreased by 26 percent year-on-year in September from 109.4 million to 80.8 million traded contracts. Turnover in interest rate derivatives decreased by 14 percent, from 83.7 to 71.7 million contracts traded in September. Total traded contracts at Eurex saw an 18 percent decrease, from 214.2 million to 176.6 million contracts traded.
/jlne.ws/48IXJAM
| | | | | | Regulation & Enforcement | | | The SEC Had a Busy Week; Whistleblowers, WhatsApp, SPAC projections, bribery, a new Sculptor bid, AI for hedge funds and an ethics competition.
Matt Levine - Bloomberg
It's SEC silly season
Many companies do at least a little bit of earnings management and "window dressing." If it is getting to be mid-to-late December and there is a sale that you have almost closed, or an expense that you'll probably have to pay pretty soon, you will sit down and say "well, our year is almost over, do we want this sale (or expense) to count for this year, or next year?" The answer will depend on your particular situation, but often you will want to book revenue early and expenses late: You'll rush to close the sale in December, and foot-drag on paying the expense until January, so that you can report higher income for this fiscal year. You want this year to look as good as possible; you'll worry about next year later.
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ISDA Response to CFTC on Conflicts of Interest Between DCOs and Affiliated Clearing Members
ISDAA
On September 28, ISDA responded to a request for comment from the US Commodity Futures Trading Commission (CFTC) on the affiliations between derivatives clearing organizations (DCOs), designated contact markets or swap execution facilities and intermediaries such as futures commission merchants (FCMs) and other market participants. The request for comment also looked at situations where the DCO has only one affiliated FCM, referred to as direct clearing.
/jlne.ws/3LPc1WV
Isda proposes new central hub for critical notices
Rebekah Tunstead - Risk.net (Subscription)
Sending critical notices to counterparties can involve multiple forms of communication: hand-delivering the notice, sending it to the counterparty's general counsel, emailing it to designated recipients at the firm, and just to make sure, dusting off the fax machine.
But is there an easier way?
That's the question the International Swaps and Derivatives Association is asking as it looks to develop a new one-stop shop for sending and receiving notices, a central notice hub.
/jlne.ws/3PHEbEd
| | | | | | Education | | | Wide World Of Options: How Are Options Priced? Making Sense of Volatility Skew and Relative Value
The Options Insider (Podcast)
Pop Quiz: Is a 10% out-of-the-money put priced similarly to an equally out-of-the-money call? And when it comes to risk, does the market value each strike the same? For answers to these questions and many more, tune into this OIC Wide World of Options episode as host Mark Benzaquen welcomes OIC instructor Mat Cashman to discuss implied volatility and various ways the market prices individual options.
/jlne.ws/3PIsTQe
| | | | | | Miscellaneous | | | Sam Bankman-Fried's Attorney Blames FTX Collapse on Volatile Crypto Market
Lloyd Lee and Katie Balevic - Business Insider
The collapse of FTX in 2022 wasn't the result of fraud or a deliberate scheme to steal from customers; it was just the nature of a volatile cryptocurrency market, Sam Bankman-Fried's attorney argued on Wednesday.
Bankman-Fried, the 31-year-old founder of crypto exchange FTX and Alameda Research trading firm, sat in for the second day of his trial in a Manhattan court on Wednesday where he faces seven criminal charges. Federal prosecutors accuse Bankman-Fried of defrauding customers and siphoning their funds to make outside investments such as in real estate and political donations.
/jlne.ws/3F3ij1l
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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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