| September 03, 2024 | | | |  | Jeff Bergstrom
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| | | | Observations & Insight | | |  Eurex Expands Crypto Derivatives Offerings With FTSE Russell Indices, Targeting Institutional Investors.JohnLothianNews.com Eurex and FTSE Russell are expanding their cryptocurrency derivatives offerings by targeting institutional investors with new Ethereum-based products. Eurex expanded its crypto derivatives portfolio with the launch of FTSE Ethereum Index Futures and Options on August 12, 2024. These products complement Eurex's existing Bitcoin derivatives, which were launched in April 2023. Listen to the podcast »
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Celebrating 25 Years of the John Lothian Newsletter - A Leap of Faith in 1999
JohnLothianNews.com
Twenty-five years ago, in August 1999, I began producing this daily newsletter as a marketing and networking tool to promote my electronic trading brokerage services, Commodity Trading Advisor offerings, and my personal brand.
I was competing with large discount commodity firms that were transitioning to electronic trading, and I needed to market myself and my firm and find a way to stand out, but I didn't have many monetary resources to do so. Therefore, I had to think outside the box.
My specific goals at the time were to increase the number of my brokerage clients at The Price Futures Group, to raise funds for Defender Capital Management and Hargrave Financial Group, two CTAs I represented, and to elevate my profile amid industry changes that I felt could undermine my career path.
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| | | | | | Lead Stories | | | Options Trader Spends $9 Million Betting on September Volatility Spike; VIX September call spreads trade upwards of 350,000 contracts; Fed meeting, debate, economic data on tap in September
David Marino and Natalia Kniazhevich - Bloomberg
While many traders on Wall Street had a foot out the door for the long Labor Day weekend, at least one investor was buying protection against a September selloff.
An options trader or traders bought call spreads on the Cboe Volatility Index - or VIX - expiring in September, spending upwards of $9 million to protect against a spike in the gauge of S&P 500 volatility past 22 from its current level of just over 15. A jump to that level would bring the VIX back to where it was Aug. 9, when the market was recovering from a sharp selloff.
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Top US derivatives banks continue to grow market share
Luke Jeffs - FOW
The top five US derivatives banks continued to grow their market share of US futures and options in July with Morgan Stanley narrowly beating Goldman Sachs and Bank of America with the largest increase.
JP Morgan, Goldman, Morgan Stanley, Bank of America and SG Americas reported in July a combined $157.8bn (ÃGBP120bn) of assets in segregated accounts, an increase of 8.1% on the June totals, according to data from the US futures regulator.
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Citadel Securities leads fight over payments for market surveillance system; Market maker attacks 'brazen' efforts by exchanges to recoup costs of 'Consolidated Audit Trail' that tracks securities trading
Jennifer Hughes - Financial Times
Citadel Securities is leading industry pushback against an effort by exchanges including the New York Stock Exchange and Nasdaq to ask traders to help foot the bill for a new market surveillance system that has already racked up almost $1bn in costs. Brokers are calling for the regulator to suspend proposed new billing schedules that would force them to contribute to the costs of the CAT system, or Consolidated Audit Trail, a real-time record of all activity across US equities and options markets, which has been likened to a "Hubble Telescope" for securities markets.
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Shorts are circling some of the AI boom's biggest question marks
Bailey Lipschultz - Bloomberg
It's the story of so many stock market manias: A transformative technology juices a few companies, a bunch of more questionable outfits follow in their wake, and Wall Street buys it all. Then time sorts out what's real from fake. Artificial intelligence, which has fueled the latest bounce in the S&P 500 Index as everything remotely attached to the technology sees its stock price soar, is the latest example. And it's reached the point where some investors are betting against a few of those AI darlings, like Super Micro Computer Inc. and Lumen Technologies Inc., whose shares were up more than 250% at various points this year.
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Wall Street Strategists Face Their Own Short Squeeze; It's the time of year, when stock market prognosticators rush to boost their S&P 500 forecasts - and 2024 will be no different.
Jonathan Levin - Bloomberg
Since the pandemic, Wall Street strategists have repeatedly underestimated the performance of the US stock market in their annual projections, leading to a mad dash to boost their outlooks in the back end of the year. The flurry of upward revisions can look something like a "short squeeze," which is a situation where traders are forced to cover bearish bets in quick succession, often reinforcing a security's upward momentum. In that sense, this year has already seen the biggest short squeeze among strategists in a decade, and seasonal trends suggest it's poised to continue in coming months.
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Cryptoverse: Bitcoin ETFs take $50 billion baby steps toward big time
Suzanne McGee - Reuters
Last October, Matthew Hougan told an industry panel that he expected spot bitcoin exchange-traded funds (ETFs) to attract $55 billion of assets in their first five years.
As of late August this year, about eight months after their debut, the 10 new funds approved by U.S. regulators collectively boasted more than $52 billion, according to data from TrackInsight.
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| | | | | | Exchanges | | | The Editor's Pick for the September edition of Focus, the publication of the World Federation of Exchanges, is "Empowering Investors Through Expanded Global Access to Derivatives" by Catherine Clay, executive vice president and global head of derivatives at Cboe Global Markets. In the article, Clay discusses the evolving landscape of volatility trading and Cboe's 2024 strategic initiatives. Also featured in September's Focus are articles written by Jorge Alegria, CEO of Bolsa Mexicana de Valores; Kopano Bolokwe, acting CEO of the Botswana Stock Exchange; Tony Sio, head of regulatory strategy and innovation at Nasdaq; and Kelly Feili and Tausif Khan, director of risk policy and advocacy and director of third-party risk and reporting, respectively, at DTCC. View the full edition at this link to read these and other contributions from exchange executives worldwide. ~SAED
Cboe's BIDS VWAP-X receives sell-side support ahead of October launch; New offering will allow participants to source and match liquidity at a forward benchmark price.
Wesley Bray - The Trade
Cboe Europe has announced the support of a range of participants for its new trading service Cboe BIDS VWAP-X. The new offering will allow users to source and match liquidity at a forward benchmark price and is scheduled to launch on 21 October, subject to regulatory approvals.
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Cboe Europe Secures Support of Key Participants for Launch of Cboe BIDS VWAP-X Service
Cboe
Cboe Europe, the largest pan-European stock exchange1 and a division of Cboe Global Markets, Inc. (Cboe: CBOE), today announces that it has secured the support of a broad range of participants for Cboe BIDS VWAP-X, its new trading service allowing participants to source and match liquidity at a forward benchmark price. This service is scheduled to launch on October 21, subject to regulatory approvals. Early adopters of the Cboe BIDS VWAP-X service include Bernstein, BNP Paribas, BMO Capital Markets, Instinet Europe, Jefferies, KCx and Virtu Financial.
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CME Group SOFR Futures Hit New Open Interest and Volume Records
CME Group
CME Group, the world's leading derivatives marketplace, today announced that open interest in its deeply liquid SOFR futures set a new record of 12,701,232 contracts on August 28, as the product's average daily volume (ADV) reached a record 3.5 million contracts year-to-date.
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Eurex tweaks VSTOXX terms, incentives after volatility spike
Radi Khasawneh - FOW
Eurex has rolled out changes to the calculation methodology and incentive scheme for its VSTOXX index derivatives, a move that comes after a volatility spike last month encouraged hedging activity.
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| | | | | | Strategy | | | T. Rowe Manager Who Predicted Yen Shock Sees Another Coming; 'Scapegoating' of yen carry trade ignores bigger, deeper trend; BOJ hikes and impact on global capital far from simple: Husain
Ruth Carson - Bloomberg
Arif Husain says he was early in sounding the alarm on Japan's rising interest rates last year, which he described as the "San Andreas fault of finance."
The head of fixed-income at T. Rowe Price is now warning that investors have "just seen the first shift in that fault, and there is more" market volatility ahead after the nation's rate hike in July helped trigger a sharp reversal of the yen carry trade.
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Why stocks could drop 10% over the next 8 weeks, according to a bullish forecaster who's nailed his calls this year
Filip De Mott - Markets Insider
Stocks are facing a possible double-digit drawback in the next eight weeks as a slew of market-moving events temporarily challenge this year's gains, Fundstrat's Tom Lee told CNBC.
Lee suggested that the market could fall between 7% to 10%, and recommended that investors gear up for elevated turbulence.
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| | | | | | Miscellaneous | | | Cliff Asness Says Markets Are Less Efficient - And Social Media May Be to Blame; Quant investor's paper titled Less-Efficient Market Hypothesis; Asness touts long investing horizons, among other strategies
Sam Potter and Justina Lee - Bloomberg
Cliff Asness says he sounds like an "old man whinging," but that's not stopping him from writing 23 pages on his latest thesis: Financial markets these days aren't what they were.
The often-cantankerous co-founder of AQR Capital Management just published new research that amounts to a detailed exposition of an argument he has repeatedly raised of late, namely that the market has become less efficient over the course of his more than three-decade career.
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Opinion: Stock market volatility in August fooled experts who should've known better; The broad disparity and differences among Wall Street analysts we're seeing now is not normal
Mohamed A. El-Erian - MarketWatch
To the extent that financial historians ever refer back to August 2024, I suspect it will be for the craziness of the first three days of the month, when global stock prices tumbled as investors' dumped their market darlings and sent the CBOE Volatility Index (VIX) (Wall Street's "fear index") soaring to levels not seen since the start of the COVID-19 pandemic in 2020.
All this financial disorder will likely be attributed to the "bad technicals" associated with an over-leveraged Japanese yen "carry trade" and junior, inexperienced traders whose superiors were away on summer vacations.
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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
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Disclaimer: All John Lothian Newsletters, JohnLothianNews.com, MarketsWiki.com and MarketsReformWiki.com are products of John Lothian News, a division of John J. Lothian & Company, Inc. The opinions expressed in all John J. Lothian & Company, Inc. publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers. Futures and options trading involve risk. Past results are no indication of future performance. Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any website or newsletter content.
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