| | | | | | | | November 11, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | DRW's Don Wilson is the latest to get the Financial Times "New titans of Wall Street" treatment in the series about "The secretive firms that have conquered trading." While Don is just a man, he is a trading god to many in the industry, thus deserving of the title "Titan." Don is more than just trading, or the "Smartest Man in Trading" as the FT article suggests. He is an industry leader. For some, he is THE industry leader. He is also a yachtsman. And if you have been paying attention, those two things are intricately linked to the history of trading in Chicago.
Bitcoin has soared above a new record price of $82,000 after breaching $80,000 over the weekend, buoyed by post-U.S. election enthusiasm for the incoming pro-crypto Trump administration. Even Dogecoin has joined the party. Bloomberg reported yesterday it had rallied 50% in the past five days.
Good guy Ray McKenzie announced his new role as senior business development executive at Quant16. Quant16 empowers Fortune 1000 companies and government entities to make faster, data-driven decisions through Model-Driven FP&A as a Service with Monetizable AI. Based in Chicago, Ray said in a LinkedIn post that he looks forward to connecting soon with industry colleagues to share more about Quant16's innovative approach. ~JJL
| | | | | | Lead Stories | | | Post-Election Volatility Crush Has Options Traders Chasing Rally; 'Volatility of volatility' had third-fastest drop since 2006; Markers of volatility across assets decline after vote
Jan-Patrick Barnert - Bloomberg
The forecasts for a drop in stock-market volatility after the US presidential vote have come about even faster than expected, with options traders now positioning for an extended rally. The post-election outcome is crystal clear and in strong favor of risk taking, with the only real surprise being the speed of the resolution, which spared days and possibly weeks of uncertainty. With hedging demand shrinking at nearly the fastest pace since the financial crisis and rally-chasing in full swing, volatility has nowhere to go but down.
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The Post-Election Volatility Surface Realignment
Ed Tom - Cboe
Cross-asset volatilities which had had been elevated at 90+ percentile highs for the last month were crushed as the resolution of the US Presidential Elections and continued FOMC rate moderation catalyzed a cross-asset risk-on sentiment and normalized the implied volatilities of the major asset classes towards their historical average levels.
/jlne.ws/4hKzxCM
Bitcoin Options Show Traders Betting on $100,000 by Year-End; $100,000 call is the largest wager for the Dec. 27 expiry; The original token set a new record, passing $82,000 Monday
Sidhartha Shukla - Bloomberg
Bitcoin options traders buoyed by Donald Trump's election victory are already eyeing a landmark price of $100,000 for the original cryptocurrency, after it surged to a fresh record on hopes for a more crypto-friendly administration.
Investors are lining up bets that Bitcoin will pass the milestone as soon as the end of the year, according to data from crypto options exchange Deribit. The token topped $82,000 for the first time on Monday.
/jlne.ws/4fGiDn0
Wall Street Is Feeling Zen Ahead of Inflation, Earnings
George Glover - Barron's
The market was feeling calm on Monday, after a frenetic week where Donald Trump's win in the presidential election helped power stocks to record highs.
The Cboe Volatility Index, a widely-followed Wall Street "fear gauge" that tracks S&P 500 options and trades under the ticker VIX, edged up 2.7% to 15.34. Any reading under 20 is seen as a sign of low volatility.
/jlne.ws/3YXgRYZ
High AT1 Bond Demand Allows Banks to Push for More Favorable Clauses
Tasos Vossos - Bloomberg
High demand for Additional Tier 1 bonds is allowing banks to add in clauses that give them more flexibility over when and how they redeem the risky debt. So-called clean-up call options have been included on more than 40% of European AT1 bonds this year, based on data compiled by Bloomberg. The clause means lenders can sweep up bonds still outstanding after a buyback, whether holders want to redeem or not. That was practically non-existent two years ago. Banks had already been favoring longer six-month call windows to have a better chance of issuing new debt at a good time.
/jlne.ws/40GQ7xl
JPMorgan launches European version of JEPI, the largest active ETF; Manager also launches JEPQ, another active US equity income ETF hugely successful in US
Sandra Heistruvers - Financial Times
JPMorgan Asset Management has added two US equity income-focused strategies to its range of actively managed exchange traded funds in Europe.
The US asset management group has listed the JPMorgan US Equity Premium Income Active (JEPI) and JPMorgan Nasdaq Equity Premium Income Active Ucits ETFs (JEPQ) in London, Frankfurt and Zurich.
/jlne.ws/3Z01G14
Hedge-Funds Hit by 'Arbageddon' Sense Brighter Future After Trump Win; A string of busted deals has hit the venerable hedge-fund industry strategy of merger arbitrage
Ben Dummett and Caitlin McCabe - The Wall Street Journal
It has been a rough year for betting on big takeovers. Now, some in the hedge-fund industry hope President-elect Donald Trump could breathe new life into the business, by giving American corporations more freedom to pursue major deals. The optimism is already evident in surging stock prices for some companies, like Discover Financial Services , that are pursuing combinations. It is part of a broader optimism across Wall Street about potentially lucrative opportunities under a second Trump term.
/jlne.ws/3YYVarC
***** Your word of the day is "Arbageddon."~JJL
Can You Ever Actually De-Risk The Banking System? Does shadow bank risk always make its way back?
Tracy Alloway and Joe Weisenthal - Bloomberg (podcast)
Over the last roughly 15 years, we've seen a migration of certain types of risks outside of regulated deposit-taking banks. Private credit has boomed, shifting lending activity away from the banks. Multi-strategy hedge funds have scooped up a lot of the proprietary trading activity that was banned under the Volcker Rule. On paper, this looks good. It seems like various risks have been removed to less systemic institutions. But does the risk find its way back in? What happens when these outside entities still rely on banks for leverage? On this episode of the podcast, we speak with Steven Kelly, the Associate Director of Research at the Yale Program on Financial Stability. We talk about where risks might lie and how regulators can stay atop of them.
/jlne.ws/3O1zF2T
| | | | | | Exchanges | | | SIX could withdraw from EuroCTP consortium following Aquis deal; EuroCTP was first announced in the third quarter of 2023 and is backed by 14 exchanges as its shareholders and would be competing with Aquis and Cboe's own consolidated tape initiative.
Claudia Preece - The Trade
Following the announcement today that SIX is set to acquire Aquis Exchange in a major deal, the exchange group has confirmed that following completion, its plans around the EU's consolidated tape would change. Last week Aquis and Cboe announced that they were teaming up to explore a bid to become the EU's equity consolidated tape. Named SimpliCT, the new venture will be based in the Netherlands and co-owned by Cboe and Aquis as equal shareholders.
/jlne.ws/4eoklbw
Tradeweb and Tokyo Stock Exchange unveil plan to expand liquidity in Japanese ETFs; The first transaction on new connectivity has already taken place with Global X Japan having been the first to execute.
Claudia Preece - The Trade
Tradeweb Markets and the Tokyo Stock Exchange (TSE) are set to collaborate to expand liquidity in Japanese exchange traded funds (ETFs) through the launch of a new direct link. Enrico Bruni Specifically, the link will be between Tradeweb and TSE's RFQ platform CONNEQTOR. According to the businesses, this will "allow Tradeweb buy-side clients to include CONNEQTOR liquidity providers when launching a trade enquiry on the Tradeweb Japan-listed ETF marketplace".
/jlne.ws/4eotZe3
ICE to Start First EU Bond Futures Trading Next Month; Futures to start on Dec. 9, subject to regulatory approval; Market will watch to see if move attracts sufficient volumes
Greg Ritchie - Bloomberg
Intercontinental Exchange Inc. plans to launch a futures contract for the European Union's bonds next month, a move that could eventually aid trading volumes in the bloc's securities.
The derivatives will first trade on Dec. 9, subject to regulatory approval, according to a ICE notice to clients dated Friday. The futures will reflect movements in the ICE 8-13 Year European Union Index, it said.
/jlne.ws/3Z3TAVv
NYSE OPTIONS: VOLUME TIER REPORTS AVAILABLE VIA EMAIL
NYSE
Beginning Friday, November 8, 2024, Options Volume Tier reports ("Tier Reports") for NYSE American Options and NYSE Arca Options will be made available via email. To subscribe to receive the email version, please contact customeroutput@nyse.com and provide a firm group distribution email; individual emails cannot subscribe to the emailed tier report. Tier Reports provide month-to-date firm volumes, individual tier thresholds, as well as tiered and base rates, as per each market's fee schedule. Tier Reports will also continue to be available via Managed File Transfer ("MFT") in addition to email.
(NO LINK)
| | | | | | Regulation & Enforcement | | | SEC Delays Decision On Ethereum ETF Options
Zhrnutie AI - Binance
According to U.Today, the United States Securities and Exchange Commission (SEC) has postponed its decision regarding the listing of Options on spot Ethereum Exchange-Traded Fund (ETF) products. This delay affects several issuers, including Bitwise, Grayscale Ethereum Trust, and Grayscale Ethereum Mini Trust, among others seeking approval. The SEC's decision to delay, rather than deny, these applications is noteworthy. By law, the SEC can extend the approval process for ETF-related products for up to 240 days, allowing the regulator ample time to gather necessary information before making a final decision.
/jlne.ws/3Z18GLn
SEC Charges Invesco Advisers for Making Misleading Statements About Supposed Investment Considerations
SEC
The Securities and Exchange Commission today charged Invesco Advisers, Inc. for making misleading statements about the percentage of company-wide assets under management that integrated environmental, social, and governance (ESG) factors in investment decisions. The Atlanta-based registered investment adviser agreed to pay a $17.5 million civil penalty to settle the SEC's charges. According to the SEC's order, from 2020 to 2022, Invesco told clients and stated in marketing materials that between 70 and 94 percent of its parent company's assets under management were "ESG integrated." However, in reality, these percentages included a substantial amount of assets that were held in passive ETFs that did not consider ESG factors in investment decisions. Furthermore, the SEC's order found that Invesco lacked any written policy defining ESG integration.
/jlne.ws/3YYrcEa
| | | | | | Strategy | | | Levered Bond ETF That's 'Broken Many Hearts' Sees Record Inflow; Bond ETFs TMF and TLT have seen large inflows in recent weeks; Some imagine scenario where Fed keeps rates at elevated levels
Vildana Hajric and Emily Graffeo - Bloomberg
A cohort of ETF traders are piling into a high-octane Treasury bet that interest rates have well and truly peaked. It's one that's burned them over the past three years.
A record $625 million flowed into the Direxion Daily 20-Year Treasury Bull 3X (ticker TMF) last week, data compiled by Bloomberg show. The fund uses derivatives to offer three times the Treasury market's performance and is favored by short-term day traders who tend to be drawn in by volatility. Investors also added more than $1.4 billion into the iShares 20+ Year Treasury Bond ETF (TLT), which followed a $1.6 billion infusion for the fund the week prior.
/jlne.ws/4fGjgwS
Over $2.8 billion bet on bitcoin topping $90,000 as it hits all-time high
MacKenzie Sigalos - CNBC
Bitcoin reached a fresh all-time high near $81,000 and futures premiums soared, in a clear sign that investors believe the record-run in the world's largest cryptocurrency is poised for even more gains on the back of U.S. elections that saw a swell of pro-crypto candidates win office.
Open interest in bitcoin's price surpassing $90,000 rose to more than $2.8 billion on the popular Deribit derivatives exchange, one of a few crypto native platforms that offers futures trading. Deribit encompasses most of the offshore options market.
/jlne.ws/3CjXiBc
Why Bitcoin's Record Price Rally May Be Choked Between $90K and $100K?; As bitcoin's ongoing price surge gives off an aura of invincibility, one force threatens to slow the ascent above $90,000.
Omkar Godbole - Coindesk
As bitcoin's (BTC) ongoing price surge gives off an aura of invincibility, one force threatens to slow the ascent above $90,000, potentially keeping the cryptocurrency rangebound above the said price level.
The force is of market makers or dealers - entities responsible for providing liquidity to the order book, profiting from the bid-ask spread while constantly striving to maintain a market-neutral exposure.
/jlne.ws/3UNTxKG
| | | | | | Miscellaneous | | | Is Chicago's Don Wilson the smartest man in trading? From cleaning up after Lehman Brothers to early bets on Bitcoin, DRW has become an industry colossus
Costas Mourselas - Financial Times
As Lehman Brothers hurtled towards bankruptcy in September 2008, the executives at the world's largest derivatives exchange found themselves in a race against time: find a new home for the failed bank's trading book or face more cascading chaos. In an early harbinger of a new era for markets, the winner of the bidding war for Lehman's bets on currencies, agricultural commodities and interest rates was not one of Wall Street's big banks, but a secretive Chicago trading firm called DRW whose founder exuded a quiet but unshakeable confidence. "Call me any time, any day or night, I will give you a price on whatever portfolio you want," Don Wilson told a senior CME executive multiple times ahead of the crisis.
/jlne.ws/4hBlob3
OCC Stories: Tricia Perl on the Power of Positive Leadership
OCC
Tricia Perl is part of the Investor Education team where she supports OCC through event planning and management. In her OCC story, she recalls how multiple senior leaders encouraged and empowered her growth and positively impacted her career.
/jlne.ws/3YK0JJd
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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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