| September 20, 2024 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Today's lead story from Bloomberg's Isis Almeida, Katherine Doherty, Lydia Beyoud, and Alice Atkins titled "Howard Lutnick's Challenge to CME's Treasury Dominance Turns Political" with the subheadlines "Trump backer plans futures venue to compete with CME" and "Democratic Senator warns CFTC of risks to Treasury markets" is a timely reminder not to mess with the CME Group, and of the importance of politics in exchange competition. Howard Lutnick, the CEO of Cantor Fitzgerald, is challenging CME Group's dominance in the US Treasury futures market by launching a competing platform, FMX, backed by major US banks. This move, closely tied to Lutnick's political connections, particularly with Donald Trump, has sparked political concerns, particularly from Democratic Senator Dick Durbin, who warns about the risks of allowing Treasury futures to be cleared through a UK-based clearinghouse, LCH Ltd. The debate has become a focal point in an election year, raising concerns about US market stability. ~JJL
| | | | | | Lead Stories | | | The new generation is seeing FX options through a different lens; When it comes to FX options alternative liquidity is being perceived as increasingly natural, agreed expert panellists at the TradeTech FX conference in Amsterdam.
Claudia Preece - The Trade
While the trend of banks historically ruling the FX options sphere will take time to shift, there's a "very interesting opportunity" for non-bank market makers to get involved, agreed panellists at the TradeTech FX conference. Ramon Puyane, head of FX trading at IMC, explained: "There's a lot of volume going through FX options and that's partly driven through interest rate differentials, central bank diverging policy, and a lot of geopolitical unrest.
/jlne.ws/4dbkNct
Nvidia's Option Expiry May Allow Renewed Surge, Spotgamma Says; About $1 billion worth of raw gamma at $120 strike to expire; Options volatility is looking relatively cheap: Spotgamma
Michael Msika - Bloomberg
The expiration of large option positions on Friday could help Nvidia Corp. shares push higher, according to analysts at Spotgamma. The option specialists note that there is "a giant $2 billion worth of raw gamma at the 120 strike," of which about half will roll off Friday. "This suggests that OPEX could remove some resistance," the team around founder Brent Kochuba says. More than $5 trillion worth of contracts tied to US single stocks, ETFs and indexes will expire Friday.
/jlne.ws/3zyRx1u
Renaissance's shrinking hedge funds
Robin Wigglesworth - Financial Times
Renaissance Technologies' Medallion fund, which since 2005 has been closed to external investors, remains the stuff of legend. But the hedge funds it offers to outsiders have collapsed in size.
FT Alphaville understands that the Renaissance Institutional Equities Fund (RIEF) currently manages about $19.6bn, down from about $35.8bn at the start of 2020.
/jlne.ws/3Xwalq9
Wall St pulls back as investors pause after rate cut-fuelled rally
Johann M Cherian and Purvi Agarwal - Reuters
Wall Street's main indexes eased on Friday as investors held back after a rally in the previous session that was sparked by an oversized interest rate cut by the Federal Reserve.
The S&P 500 and the Dow hovered near their record highs and were on track for weekly gains of about 1%, along with the tech-heavy Nasdaq.
/jlne.ws/3MSt6iJ
| | | | | | Regulation & Enforcement | | | Hedge Fund Two Sigma Is in Settlement Talks With SEC; Firm likely to pay as much as $100 million to settle probe of trading scandal
Gregory Zuckerman - The Wall Street Journal
Hedge-fund powerhouse Two Sigma is likely to pay as much as $100 million to settle a Securities and Exchange Commission investigation into a trading scandal at the firm.
The New York firm would likely face blame for how it oversaw an ex-employee at the center of the misconduct, according to people close to the matter. The episode led to hundreds of millions of dollars in losses and gains after the researcher allegedly adjusted trading models without authorization.
/jlne.ws/4e8LUq5
US adopts first guidelines to shore up carbon credit markets; Derivatives regulator sets basic standards amid concerns about greenwashing and ineffective offsets
Stefania Palma, Aime Williams and Patrick Temple-West - Financial Times
The US derivatives watchdog has finalised the first federal guidelines for unregulated carbon offsets, as the Biden administration seeks to standardise a disorderly market in a bid to tackle climate change. The Commodity Futures Trading Commission adopted measures announced on Friday that ask exchanges to validate carbon offset derivatives, which base their prices on those of financial instruments bought by companies to offset emissions.
/jlne.ws/47AMU3R
Apple Wins Big as $250 Billion of Index Trades Hit Wall Street; Friday's quarterly rebalance to reflect S&P new capping rules; Technology seen as the only industry benefiting from the event
Lu Wang - Bloomberg
An action-packed week on Wall Street ends with a bang as index-tracking funds are set to reshuffle $250 billion of shares, just as a "triple witching" trading event hits. Equity gauges from S&P Dow Jones Indices and FTSE Russell will be revamped Friday, with this quarterly activity forecast to be the busiest in almost four years thanks to tech-driven market gyrations.
/jlne.ws/4evsV8C
Derivatives Service Bureau Data Shows Industry Ready For UK UPI Reporting - UPI Reporting In The UK Comes Into Force On 30 September 2024
Mondovisione
The Derivatives Service Bureau (DSB), the global golden source of reference data for OTC derivatives, today released data indicating industry readiness for the start of UK UPI (Unique Product Identifier) reporting on 30 September 2024 under revised UK EMIR rules. The UPI is reported to trade repositories so regulators can monitor the build-up of systemic risk across the OTC derivatives market.
/jlne.ws/3XOjkoa
SEC Reviews Proposal for New Bitcoin, Ether ETF Custodians
Kevin Helms - Bitcoin.com
The U.S. Securities and Exchange Commission (SEC) is seeking public input on a proposal by Cboe BZX Exchange to add new custodians for bitcoin and ethereum exchange-traded funds (ETFs). The plan aims to enhance security by adding Anchorage Digital Bank and Bitgo alongside Coinbase as custodians for bitcoin and ether holdings.
/jlne.ws/47Bhjiv
| | | | | | Strategy | | | S&P 500 Stalls into September Options Expiry; Gold Reaches New All-Time High
Thomas Westwater - tastylive
The upbeat mood following yesterday's Federal Reserve's interest rate cut faded today as traders took a pause to assess market conditions. Many are already claiming victory over a soft landing, and recent economic indicators such as jobless claims data show that could very well be the case. If so, it could help to lift equity markets higher in the coming weeks and months. The big risk for traders now is the upcoming presidential election. Elsewhere, the dollar strengthened on yen weakness, oil prices gave back some gains and copper prices pulled back after briefly touching a fresh two-month high.
/jlne.ws/4guHEmh
Investors should be hesitant to dive into stocks after the rate cut, with election uncertainty looming, Fundstrat's Tom Lee says
Kelly Cloonan - Markets Insider
Prominent stock market bull Tom Lee has long called for a big rally after the Federal Reserve cuts interest rates.
But after a big 50 basis point cut on Wednesday, Lee says he's feeling cautious ahead of the November election.
"This Fed cut cycle I think is setting the stage for markets to be really strong over the next one month or next three months," Lee, co-founder and head of research at Fundstrat Global Advisors, told CNBC in a Thursday interview.
/jlne.ws/3XOOhsh
Fed's Aggressive Rate Cut Sparks Stock Surge, Raises Economic Concerns
JJ Kinahan - tastylive
Stocks surged the day after Federal Reserve Chair Jerome Powell delivered a half-point cut in interest rates. The Dow Jones Industrial Average climbed 1.26%, the S&P 500 gained 1.7%, and the Nasdaq Composite soared 2.5%, with all three indices hitting record highs. The Russell 2000 also posted a strong 2% gain, fueling optimism across markets.
/jlne.ws/3MVJOOh
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| | | Jeff Bergstrom
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