| August 11, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | The Short-Volatility Trade Is Back With ETFs Sucking In Billions
Lu Wang - Bloomberg
All of a sudden, the short-volatility trade is back on Wall Street as billions of dollars pour into options-selling ETFs like never before.
With this year's stock rally defying recession warnings and aggressive Federal Reserve tightening, investors have been paying up for defensive strategies that offer income along the way. That's endowed an exotic corner of the exchange-traded fund universe with a record $57 billion of assets.
/jlne.ws/440bV4U
Soft commodities: orange juice squeezed by extreme weather
Financial Times
Britain's summer may be conforming to the stereotype, but elsewhere in the world climates are growing more extreme. A "heat dome" in southern Europe led to wildfires and droughts. Record temperatures are threatening global crop yields, sparking fears of food shortages. Orange juice is one example that is part of a larger trend. Hurricanes and tree disease in the sunshine state of Florida pushed juice prices to record highs this week.
Commodities can be a daunting prospect for new investors. Agricultural markets range from cooking oils to live pigs. These products are typically known as soft commodities. Trading mostly takes place on futures and options exchanges.
/jlne.ws/3s3bl9f
Index-Tracking ETFs Were All the Rage, Until Now
Jack Pitcher - WSJ
The titans of the ETF industry are facing competition in the battle for new money.
BlackRock, Vanguard Group and State Street have long had a chokehold on the market for exchange-traded funds, largely through the passive index-tracking funds that helped make ETF investing popular.
/jlne.ws/3OAuRl0
Investors brace for turbulence as Fed balance sheet shrinks by $1tn
Kate Duguid and Nicholas Megaw - Financial Times
The Federal Reserve's drive to shrink its swollen balance sheet is poised to hit $1tn this month, a significant milestone in the US central bank's attempt to reverse years of easy pandemic-era monetary policy as investors warn further reductions threaten to shake financial markets.
The US central bank bought trillions of dollars of government bonds and mortgage-backed securities to help stabilise the financial system during the early stages of the Covid-19 pandemic, but last spring started letting its holdings mature without replacing them.
/jlne.ws/3QwIvZb
China Hedge Funds Shakeup Has Thousands of Small Firms Facing Closure
Bloomberg
China's 6 trillion yuan ($832 billion) hedge fund industry is bracing for a historic shakeup that will likely cause thousands of smaller managers to shut and impose stricter regulations on larger peers that have become a growing force in local markets.
Draft rules set to take effect as soon as September will impose a 10 million yuan asset minimum on Chinese hedge funds, a threshold that is expected to force the liquidation of more than a third of the existing products tracked by Shanghai Suntime Information Technology Co. The rules will also cap leverage levels and the size of investments hedge funds can make in single securities.
/jlne.ws/3QB6XZ9
Bitcoin 'Holds Precariously' as Cryptos Slip
Jack Denton - Barron's
Bitcoin and other cryptocurrencies edged lower Friday, with digital assets continuing a pattern of stagnant trading that seems to be unnerving market participants. Even optimism about a major catalyst may be fading.
/jlne.ws/3QzAWAM
Hedge Fund Alum George Noble Shutters New ETF After 59% Plunge
Katie Greifeld and Vildana Hajric - Bloomberg
Hedge-fund veteran George Noble's foray into the exchange-traded fund industry has come to a quick, and painful, end. The Noble Absolute Return ETF (ticker NOPE), which took long and short equity positions and which has dropped 59% since its September debut, is set to liquidate, according to a Wednesday announcement. Its plunge has happened even as the S&P 500 rose 23% over that stretch and the Nasdaq 100 jumped some 36%.
/jlne.ws/447GaXH
| | | | | | Exchanges | | | HKEX eyes options contracts on MSCI A-shares index
Jiefei Liu - Risk.net (Subscription)
The Hong Kong Exchange is looking to launch options on the MSCI China A50 index, in a move that could round out its derivatives offering on the index and help boost its warrants product.
"The market would certainly like to see a vega product or options," Kevin Rideout, co-head of sales and marketing at HKEX, tells Risk.net. "We've heard that and we will continue to discuss that with our partners in China and with our regulators."
/jlne.ws/440G3NH
Robinhood May Be Beating Coinbase in Crypto. You'd Never Know From the Stocks.
Jack Denton - Barron's
Broker Robinhood Markets may be beating crypto-focused rival Coinbase Global at its own game, attracting retail traders during a tough time for digital assets, but you would never guess that from the stock market.
Signs point to Robinhood (ticker: HOOD)âa retail investor-focused broker with offerings across stocks, options, and cryptoâcontinuing to take market share from Coinbase (COIN), analyst Dan Dolev at Mizuho Securities wrote in a Friday research note. Mizuho rates Coinbase at Underperform with a target of $27 for the price. The stock closed at $83.39 on Thursday.
/jlne.ws/3KEdD5c
| | | | | | Regulation & Enforcement | | | U.S. Securities and Exchanges Commission (SEC) Opens Potential Bitcoin Spot ETFs to Public Opinion
Mehron Rokhy - The Daily Hodl
The U.S. Securities and Exchange Commission (SEC) is opening up the potential creation of ARK Invest's spot market Bitcoin (BTC) exchange-traded funds (ETFs) to public opinion.
In a new document, the regulatory agency is asking the public to submit their "written data, views, and arguments" on a proposed rule change that would allow the Chicago Board Options Exchange (CBOE) to list and trade shares of the ARK 21 Shares Bitcoin ETF.
/jlne.ws/3s7f4mh
SEC Rebuked for Failing to Explain Why It Declined to Regulate a Financial Product
Jones Day - JDSupra
The SEC's loss highlights a bigger problem with legislation that calls for sharing jurisdiction with the CFTC over financial products.
On July 28, 2023, a three-judge panel of the United States Court of Appeals for the District of Columbia granted a petition from a registered futures exchange challenging a 2020 Securities and Exchange Commission ("SEC") order treating SPIKES index futures ("SPIKES") as futures rather than as security futures ("Order"). The court vacated the Order on Administrative Procedure Act grounds, concluding that the SEC did not adequately explain why SPIKES must be regulated as futures, rather than as security futures, to promote competition with VIX futures. VIX futures are listed on the petitioner's exchange. The court provided a three-month grace period for market participants to close out their existing SPIKES before the vacatur takes effect.
/jlne.ws/3Yz4lxe
CFTC Commissioner Kristin Johnson Announces Tamika Bent as Chief Counsel
CFTC
CFTC Commissioner Kristin N. Johnson today announced that Tamika Bent has joined her executive staff as Chief Counsel.
"Tamika is a seasoned derivatives lawyer with more than 15 years of experience, including many years as a senior attorney in private practice, as in-house counsel, and as an academic," said Commissioner Johnson. "She has significant expertise in the derivatives markets and extensive knowledge about the implementation of the Dodd-Frank Act financial reforms."
/jlne.ws/3QFMBhL
| | | | | | Technology | | | dxFeed Launches Cboe EDGX Summary Depth Market Data Feed
Press Release
dxFeed, a leading market data solutions and index management provider for the global financial industry, both traditional and crypto, expanded its offering with the Cboe EDGX Summary Depth market data feed. This offering provides traders, brokerage firms, and information portals with comprehensive access to real-time market data from Cboe Global Markets' EDGX Equities Exchange.
/jlne.ws/45gfUvg
| | | | | | Strategy | | | This type of ETF is designed to hedge against volatility and help investors navigate a stormy stock market
Isabel Wang - MarketWatch
This week's stock-market volatility is the latest reminder that it is time to revisit risks and play defense in your investment portfolio. The CBOE Volatility Index VX00, -1.35%, known as Wall Street's fear gauge, rose as high as 18.14 on Tuesday, its highest level in over two months, according to FactSet data.
Investors in exchange-traded funds who are looking for alternative income solutions while avoiding market volatility in the rising interest-rate environment may want to consider covered-call ETFs as part of their defensive portfolio, said Rohan Reddy, director of research at Global X ETFs.
/jlne.ws/47wRv6r
Market Momentum Shifting
Cboe (Video)
In #Vol411, Dan Deming @Djd551 covers the #markets realizing an increase in intraday volatility, slight flattening in the $VIX futures term structure and the most active VIX #options as we head into Aug expiration week.
/jlne.ws/3DVBjhH
| | | | | | Events | | | Futures & Options Expo
FIA
Whether you're a trader chasing the latest data and trends affecting the markets or a back office manager seeking ways to increase operational efficiency or a business strategist looking for what's next, you'll find your answers at Expo. From sessions featuring exchange leaders, industry experts and key regulators to the exhibit hall that brings opportunities and solutions to the forefront, you'll get everything you need at Expo.
Join us on 2-3 October back at the Sheraton Grand Chicago Riverwalk for Expo 2023. Save on registration through 1 September!
/jlne.ws/441lVe5
| | | | | | Miscellaneous | | | 5 Questions About Bullish 'Resilience' Thesis of Stocks and the Economy
Matthew Fox - Markets Insider
The decline in bearish sentiment over the past year has been driven by a surprisingly resilient consumer, which has helped prop up the economy to avoid a recession.
But as sentiment towards the economy shifts from bearish to bullish and a potential soft-landing-no-recession scenario, there are lingering questions as to whether the resilience of the all-important consumer can continue.
/jlne.ws/45mpFYT
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