| September 12, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Cboe Global Markets announced that it will launch the new Cboe S&P 500 Variance Futures on September 23, 2024. These futures offer a streamlined way to trade and hedge U.S. equity market volatility by allowing participants to manage the spread between implied and realized volatility. The launch comes at a critical time as markets face uncertainty due to geopolitical tensions, monetary shifts, and the U.S. election. The futures are designed to appeal to a broad range of investors, including volatility traders, institutional investors, and hedge funds. Cboe also plans to introduce options on VIX Futures in October. ~JJL
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Lake Geneva Yacht Club and Chicago's Futures Markets: A Shared Legacy
JohnLothianNews.com
The intertwined history of the Lake Geneva Yacht Club, the Chicago Board of Trade, and the City of Chicago traces back to the 19th century, with key figures like Julian Sidney Rumsey and Nathaniel Kellogg Fairbank establishing deep connections through sailing and business.
When I mentioned the news about my cousin Tom being hired as the new manager of the Lake Geneva Yacht Club ("LGYC") yesterday in JLN, I mentioned Thomas "T" Freytag, a co-founder of Geneva Trading, as a contemporary reference to give it relevance to the normal newsletter fodder. However, the history of Chicago's futures markets and the LGYC have a common founder in Julian Sidney Rumsey.
In fact, the City of Chicago, the Chicago Board of Trade (CBOT), and the LGYC share an intertwined history dating back to the mid-19th century, with the Sheridan Trophy serving as a symbolic link between these institutions.
Read more »
| | | | | | Lead Stories | | | The VIX is calm. But another volatility gauge is a red flag, says Societe Generale.
Jamie Chisholm - MarketWatch
The choppiness goes on, frazzling traders' nerves. Wednesday saw another 1% pullback for the S&P 500 index in the morning, only for the equity benchmark to rally strongly into the close for a 1.1% gain.
Yet the CBOE VIX index, an option-derived measure of expected S&P 500 volatility that's known as Wall Street's fear gauge, was relatively sanguine. It's currently below 18, lower than its long-run average of about 19.5.
/jlne.ws/3TqNFGI
What the 'Fear Gauge' Is Telling Us About the Stock Market
Steve Sosnick - Barron's
The Cboe Volatility Index is one of the most important metrics for interpreting Mr. Market's mood. Increased correlation among index components is a key reason why he has recently become quite jittery.
/jlne.ws/3To1B4c
JPMorgan, Nomura Warn Leveraged ETFs Amplifying Stock Gyrations; Such funds may be exerting a bigger influence on broad market; Rebalancing flows have grown bigger as volatility returns
Denitsa Tsekova and Lu Wang - Bloomberg
After weeks of stomach-churning volatility, Wall Street pundits are blaming a burgeoning leveraged investment strategy for exacerbating stock-market moves, particularly right before the end of the trading day.
Funds that use derivatives to offer juiced-up or inverse returns of individual companies and indexes sold about $15 billion of stocks on Sept. 3 - when the Nasdaq 100 plunged 3% - according to JPMorgan Chase & Co. That was the cohort's biggest selling wave from rebalancing since the onset of the pandemic.
/jlne.ws/3ZhrkPD
| | | | | | Exchanges | | | FXPA Publishes White Paper Promoting Fair & Orderly FX Derivative Markets
FXPA
The Foreign Exchange Professionals Association (FXPA) has published a white paper entitled Regulated FX Derivatives Trading Venues: Promoting Fair and Orderly Markets. The paper is the outcome of several months' work by FXPA's Trading Platforms Working Group and explores the potential risks posed by the current, uneven playing field that exists between regulated and unregulated trading venues operating in over-the-counter FX derivatives markets. The paper focuses on the varying structures of trading venues, the potential impacts on market integrity, and the benefits of regulatory oversight for these venues. "While unregulated FX derivatives trading venues may, in some cases, offer higher leverage, lower deposit requirements to trade, lower fees for customers and less onerous onboarding requirements, when compared to regulated FX derivatives trading venues, those benefits may come at the expense of reduced customer protections resulting from lack of comprehensive regulatory oversight," the report states.
/jlne.ws/3zh9v8D
EBS Market on CME Globex Notice: September 12, 2024
CME Group
Central Post Trade (CPT) TOF and FIX will be decommissioned on December 31. All EBS clients must migrate to CME STP solutions before the decommission. Both CME STP and CME STP FIX currently support EBS trades as well as BrokerTec on CME Globex, BrokerTec Stream, and CME Group futures and options.
/jlne.ws/47lGSE1
| | | | | | Regulation & Enforcement | | | Court sets trial date of four defendants for securities fraud via illegal short selling
SEC
The District Court today fixed the trial of Mr Li King Hong, Ms Chan Ngai See, Mr Lam Hin Fai and Ms Betty Hui Pui Yan for 8 to 17 December 2025 after they pleaded not guilty to offence of fraud (Note 1). The four defendants pleaded guilty to the alternative offence of illegal short selling (Note 2). It is alleged that between 23 June 2020 and 9 September 2020, the four defendants deceived an account executive at CVP Securities Limited (CVP) on several occasions by falsely claiming ownership of certain shares with an intent to defraud and induce CVP to place selling orders for those shares. This resulted in benefit of $3.3 million to the four defendants or in prejudice or a substantial risk of prejudice to CVP (Note 3).
/jlne.ws/4gmqw1W
SEC Settles With Trading App eToro on Unregistered Broker Charges As Exchange Ceases Most Crypto Trading
Daniell Marlow - The Daily Hodl
The top U.S. securities regulator has reached a settlement with the trading app eToro severely limiting the platform's crypto trading abilities.
According to the U.S. Securities and Exchange Commission (SEC), eToro has agreed to pay $1.5 million in penalties and limit its crypto trading options to Bitcoin (BTC), Bitcoin Cash (BCH) and Ethereum (ETH) without admitting to or denying charges of operating as an unregistered crypto broker and clearing agency since 2020.
/jlne.ws/3z6abOl
| | | | | | Strategy | | | Selloff in stocks was 'overdone' after CPI, but don't rule out more volatility, strategist says
Joy Wiltermuth - MarketWatch
Expect more upheaval in stocks after Wednesday's "overdone" selloff and recovery, said Kent Engelke, chief economic strategist at Capitol Securities Management.
Engelke said waning liquidity in both stocks and bonds, as well as big market reactions over the past few years to incoming economic data, were likely culprits, without an easy fix.
/jlne.ws/4gnzFqT
YieldMax's New ETF Uses SMCI Option Income Strategy
Nick Wodeshick - ETF Trends
On Thursday, YieldMax debuted the YieldMax SMCI Option Income Strategy ETF (SMCY).
As the latest YieldMax option income ETF, SMCY seeks to provide current income. Additionally, the fund also aims to provide some exposure to the share price of Super Micro Computer Inc. (SMCI). The fund has a net expense ratio of 0.99% and is actively managed.
To achieve its investment goals, SMCY utilizes a synthetic covered call strategy. Through the use of a covered call strategy, the fund could simultaneously provide both yield and indirect exposure to SMCI's share price returns.
/jlne.ws/3MKXX0s
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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
Publisher | | | Sarah Rudolph
Editor-in-Chief
| | | Jeff Bergstrom
Editor
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