| September 25, 2023 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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Navigating Uncertainty: JPX Launches New Derivatives Amid Global Challenges
In a year shadowed by the Ukraine conflict, soaring inflation, environmental and geo-political crises, Japan Exchange Group (JPX) is fortifying its offerings with new derivatives products. This strategic move coincides with the 35th anniversary of Equity Index Futures trading in Japan, spotlighting the Nikkei 225 and TOPIX indices as enduring financial tools.
This milestone anniversary underscores the resilience of JPX's flagship products, which continue to offer investors risk-hedging opportunities amid geopolitical and economic volatility.
Nikkei 225 Micro Futures: Inflation Hedge
While the Nikkei 225 soars to new decade highs, JPX's newly launched Nikkei 225 Micro Futures cater to individual investors, offering a cost-effective way to navigate inflation and market volatility. The micronized contracts provide an accessible and affordable hedge against global economic unpredictability.
Nikkei 225 Mini Options: Geopolitical Risk Management
With geopolitical tensions in mind, JPX has introduced Nikkei 225 Mini Options. These instruments open risk management strategies to a broader audience, offering adaptability in a swiftly changing global landscape.
3-month TONA Futures: Addressing Rate Uncertainty
JPX's 3-month TONA Futures assist institutions in managing liquidity during an unstable interest rate environment. As TONA emerges as a key rate benchmark, these futures serve as a strategic tool for financial adaptability. The offering completes the already robust JGB futures and vibrant JSCC IRS markets, cross margin efficiencies across the whole fixed income playbook are available through the JSCC clearing house.
Futureproofing and ESG
JPX is also preparing to implement Value-at-Risk (VAR) clearing in November 2023, offering a best-in-class margining methodology to further unleash portfolio efficiencies for market participants.
To deliver our part to global ESG concerns, JPX has launched a carbon credit market under the TSE brand, this offering will complement the already actively trading TOCOM Power market in the future. These anticipatory measures ensure JPX stays aligned with global sustainability initiatives.
These product launches, along with the upcoming VAR clearing system, cement JPX's role as a resilient, forward-thinking player in the global financial landscape and to further stride to remain your exchange of choice!
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Author: Matthias Rietig, Senior Officer of OSE Contact: Osaka Exchange / Tokyo Commodity Exchange Derivatives Business Development E-mail: ose-dmg@jpx.co.jp |
| | | | | | Lead Stories | | | Traders Get Fastracked Options Access in Volatile IPO Markets
Carly Wanna - Bloomberg
Wall Street's biggest exchanges quietly altered rules this summer, fast-tracking investor access to options trading on newly listed companies.
This month's large initial public offerings â Arm Holdings PLC; Maplebear Inc., known as Instacart; and Klaviyo, Inc. â each saw options trading two days after shares started to trade. Under old rules, the exchanges waited four sessions to allow for such trades.
/jlne.ws/464S3zs
Zero-day options now account for 50% of S&P options volumes; Carpe nulla diem
Robin Wigglesworth - Financial Times
Given their trajectory it was almost bound to happen but, according to JPMorgan, zero-day options trading volumes keep hitting record levels and have recently accounted for half of all S&P 500 index option trading.
/jlne.ws/3RzI2WK
Wall Street Exchanges Shorten Options Trading Wait Period for New Listings
Investing.com
In a significant shift in trading rules, major Wall Street exchanges have reduced the waiting period for options trading on newly listed companies from four sessions to two. This change, which took place quietly over the summer, reflects the growing importance of options trading in capital markets, with volumes having doubled since 2019.
/jlne.ws/450O6uk
The Hedge Fund Meltdown That Rescued Your Stock Portfolio; Long-Term Capital Management's collapse 25 years ago started a habit hard to break-the 'Fed put'
Justin Lahart - The Wall Street Journal
Before there was Silicon Valley Bank or Lehman Brothers or the housing meltdown, Long-Term Capital Management set the tone for every crisis that would come after it. The hedge fund, with its dream team of finance luminaries, including Nobel Prize winners, thought it had found a way to make a bundle with what seemed like hardly any risk. The banks that lent it tens of billions of dollars believed them. When the fund's strategy fell apart, Federal Reserve officials coordinated an unprecedented rescue, and cut interest rates in a bid to shore up a falling stock market. Even 25 years later, the effects are with us. If there was a time the "Fed put" was born, it was during the LTCM crisis.
/jlne.ws/3t7iciy
The Hedge Fund That Made a Killing Betting Against Lina Khan; Pentwater Capital predicted that FTC attempts to block big deals would fail
Caitlin McCabe and Ben Dummett - The Wall Street Journal
The efforts by Federal Trade Commission Chair Lina Khan to protect Main Street are inadvertently enriching some on Wall Street, generating outsize profits for Pentwater Capital Management and other large hedge funds that bet on merger deals.
/jlne.ws/3t4ABN0
Hedge funds rush to unwind bets against gilts; Short positions in UK government debt this week fell to their lowest level since at least 2006
Mary McDougall - Financial Times
Hedge funds have been rushing to unwind bets against Britain's GBP2.5tn government bond market as investors become increasingly convinced that the Bank of England is nearing the end of its rate rising campaign.
/jlne.ws/48sKyUn
Short Sellers Mount Attack on ESG Stocks Bloated From Green Hype; Blue Orca CIO says he's finding 'great shorts' across ESG; ESG seen ripe for shorting after being inundated with capital
Ishika Mookerjee and Sheryl Tian Tong Lee - Blomberg
Hedge fund managers are piling into short positions in ESG stocks as they hunt for bogus green claims and valuations inflated by record stimulus. Bloated prices can be found "all over ESG," according to Soren Aandahl, the founder and chief investment officer of Texas-based Blue Orca Capital LLC. He says he didn't set out to target ESG but, here and now, the "great shorts just happen to be in the ESG space."
/jlne.ws/3PMTdK9
Bill Ackman Doubles Down on a Bond Short That's Still Flawed
Jonathan Levin - Bloomberg
Some seven weeks ago, hedge fund investor Bill Ackman laid out his rationale for shorting long-term US bonds, and I took exception.
Since then, 30-year Treasury yields are up about 34 basis points and grazed the highest level in 12 years, and Ackman has taken to X â the platform formerly known as Twitter in which he's an investor â to double down on his earlier call. But while I've been humbled by the moves of recent weeks, I still think that his logic is flawed and that if he makes any more money on the trade, he may be right for the wrong reasons.
/jlne.ws/46tQDhP
Brace for a Surge in Oil Prices, $100 Could Be the New Normal: JPM
Zahra Tayeb - Markets Insider
Global oil prices could see a new normal around $100 a barrel thanks to a trifecta of higher interest rates, production cuts, and lack of investment in the industry, according to a top JPMorgan energy analyst.
Speaking in a Bloomberg interview, Christyan Malek warned of a volatile ride for crude costs for the foreseeable future.
"Put your seatbelts on. It's going to be a very volatile supercycle," Malek told the outlet.
/jlne.ws/3PomQQs
Wall Street Is Hoping $100 Oil Ain't What It Used to Be
David Uberti - WSJ
A string of inflationary shocks has challenged the Federal Reserve's effort to control price increases. Investors are worried the latest could be $100-a-barrel oil.
Crude's march closer to that mark has made Americans' commutes more expensive. Truckers who haul food cross-country are charging grocery stores more for diesel. Jet-fuel-reliant airlines are demanding higher fares. And manufacturers of everything from plastic toys to asphalt could face costlier ingredients.
/jlne.ws/3t7mo1F
| | | | | | Exchanges | | | Cboe Global Markets and S&P Dow Jones Indices to Launch the Cboe S&P 500 Dispersion Index on September 27
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, and S&P Dow Jones Indices (S&P DJI), the world's leading index provider, today announced plans to launch the Cboe S&P 500 Dispersion Index (DSPX) on Wednesday, September 27. Jointly developed by Cboe Labs, the company's innovation arm, and S&P DJI, this new index is the latest addition to Cboe's volatility index suite and aims to provide deeper insights into U.S. equity market volatility.
Dispersion can be used by market participants to gain visibility into potential opportunities for portfolio diversification. Specifically, dispersion strategies allow investors to model the impact of company-specific risk on a portfolio by measuring the variability of volatilities for single-name stocks relative to the volatility of the index itself.
/jlne.ws/3ZtC37J
Coinbase nears acquisition deal for FTX Europe, eyeing crypto derivatives expansion
Investing.com
Coinbase (NASDAQ:COIN), the major U.S. cryptocurrency exchange, is reportedly nearing a deal to acquire FTX Europe, as part of its strategy to expand in areas with clear cryptocurrency regulations. This move comes after the bankruptcy of FTX's parent company in the United States last year. Coinbase's interest in FTX Europe is driven by the latter's "highly profitable" derivatives business and growing customer base.
/jlne.ws/3Lwh3HK
| | | | | | Regulation & Enforcement | | | SEC says Citadel Securities broke short-sale labeling rules
Austin Weinstein - Bloomberg
Citadel Securities broke rules for labeling short sales and may have incorrectly marked millions of trade orders over a five-year span, according to the Securities and Exchange Commission. The firm, which didn't admit to or deny the allegations, agreed to pay a $7 million penalty. The SEC said that the lapses resulted from a coding error in the firm's automated system, and that Citadel Securities provided inaccurate data to the regulator over the period.
/jlne.ws/3RxEGmQ
| | | | | | Strategy | | | Crypto Traders Brace for Nearly $5B Bitcoin and Ether Options Expiry
Omkar Godbole - CoinDesk
On Friday at 08:00 UTC, a total of 1.217 million bitcoin (BTC) and ether (ETH) options contracts with a notional value of $4.8 billion will expire on leading crypto options exchange Deribit.
Roughly 10% or 117,000 contracts out of the total are tied to bitcoin, while the rest are ether options. On Deribit, one options contract represents one BTC and one ETH. Options are derivatives that give the purchaser the right to buy or sell the underlying at a pre-determined price at a later date.
These derivatives contracts will be valuable or worthless depending on how the top two cryptocurrencies trade by the end of the week.
/jlne.ws/3Py2Wm7
Here's how you can use the VIX to beat the stock market
Mark Hulbert - MarketWatch
The U.S. stock market is struggling, but you may still want to give the bulls the benefit of the doubt.
That's the conclusion I draw from a landmark study into using volatility as a market-timing indicator. Entitled "Volatility-Managed Portfolios," it was conducted by finance professors Alan Moreira of the University of Rochester and Tyler Muir of UCLA. The study challenged conventional wisdom's view of volatility, finding that you can beat the market over the long term by having higher equity exposure when market volatility is lower.
/jlne.ws/48EW5jQ
Consumer Sentiment Coming Friday
Cboe (Video)
In #Vol411, Joel Hawthorne @louiswinthrop lets us know economic data to be on the lookout for this week - like consumer confidence and new home sales on Tues. 9/26, durable orders and crude oil inventories on Weds. 9/27, weekly jobless claims and pending home sales data on Thurs. 9/28 and more.
/jlne.ws/48wHabp
| | | | | | Miscellaneous | | | America's Billionaires Love Japanese Stocks. Why Don't the Japanese? Japan's government wants cash-hoarding households to invest more
Akane Otani - The Wall Street Journal
Japan's government is on a mission to make buying stocks hot again. Many of America's biggest investors are bullish on Japan. Warren Buffett shared that he increased his investments in Japanese companies during an April visit to the country. Ken Griffin is preparing to reopen an office in Tokyo for his hedge fund, Citadel, and investment banks Goldman Sachs and Morgan Stanley have issued optimistic outlooks for Japan's stock market.
/jlne.ws/3ERVMUV
Corzine Plans to Shut Hedge Fund and Return Capital to Investors; He says he plans to focus on philanthropy, teaching, family; MF Global failure in 2011 was among largest US bankruptcies
Miles Weiss - Bloomberg
Jon Corzine will shutter the hedge fund he started after the collapse of MF Global Holdings, marking the end of his bid to rebound from one of the largest bankruptcies in US history. JDC-JSC, Corzine's New York-based money-management firm, terminated its registration with the Securities and Exchange Commission as of Sept. 22, according to the agency's website. The firm's lone investment vehicle, the JDC-JSC Opportunity Master Fund, had gross assets of about $510 million, including leverage, at the end of last year.
/jlne.ws/3PyZ58J
****** It is about time Mr. Corzine drifted into retirement.~JJL
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