| October 16, 2023 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | On Friday, the SEC adopted two rules, one to increase transparency in the securities lending market and the other to increase transparency into short selling and amendments to CAT NMS plan for purposes of short sale data collection. The five SEC commissioners weighed in with comments on both rules, except for Commissioner Jaime Lizárraga, who only commented on the securities lending rule. ~ JJL
| | | | | | Lead Stories | | | Wall Street's 'Fear Gauge' Is Falling
Connor Smith - Barron's
After spiking last week amid concerns about the Israel-Hamas war, the market's fear gauge was sinking on Monday.
The CBOE Volatility Index, or Vix, was down 9.7% to 17.45 on Monday. That would be the Vix's largest decline since June 1. The Vix has fallen 44% in the past 12 months and 79% from its peak of 82.69 on March 16, 2020.
/jlne.ws/46QGEDd
Rise of Zero-Day Options With CBOE: All Options Considered
Bloomberg (Podcast)
In this edition of the All Options Considered podcast, BI's Chief Global Derivatives Strategist Tanvir Sandhu is joined by Mandy Xu, Head of Derivatives Market Intelligence at CBOE. They address concerns over zero-days-to-expiry options (0DTEs), the typical users and common strategies traded. Other topics include the lack of reactivity of the VIX to market declines and dispersion trading. Listen to this episode on Apple Podcasts and Spotify.
/jlne.ws/3M4yWgK
Global economy faces new age of volatility
Darren Dodd - Financial Times
Good evening.
"Maybe the most dangerous time the world has seen in decades".
Whether you agree with JPMorgan boss Jamie Dimon or not, fears of a wider conflict in the Middle East have added to concerns for a global economy already rocked by war in Europe and still feeling the aftershocks of Covid-19.
Finance ministers and officials voiced their concerns as they finished off a round of meetings with the IMF and World Bank in Morocco last week, including fears that higher energy prices would revive inflation (the IMF says a 10 per cent rise in oil prices would raise global inflation by about 0.4 percentage points). Higher costs of imported energy and higher borrowing costs also spell trouble for the euro.
/jlne.ws/3M4wtmR
China Tightens Rules on Short Selling in a Bid to Boost Stocks
Bloomberg News
China is tightening curbs on short-selling activities as authorities step up efforts to shore up a struggling stock market. The Securities Regulatory Commission said with effect from Oct. 30, hedge funds wishing to short sell a stock must hold 100% of the value of the transaction in their account while other investors need to have at least 80%. Other rules that came into force Monday restrict lending of shares by strategic investors and senior management and increase the supervision of "various arbitrage activities," it added in a statement on Saturday.
/jlne.ws/3FgX3VQ
Wall Street Strategists Sound Alarm on Worsening Profit Outlook
Farah Elbahrawy - Bloomberg
The outlook for earnings is weakening and could remain subdued, according to strategists from Morgan Stanley to JPMorgan Chase & Co.
As the reporting season kicks off, Morgan Stanley's Michael Wilson said the earnings revisions breadth â referring to the number of stocks seeing upgrades versus downgrades â for the S&P 500 has fallen sharply over the past couple of weeks.
/jlne.ws/3RWgpao
Economists See Recession Risk Waning, End Of Fed Rate Hikes: How Could Treasury ETFs React To Yields?
Markets Insider
Economists are increasingly upbeat about the U.S. economy, with a growing consensus that the country is headed for what is known as a soft landing.
In the latest quarterly survey conducted by The Wall Street Journal, 65 economists have collectively lowered their recession probability forecast for the next year. Previously standing at an average of 54% in July, this figure has now taken a significant dip to a more encouraging 48%, falling below the 50% mark for the first time since the middle of the previous year.
/jlne.ws/3rQKwp7
| | | | | | Exchanges | | | Fight to launch spot bitcoin ETF in the US passes another hurdle
Steve Johnson - Financial Times
The long-running fight to launch a US exchange traded fund investing directly in bitcoin has passed another hurdle after the regulator declined to contest a court ruling made against it.
The US Securities and Exchange Commission had until Friday to appeal against an August federal appeals court ruling that it had been wrong to reject an application from cryptocurrency house Grayscale Investments to convert its $16.7bn Bitcoin Trust (GBTC), the world largest crypto fund, into an ETF.
/jlne.ws/3Q1MXgm
Overview of the Canadian Derivatives Market
ISDA
The Canadian derivatives market was the eighth largest in the world in April 2022, as measured by foreign exchange (FX) derivatives and interest rate derivatives (IRD) transacted in the country. Canadian dollar was also the sixth most traded currency for FX derivatives and IRD trades globally.
/jlne.ws/3rRU1nR
| | | | | | Regulation & Enforcement | | | Hedge Funds Must Tell SEC Which Companies They Sell Short Under New Rules; Agency will publish aggregate information, giving investors a window into short selling activity
Paul Kiernan - The Wall Street Journal
Traders will get a broader look at which public companies are being targeted by short sellers under rules the Securities and Exchange Commission adopted Friday as part of its response to the 2021 GameStop trading frenzy. The final rules come more than two years after that drama, when thousands of investors coordinated on Reddit to buy shares of GameStop and others-and punish hedge funds that had bet against the stocks.
/jlne.ws/3QkbDCu
SEC adopts new short selling rule to bolster transparency for market participants; New rule will increase the public availability of short sale related data, supplementing short sale data that is currently offered.
Wesley Bray - The Trade
The US Securities and Exchange Commission (SEC) has adopted a new rule to bolster transparency to market participants through increased public availability of short sale related data. Named Rule 13f-2, the new rule will require institutional investment managers that meet or exceed specific thresholds to report short sale related information for equity securities through Form SHO.
/jlne.ws/46uL1UF
| | | | | | Moves | | | People: Tomczyk in, Tilly out at Cboe, Sibbern moves to Six, and more
Risk.net
Chicago Board Options Exchange (Cboe) has replaced outgoing chairman and chief executive officer Edward Tilly, who resigned after an investigation concluded he had failed to disclose personal relationships with colleagues. He had been CEO since 2013.
The exchange launched its investigation, involving the board of directors and outside legal counsel, in late August, concluding Tilly had violated Cboe's policies.
/jlne.ws/3Flt2Ei
| | | | | | Strategy | | | A New Equity Index Options Volatility Cycle?
Erik Norland - Institutional Investor
Implied volatility on S&P 500 options has been exceptionally low recently. But is that about to change?
/jlne.ws/3PQBuQI
Earnings Season
Cboe (Video)
In #Vol411, Joel Hawthorne @louiswinthrop shares today's most active #options traded in the $VIX and $SPX, lets us know notable earnings this week including $SCHW, $BAC, $UAL, $TSLA and more, reminds us of economic data to be on the lookout for this week and more.
/jlne.ws/3ZX0RoI
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