| February 02, 2022 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Payments to U.S. Brokers Surged Amid Meme-Stock and Options Boom; Earnings from selling their customers' order flow to electronic trading firms rose 33% last year
Alexander Osipovich - WSJ
Brokerages serving individual investors received a windfall last year for selling their customers' order flow to electronic trading firms, even as the practice faced increasing scrutiny from regulators. The dozen largest U.S. brokerages earned a combined $3.8 billion for selling their customers' stock and options orders last year, up 33% from 2020, according to new data compiled by Bloomberg Intelligence and released Tuesday.
/jlne.ws/3IU1OEE
Has the Fed 'put' been put to bed? Don't count on the central bank intervening over market volatility
Liz Ann Sonders - FT
Don't fight the Fed. The saying was popularised by the late Marty Zweig, this author's first boss and mentor on Wall Street in the 1980s and 1990s. Zweig also coined the phrase: "Don't fight the tape".
/jlne.ws/3gjE40k
Derivatives Market Stalking Libor Turns Heads With Volume Surge
Edward Bolingbroke - Bloomberg
The effort to eradicate U.S. dollar Libor is showing results in the derivatives market, where trading volume in options on the main successor rate surged to a record Tuesday.
According to CME Group Inc., which lists the derivatives, 89,700 options on three-month futures referencing the Secured Overnight Financing Rate changed hands Feb. 1. While that still pales in comparison to CME's options on Libor-settled eurodollar futures, it was more than half the volume for the month of January of about 163,000. The momentum ebbed Wednesday, with volume of about 14,000 at around noon in New York.
/jlne.ws/3J2ERiJ
As Fed sets stage for March rate hike, stock-market investors face 'perilous' backdrop of higher volatility
Vivien Lou Chen - MarketWatch
Investors, particularly those reliant on computer-generated decisions to buy or sell, face a treacherous backdrop of volatility driven by the Federal Reserve, following a brutal month of stock trading.
January's violent moves in equities offer a glimpse of what might still be in store: The S&P 500 and Nasdaq Composite indexes finished the month with their biggest percentage declines since March 2020, while the Dow Jones Industrial Average staged an unprecedented 1,214-point reversal in a single day last week. Meanwhile, two- and five-year Treasurys, with rates reflecting the short- to intermediate-term path of Fed policy, are off to their worst start to a new year in more than three decades, according to Dow Jones Market Data.
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Bitcoin options traders appear bearish and lack confidence in placing directional bets
Sarah Tran - FXStreet
Bitcoin options data suggest that traders are currently bearish and hesitant in betting on the leading cryptocurrency's next directional moves. Investors have not been this long-term bearish since the May 2021 crash when over 50% of BTC value was wiped out.
/jlne.ws/35LrZiz
| | | | | | Exchanges | | | Nanos by Cboe, the Smaller and Simpler Option, Planned for Launch on March 14
Cboe Global Markets, Inc.
Designed to make options trading more accessible for investors;1/100th the size of Mini-S&P 500 Index options contract; One-multiplier, cash-settled (no delivery of physical shares) and European-style (no early exercise)
Cboe Global Markets, Inc. (Cboe: CBOE), a leading provider of global market infrastructure and tradable products, today announced it plans to launch trading in Nanos by Cboe beginning Monday, March 14, subject to regulatory approvals. At a fraction of the size of a standard options contract, Nanos is a first of its kind, one-multiplier, cash-settled listed options contract that will help provide greater access to options trading. The new contracts will be listed exclusively on the Cboe Options Exchange.
/jlne.ws/3sb0A0X
***** Smaller, simpler, faster, better, easier, and just plain fun to trade!~JJL
CME Group Reports January 2022 Monthly Market Statistics
CME Group
Overall ADV increased 28% year-over-year; Equity Index ADV grew 56%, driven by record Micro E-mini Equity futures ; Record SOFR futures and options ADV and OI.
CME Group, the world's leading derivatives marketplace, today reported its January 2022 market statistics, showing average daily volume (ADV) increased 28% to 24.6 million contracts during the month. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
/jlne.ws/34eSX1v
Marex acquires Arfinco S.A.
Marex
Marex has today announced the completion of the acquisition of Arfinco S.A., one of Europe's leading agricultural brokers. Arfinco is one of the largest brokers of exchange-traded European grains, as well as covering US and Canadian markets. The company provides trade execution services for commodities futures and options across Euronext, CME CBOT and ICE markets.
/jlne.ws/3467M6L
| | | | | | Strategy | | | The three free puts: Time to put 'em to bed
Terence Gabriel - Reuters
BofA's data analytics team is saying that the January FOMC meeting and ensuing market reaction reinforced their view that the market's three free puts: the Fed put, the "buy-the-dip" put, and bond-equity diversification "are failing and pose a big threat to risk assets."
Powell dismissed the idea of a Fed put and caused the most hawkish surprise in front-end rates since 2009. With this, credit spreads suggest the Fed is far from stepping in, the BofA analysts write in a note.
/jlne.ws/3HmDRWb
S&P 500 Won't Deliver in Volatile 2022, Check Out These Stocks: BofA
Hamza Fareed Malik - Business Insider
Investors shouldn't expect the S&P 500 to deliver good gains this year, and should brace for stocks to keep whipsawing, according to Bank of America's Savita Subramanian.
"It's going to be a year where we are shocked by the volatility," she told CNBC's "Fast Money" on Tuesday.
/jlne.ws/3HnnUiD
The Fed says nothing, and the market won't listen
Ethan Wu - Financial Times
Last week's Fed meeting sent bond yields up and stocks down. The near-universal reaction was that Fed chair Jay Powell's press conference was more hawkish than expected, confirming the central bank was behind the inflation curve and means to get ahead of it. The market now thinks four to five rate increases are coming this year.
Financial conditions were tightening even before the meeting, as this chart shows (axes are arranged so that down means tighter and up means looser):
/jlne.ws/3okcXXt
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| | | Jeff Bergstrom
Editor
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