| November 15, 2022 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Walt Lukken's interview at FIA Expo with Cboe Chairman and CEO Ed Tilly turned out to be a video, as Tilly was unable to be there in person. Lukken asked Tilly about how Cboe's markets were faring amid all the volatility, inflation, and high interest rates. Tilly said that what is consistent is uncertainty, but what has changed is the geography and regions. Regarding retail trading as a trend, Tilly said, "The Gamestop craze is behind us" and "the derivatives trend is with the more educated investor." Retail traders are engaging in education, he said. Another big recent trend is event markets and binary options, and Tilly said he thought there was nothing wrong with those markets for some investors: "Appropriateness of investors is at the heart of investing," he said. When it comes to crypto, as well, he said what was important was making sure contracts were suitable and appropriate. Cboe has been growing in Europe, he said. It started originally with equities and then clearing, and in September of 2021 Cboe launched the Cboe Europe Derivatives Exchange ("CEDX"), its first options exchange in Europe. When it comes to "growth opportunities," Tilly said "Every glass is full rather than empty" in the markets. The time horizon for investors is different now, he said - short-dated options in particular have a purpose.~SR
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FIA 50 Years of Financial Futures Celebration
JohnLothianNews.com
2022 is the 50th anniversary of financial futures and the birth of the modern exchange traded derivatives markets. In this video, John Lothian News discusses the birth of the financial futures industry in 1972 and how it has evolved into a market that traded $53.9 billion contracts this year.
Watch the video »
| | | | | | Lead Stories | | | Quants Forced to Shed $225 Billion of Short Bets in Big Squeeze
Lu Wang and Denitsa Tsekova - Bloomberg
Fast-money quants were effectively forced to buy an estimated $225 billion of stocks and bonds over just two trading sessions, as one of Wall Street's hottest strategies in the great 2022 bear market shows signs of cracking.
As cooling consumer price data sparked a cross-asset rally, trend-following traders were compelled to unwind short positions totaling about $150 billion in equities and $75 billion in fixed income on Thursday and Friday, JPMorgan Chase & Co. strategist Nikolaos Panigirtzoglou estimated.
/jlne.ws/3Eauo3R
Funds downvote CBOT wheat and corn despite thin global supplies
Karen Braun - Reuters
Chicago grain futures have either reached or flirted with all-time highs this year amid tight world stocks and disruptions to Ukrainian exports, but that narrative has lost steam this month.
As of Nov. 8, money managers' net short position in CBOT wheat futures and options rose nearly 6,000 contracts to 42,902 contracts, their most bearish stance since June 2020, according to data published Monday afternoon by the U.S. Commodity Futures Trading Commission.
/jlne.ws/3EAeyRB
The Fed will only stop tightening if there's a recession, and investors are stretching if they're hoping for a pivot, Citi's US investment strategist warns
Jennifer Sor - Business Insider
The Fed is only going to stop tightening if the US tips into a recession, and investors are stretching if they're hoping for a pivot, according to Citi's US investment strategist Kristen Bitterly.
"We have to ask the question: what would change the Fed's trajectory? Well, as long as the employment numbers remain strong, they are not going to change path from here," Bitterly said in an interview with Bloomberg on Monday. "This idea of a pivot or even a pause before we enter into a recession is really kind of a far stretch."
/jlne.ws/3ty3rCj
Wall Street rises on inflation data but geopolitical tensions cut gains
Lewis Krauskopf, Amruta Khandekar and Ankika Biswas - Reuters
The S&P 500 and Nasdaq were higher on Tuesday, but gains were cut after a report that Russian missiles crossed into Poland and killed two people, somewhat undermining hopes that cooling inflation would lead to a pullback in rate hikes by the U.S. Federal Reserve.
Two people were killed in an explosion in Przewodow, a village in eastern Poland near the border with Ukraine, firefighters told Reuters.
/jlne.ws/3EaQGT1
Oil investors set for supply fall to offset weak economy
John Kemp - Reuters
Investors expect a planned U.S. and EU price cap to disrupt Russia's crude exports by enough to offset the impact of an economic slowdown on oil consumption, boosting prices.
Hedge funds and other money managers bought the equivalent of 41 million barrels in the six most important petroleum futures and options contracts in the week ending on Nov. 8.
/jlne.ws/3V3yDoR
| | | | | | Exchanges | | | LME stays Russian metal ban with views starkly split
Andy Home - Reuters
The London Metal Exchange (LME) has announced it will continue accepting Russian metal as good delivery against its industrial metal contracts, for now at least.
It made the decision knowing "it is likely that additional tonnages of Russian metal will - in time, if not immediately - be warranted in the LME physical network."
/jlne.ws/3GhMJP0
MIAX Exchange Group - Holiday Schedule
Press Release
Please be advised the MIAX Options Exchange, MIAX Pearl Options Exchange, MIAX Emerald Options Exchange and MIAX Pearl Equities Exchange will be closed on Thursday, November 24, 2022
On Friday, November 25, 2022, the MIAX Exchanges will have an abbreviated trading session. All Option Classes and Equity Issues will close 3 hours early.
/jlne.ws/3Oo9DGN
| | | | | | Regulation & Enforcement | | | An SEC Rule May Cost FTX Crypto Customers Billions
Hal Scott and John Gulliver - WSJ
After the crypto exchange FTX filed for bankruptcy last week, Securities and Exchange Commission Chairman Gary Gensler announced that he will crack down on the "wild west" of crypto markets. Meanwhile, Reuters reported that between $1 billion and $2 billion in customer funds held by FTX had disappeared. If U.S. customers lose their shirts, the SEC will bear significant responsibility.
/jlne.ws/3Ez1hZm
SEC Levied Record Enforcement Penalties for Misconduct in 2022
Lydia Beyoud - Bloomberg
The US Securities and Exchange Commission's enforcement penalties surged to a record in the government's fiscal 2022, the agency said on Tuesday.
The SEC's enforcement actions resulted in $6.4 billion in fines and money ordered to be reimbursed to investors, up from just $3.9 billion in 2021, according to an annual report.
/jlne.ws/3X7feF0
Health of FTX's US Derivatives Arm Owed to Oversight, Says CFTC Chief Behnam
Nick Baker, Jesse Hamilton - CoinDesk
FTX's U.S. derivatives-trading subsidiary - the former LedgerX - remains standing while other parts of Sam Bankman-Fried's empire crumble, and that could be credited to its government oversight, said Rostin Behnam, chairman of the U.S. Commodity Futures Trading Commission (CFTC). That part of the company, known now as FTX US Derivatives, has not been pulled into the bankruptcy filings of FTX's U.S. operations. "The reason is because - I believe pretty strongly - that they are very clearly regulated by the CFTC," Behnam said Monday at a Futures Industry Association (FIA) event in Chicago. "It's a testament to CFTC regulations and CFTC staff and the benefit of having clear, transparent rules."
/jlne.ws/3tx9tTO
Global investigators pounce as FTX collapse leaves potentially 1mn creditors
Joshua Oliver - Financial Times
The collapse of Sam Bankman-Fried's crypto empire has sparked a vast global investigation, with dozens of authorities circling the company as lawyers warn there could be 1mn creditors in its bankruptcy proceeding.
FTX said in court filings it was in contact with US federal prosecutors, the Securities and Exchange Commission, the Commodity Futures Trading Commission and "dozens of federal, state and international regulatory agencies" in the three days since the cryptocurrency exchange and more than 100 affiliated companies filed for Chapter 11 bankruptcy in Delaware.
/jlne.ws/3ExZgMZ
Deutsche Bank to Search Former Exec's Emails in Derivatives Spat
Jonathan Browning - Bloomberg
Deutsche Bank AG, fighting a EUR500 million ($520 million) lawsuit over the potential misselling of risky foreign exchange derivatives, agreed to search the emails and records belonging to a former executive, Louise Kitchen.
The German lender will search Kitchen's records as it prepares for a London trial with a Spanish hotel operator, according to a filing Monday. The agreement came after the operator queried why she hadn't been included in a list of what it characterized as key individuals for disclosure purposes.
/jlne.ws/3X7dwU6
| | | | | | Miscellaneous | | | What's in among stock-market traders â and what's out â according to Charles Schwab survey
Christine Idzelis - MarketWatch
Traders have soured on the outlook for the U.S. stock market, leaving meme stocks out and value stocks in, according to Charles Schwab's latest quarterly survey of trader sentiment.
The mood is bearish, said Barry Metzger, head of trading and education at Charles Schwab, in a media briefing ahead of the release of the survey's results. Bearish sentiment, which was evident in the first quarter, deepened in the fourth quarter this year, the survey found.
/jlne.ws/3EwzGIm
Expo 2022 - The role of innovation and intermediation
FIA
Welcome to FIA Expo, and welcome back to the Sheraton. For us old-timers, this is FIA's first event at this location since 1999.
To put that in perspective, in 1999:
ICE was only an idea in Jeff Sprecher's head
Don Wilson was still a floor trader
Gary Gensler was at the US Treasury and supported de-regulating the derivatives markets; and
The number one issue for our industry was...wait for it...Y2K
Boy, have times changed. This year also marks the 50th anniversary of the birth of financial futures, and the start of our modern derivatives markets. We will commemorate this anniversary with a video presentation and some special guests during our Taste of Expo in the Exhibit Hall later today. Thanks to John Lothian for helping produce this video. I hope you can join us this afternoon to celebrate this milestone.
/jlne.ws/3OaqGM3
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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
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| | | Jeff Bergstrom
Editor
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