| August 11, 2021 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | ****JJL: Wayne Luthringshausen has passed away at the age of 77 from cancer. He was the retired longtime chairman and CEO of the Options Clearing Corporation (OCC). He was part of CBOE founder Joe Sullivan's team at the Chicago Board of Trade who helped develop the plans for the CBOE and was the original president and CEO of the Chicago Board Options Exchange Clearing Corporation.
I wrote about Wayne while remembering the life of Sullivan when he passed away in October of 2020. Here is that story.
Condolences to Wayne's family, friends and former colleagues. You are all in our prayers.
JLN is accepting remembrances about the life of Wayne Luthringshausen and will publish them on JohnLothianNews.com and share them here in JLN. Please email your reflections on his life to me at johnlothian@johnlothian.com.
| | | | | | Lead Stories | | | Remembering the Life and Legacy of Wayne Luthringshausen, OCC Founding President and CEO
OCC
OCC's Board of Directors, management and colleagues join the entire options community in honoring the life of Wayne Luthringshausen.
Wayne is widely regarded as one of the founders of the U.S. listed options market. Starting in 1970, shortly before the creation and launch of the Chicago Board Options Exchange Clearing Corporation, Wayne was asked to lead the project to launch the clearing corporation and was soon appointed the company's first President and CEO. Shortly thereafter, he was instrumental in restructuring the organization to create a clearinghouse for the entire listed options market, now known as the Options Clearing Corporation (OCC).
/bit.ly/3CCthZ3
Treasury Traders Bet on Renewed Selloff With Inflation Data Due
Stephen Spratt, Anchalee Worrachate and Greg Ritchie - Bloomberg
Options are signaling rising expectations of another bond selloff ahead of U.S. inflation data, as investors position for the Federal Reserve's response to price pressures.
Traders are targeting rates on five to 10-year Treasuries to lead a charge higher, rather than the longer-dated notes they bet on in February. One-month risk reversals -- a gauge of demand for bearish put options over bullish calls -- are at their highest since May for benchmark 10-year Treasury futures and their five-year equivalents. Similar premiums for short- and longer-dated contracts are lagging.
/bloom.bg/2XnI6yN
Derivative Path Opens up World of Futures and Options Beyond Wall Street
Aaron Weinman - Business Insider
However maligned derivatives are, it remains a lucrative pocket of the capital markets.
Derivatives bankers insulate clients' risks to fluctuating interest rates, commodity prices, and foreign currencies by betting on future values. Big banks have invested millions of dollars in bespoke tech offerings like Citi's digital capital markets platform, Citi Velocity, which enables users to trade FX or rates directly with the bank's derivatives teams.
/bit.ly/3CBBWuR
Manic Robinhood Era Is Forcing Quants to Rethink Popular Trades
Justina Lee - Bloomberg
Between record dip-buying and the roller coaster in Robinhood Markets Inc., the meme-stock army is running wild across Wall Street again -- making life harder for institutional pros trading popular quant strategies.
With amateurs now commanding roughly one-fifth of U.S. equity volume, a cohort of systematic players suspect the retail billions are undermining time-tested trades like short selling and low-volatility investing.
/bloom.bg/3lVhlfi
Coinbase gets boost from wild cryptocurrency trading swings
Hannah Murphy - Financial Times
Coinbase's revenue rose more than 1,000 per cent year on year in the second quarter of 2021 as cryptocurrency markets experienced some of their wildest swings, though the exchange warned of declining volatility as it lowered expectations for the year ahead.
In its second quarterly results since becoming the first big US cryptocurrency exchange to go public in April, Coinbase posted net revenue of $2.03bn, up 27 per cent from the previous quarter and 1,042 per cent year on year. Net income rose to $1.6bn from $32m in the same period last year.
/on.ft.com/3yG2KI7
| | | | | | Exchanges | | | SGX reports market statistics for July 2021
SGX
Derivative volume rises on increased risk-management activity
ETF turnover climbs to highest since March 2020
Singapore Exchange (SGX) today released its market statistics for July 2021. Declines in several Asian stock markets during the month bolstered equity risk management among institutional investors, while hedging demand fueled volumes in currency and commodity derivatives.
/bit.ly/3jLuTHl
HKEX sets half-yearly record of $1.68 billion revenues in H1, driven by mainland stock link momentum and IPO wave
Global Times
The Hong Kong Stock Exchange (HKEX) saw record revenues over the first half of this year, driven by momentum created by the Hong Kong-mainland stock link programs and the recent trend of mainland companies seeking IPOs in Hong Kong, with observers stating the result reconfirms the strength and appeal of Hong Kong as a key global financial hub.
/bit.ly/3yQV2e0
| | | | | | Regulation & Enforcement | | | FINRA Targeted Examination Letter on Option Account Opening, Supervision and Related Areas
August 2021
FINRA
FINRA is conducting a review of Firm Name practices and controls related to the opening of options accounts and related areas, including account supervision, communications and diligence. The requests below pertain to both self-directed accounts and accounts in which registered representatives recommended options but excludes both institutional and managed accounts and covers the period from January 1, 2020 to the date of this letter. To the extent your response to any request differs depending on whether accounts were self-directed or were instead ones in which registered representatives recommended options, please describe those differences in detail. To the extent records requested have previously been provided to FINRA for the specified time period, you may identify such production in lieu of providing duplicative materials. We request production of the information by no later than Date.
/bit.ly/3fUv7uz
Optiver: The Equity Options Market Structure Needs an Update
Optiver
Optiver, a leading market maker in US equity options, today released a new thought leadership series that advocates for an update of the US equity options market structure. In conjunction with the release of these papers, the firm issued the following statement:
Optiver has followed with great interest, the SEC's recent remarks on payment for order flow (PFOF) and the agency's review of the equity market as we believe that transparency and fair competition are the foundation for a healthy market. We applaud the SEC for highlighting its concerns about market structure issues, which often unfairly rewards wholesalers who route retail flow with an affiliated market making arm.
/bwnews.pr/3xDbflY
BitMEX to Pay $100 Million to Resolve Regulator's Lawsuit Over Crypto Derivatives Trading
Dave Michaels - WSJ
One of the world's largest cryptocurrency exchanges has agreed to pay $100 million to resolve a regulatory lawsuit over its failure to follow U.S. rules while allowing Americans to access its trading platform.
BitMEX, which offers leveraged trading in bitcoin and other cryptocurrency derivatives, had been sued by the Commodity Futures Trading Commission last year. Three of the company's co-founders were named as defendants in that lawsuit, while they were also separately indicted on a charge of failing to use an effective anti-money-laundering program. They have pleaded not guilty to criminal charges, and Tuesday's civil settlement doesn't resolve their cases.
/on.wsj.com/3AvwtUw
| | | | | | Miscellaneous | | | Robinhood Meme Stock Trades Aren't Democratizing of Markets
Jared Dillian - Bloomberg
Robinhood Markets Inc. has been at the forefront of the democratization of finance, which is the idea that an average Joe can play in the stock market alongside the professionals. And back in January, they did, nuking a bunch of hedge funds betting against GameStop Corp. in one of the greatest short squeezes of all time. Hollywood is full of average Joe underdog stories, but is it true in real life? Not, at least, in the markets, where retail trading of "meme stocks" is, on balance, just a massive transfer of wealth from the unsophisticated to the sophisticated.
/bloom.bg/3yKXHpW
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| | | Jeff Bergstrom
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