| June 28, 2021 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | The Innovator's Dilemma Meets Fertik's Law
John Lothian - JLN
NEW START-UP EXCHANGES SHOULD HELP, NOT HURT CME GROUP
The late author and Harvard professor Clayton Christensen coined the phrase "the innovator's dilemma" in his popular book by the same name. In the book he describes why some well-run companies lose their dominant market position through the entrance of a competitor with a disruptive technology.
He uses as an example the personal computer and its smaller, slower disc drives, which disrupted "big iron" mainframe computers by offering a cheaper solution that was good enough.
The CME Group's dominant market position in the U.S. futures market, which some classify as a monopoly, has spawned two separate challengers built on the model of the innovator's dilemma. The Small Exchange and the Fair Exchange are seeking to disrupt the CME's dominant position, or at least carve out a place of their own in the U.S. futures market landscape.
It is the latter that is really the truth. The CME Group will most likely benefit from these new exchanges while not sacrificing their higher margins.
For the rest of the commentary, click HERE.
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The Spread - June 25, 2021
JohnLothianNews.com
No summer doldrums this year; Volatility and volume surge; More (single stock) options to choose from; John Lothian weighs in with his take; and Jermal Chandler explains extrinsic value in this week's options "Term of the Week."
Watch the video »
| | | | | | Lead Stories | | | The Stock Market Hasn't Been This Placid in Years; S&P 500 hasn't had a 5% correction based on closing prices since October, but there is turmoil in the depths
James Mackintosh - WSJ
The U.S. stock market is as calm as can be on the surface, while churning underneath more than it has in decades. The S&P 500 is so quiet it is almost disconcerting. The index hasn't had a 5% correction based on closing prices since the end of October; no wonder the new day traders who started buying shares in lockdown think the market only goes up. The last time the S&P was this serene for so long was in 2017, a period of calm that ended with the volatility crash early in 2018âalthough back then it was even quieter for much longer.
/on.wsj.com/3x18wDa
GameStop Stock Heats Up After Another Analyst Puts It on Ice
Connor Smith - Barron's
GameStop began the year with nine analysts covering the stock. Now only three remain with ratings after an analyst suspended his target, pointing his finger at social media and other nonfundamental factors that are moving the stock.
Baird analyst Colin Sebastian discussed the reasoning behind his decision in a note on Monday. He told clients that he is putting his Neutral rating and $25 price target on hold until management details its new business strategy so analysts can better forecast free cash-flow generation and assess intrinsic value.
/bit.ly/2SwHuEK
Persistent Advance in Stocks and Commodities Shows Investor Confidence
Amrith Ramkumar and Hardika Singh - WSJ
Stocks and commodities are surging together in a way few on Wall Street have ever seen, a sign that demand for riskier investments remains robust.
The S&P 500 and S&P GSCI gauge of commodities enter the last few days of the second quarter up about 8% and 13% for the period, respectively. This would mark the first time that both indexes climbed at least 5% in five consecutive quarters, according to a Dow Jones Market Data analysis of figures going back 50 years.
/on.wsj.com/35ZRzNv
Falling U.S. crude stocks draw hedge fund attention: Kemp
John Kemp - Reuters
Hedge funds were big buyers of petroleum for the fourth week running, boosting their bullish position to its highest for more than 30 months, as U.S. shale firms declined to respond to rising prices.
Hedge funds and other money managers purchased the equivalent of 51 million barrels in the six most important petroleum futures and options contracts in the week to June 22.
/reut.rs/364YZ1X
IG Group and tastytrade Complete $1 Billion Partnership
Press Release
Significant milestone materially expands product set and footprint for the combined business
IG Group Holdings plc ("IG", "the Group", "the Company"), a global leader in online trading and tastytrade, Inc. ('tastytrade'), the fast-growing online brokerage and investor education platform, are pleased to announce the completion of a $1 billion landmark partnership...
The partnership significantly increases the scale and relevance of IG's existing US business, resulting in a prominent position in the high-growth retail options trading market through tastytrade's market-leading online brokerage and trading education platform, used by over 105,000 self-directed investors with active accounts. IG's powerful global reach provides tastytrade with a platform for international expansion.
/bwnews.pr/35ZSVb2
Huobi bans crypto derivatives trading for users in China
Chinese users will no longer be able to trade crypto derivatives on the Huobi exchange amid a broader cryptocurrency crackdown from the government.
Cointelegraph
Crypto exchange platform Huobi has updated its user agreement document, banning crypto derivatives trading for customers in China.
According to the updated user agreement section of the Huobi Global website, the ban on crypto derivatives trading covers users in jurisdictions such as China, Taiwan, Israel and Iraq. Other banned countries include the United Kingdom â restricted to retail customers â as well as Bolivia, Bangladesh and Ecuador, to mention a few.
/bit.ly/36cpfb7
| | | | | | Exchanges | | | CME wants to lure retail traders to the bond market by offering a simplified futures contract that tracks yields
Emily Graffeo - Markets Insider
CME Group Inc is attempting to lure retail traders by offering a simplified futures contract that tracks yields. The Micro Treasury Yield futures will rise when Treasury yields increase and fall when they decline.
The contracts will begin trading on Aug. 16 and will come in 2-,5-,10-, and 30-year versions.
/bit.ly/2U7tIZR
HKEX market open delayed following rainstorm warning; Severe rainstorm warning forced HKEX to delay its market open on Monday morning before trading resumed at 1.30pm local time.
Annabel Smith - The Trade
The morning trading session for derivatives and securities at exchange operator Hong Kong Exchanges and Clearing (HKEX) was delayed on Monday following severe rainstorm warnings in Hong Kong. HKEX confirmed via a statement at the beginning of the trading day that the market open, including Stock Connect trading, had been delayed due to the weather conditions, before cancelling the session at 9.00am local time.
/bit.ly/3hc4lOn
T7 Release 9.1 - already great, and now even better
Eurex
Right from the start, the T7 trading architecture, developed by Deutsche Börse Group, has revolutionized the way traders and investors access market opportunities worldwide. Equipped with cutting-edge technology, the trading platform delivers ultra-low latency, robustness and safe handling even for very high throughput. To keep our trading system at these high standards, regular improvements and further extensions of functionality are key.
/bit.ly/3x56qSG
ICE's Global Commodities Futures Markets Reach Record Open Interest of 35.2 Million Contracts
ICE
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced record open interest across its global commodities futures markets of 35.2 million contracts on June 24, 2021, contributing to 10% year-over-year ("y/y") growth in total open interest on ICE and surpassing the previous record set on June 25, 2020.
On June 24, ICE also hit record high open interest across its global natural gas futures markets of 19.1 million contracts. ICE's North American natural gas futures and options, which includes Henry Hub and U.S. Basis Markets contracts, is at record high open interest of approximately 22.8 million, with open interest in Henry Hub futures and options up 11% y/y.
/yhoo.it/3y3o0GQ
Nasdaq Announces the Board of Directors of Its U.S. Exchanges
Nasdaq
Nasdaq, Inc. ( NDAQ) today announced the election of all nominated directors to the boards of the U.S. exchanges operated by the company, which include The Nasdaq Stock Market LLC, Nasdaq PHLX LLC, Nasdaq BX, Inc., Nasdaq ISE, LLC, Nasdaq MRX, LLC, and Nasdaq GEMX, LLC:
/bit.ly/3jmYrg3
| | | | | | Regulation & Enforcement | | | Crypto exchange Binance ordered to cease activity in U.K.
Anna Hirtenstein - MarketWatch
Authorities in the U.K. and Japan took aim at affiliates of Binance Holdings Ltd., the world's largest cryptocurrency exchange network, in the latest regulatory crackdown on the wildly popular trade in bitcoin and other digital assets.
The U.K. Financial Conduct Authority, the country's lead financial regulator, told consumers Saturday that Binance's local unit wasn't permitted to conduct operations related to regulated financial activities.
/on.mktw.net/3x7WpEs
Credit Suisse to pay $1.5 million for swap data reporting failures; Registered swap dealers at Credit Suisse were found to have inaccurately reported swap transactions by the US derivatives regulator.
Annabel Smith - The Trade
Credit Suisse will pay a $1.5 million penalty after the US derivatives trading watchdog found three of its registered swap dealers reported inaccurate swap data over a period of five years.
/bit.ly/2TdZjZB
| | | | | | Strategy | | | Trade Winds: An Options Strategy Styled For You
Doug Ashburn - TD Ameritrade
When you're shopping for spaghetti sauce, having several choices is great. Of course, options trading involves unique risks and is not appropriate for everyone. But, if you're an options trader, it's kind of the same thing with options strategies. But with all those various strategies, strikes, and expiration dates, how do you choose?
When you're starting with, say, 60 options strategies, you need a process to get that number down to a manageable level. Start with three basic questions:
1. Are you bullish, bearish, or neutral? This answer can narrow a list fastâby half or more. If you're looking for a market advance, you're likely not shopping in the long put verticals aisle.
/bit.ly/3hhMxBc
VIX at Pre-Pandemic Levels, Summertime Volatility Possible?
As the S&P 500 marches on, the VIX is trading at pre-pandemic levels. Will the fear index remain subdued all Summer, or could a return of volatility be in the cards?
Rafael Zorabedian - FX Empire
Last week seemed to be one of those weeks where the market could do no wrong . After digesting the previous week's interest rate stance changes from the Fed, the S&P 500 just kept climbing and climbing last week, reaching all-time highs once again. Weak economic data print via Flash Services PMI? No problem; market higher. Unemployment Claims printing higher than expected? Also, no problem. Weak New Home Sales print? The market said no problem. The S&P 500 had plenty of upside to get last week, and it got it. What about this week?
/bit.ly/3A9ZyW4
| | | | | | Events | | | Reminder: The FIA's webinar "Technological revolution for clearing derivatives?" sponsored by BofA Securities and Itiviti, takes place virtually on Wednesday, June 30 from 9:30 - 11:00 SGT.
You can go here to register and for more information.
| | | | | | Miscellaneous | | | Cboe Europe chief Howson on how London may just keep its finance hub crown; The City is trying to reinvent itself amid the loss of a clear post-Brexit determination
Penny Sukhraj - Financial News
Brexit is putting pressures on the City but there may be opportunities ahead for the capital, says Cboe's president for Europe, David Howson. "As an international hub, I don't think it's lost its place," Howson told Financial News in an interview.
/bit.ly/2Tf1SdN
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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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