Episode Transcript
[00:00:06] Welcome to the John Lothian News daily Update podcast for July 22, 2022. I am your host, John Lothian. This podcast is brought to you by John Lothian News, the home of markets Wiki and Marketswicky Education. Thank you for joining us. Here are the hits and takes comments from today's GLN nothing like a nice, quiet weekend, and then President Joe Biden dropped out of the 2024 presidential election with his tweet on Twitter x announcing it is time for him to stand down as a candidate for the democratic nomination for president. Biden's first act was to endorse his vice president, Kamala Harris, for the nomination. Bill and Hillary Clinton quickly followed with their endorsements of Harris, though former President Barack Obama held off offering an endorsement, something he did not give Joe Biden until Bernie Sanders dropped out of the 2020 nomination race. The CEO of Crowdstrike, who was criticized for his tardy apology for crippling the world's economy on Friday, would like to send a message of personal thanks to Biden for taking him off the front page of newspapers around the world.
[00:01:25] CboE Global Markets announced the launch of its redesigned S and P 500 variance futures ticker. Is VA expected to begin trading on September 23, 2024, pending regulatory review. This new product aims to transition OTC variant swaps trading to an exchange listed format, simplifying trading and settlement while providing the benefits of price discovery, central clearing and increased liquidity. The VA futures will settle based on the annualized realized variance of the S and P 500 index calculated daily from the first trading day to the final settlement date. Addressing customer feedback, the redesign features improve upon Cibo's previous offerings with a straightforward methodology, quoting and trading invariance units with a dollar twelve contract size. They align with standard S and P 500 index or SPX options, expiration dates, enhancing flexibility for managing variance exposure and hedging. In the press release, Rob hawking, CBOs head of product innovation, highlighted the products accessibility, capital efficiency and user friendliness, while Tim Brennan, head of capital markets at S and P Dow Jones indices, emphasized the tools utility in managing variants and risk within the high, highly liquid S and P 500 ecosystem.
[00:02:56] When I was a broker at Gerald commodities, there were brokers whose customers would call them and ask them whether they were bullish or bearish on a market and then do the opposite of the recommendation. A recent disciplinary action by the CME Group has a completely different take on this with a brokerage deploying an automated trading system to enter trades, taking the opposite side of customers that identified as frequently unprofitable a panel of the Chicago Mercantile Exchange Business Conduct Committee found that between July 22, 2020 and July 7, 2022, Wingfeng Futures Limited deployed an automated trading system, or ATS, in the australian dollar, british pound, canadian dollar, Euro, FX, Japanese Yen, New Zealand dollar, e mini, Nasdaq, Micro, E mini, Nasdaq, and E mini S and P futures markets, wherein the ATS strategy was to submit orders based upon trades executed by its clients who were regularly unprofitable specifically upon a target client. Establishing a short or long position, the ATS generated a trading signal to enter an order in the same market for the same price and quantity as the client, though to establish the opposite short or long position. The panel found that by employing the strategy, wing Fung attempted to profit from its knowledge of its clients record of losses, which was not available to others in the marketplace. The firm was fined $100,000 and forced to disgorge $4,011.33 in profits. Matthew Lysing, the editor in chief of decentral Media, is working on a weekly newsletter, the web three rewind, billed as a weekly recap of the most insightful news, analysis and capital flows in the Wild west we call Crypto.
[00:05:05] The latest edition is titled Crypto's Trump problem.
[00:05:10] Lysing is a former Bloomberg reporter who dove deep into the crypto world to write a book out of the ether, the amazing story of Ethereum and the $55 million heist that almost destroyed it all, and has teamed with some crypto colleagues for decentral media we missed, including the latest white paper from FIA titled Best Practices for automated trading risk controls and system safeguards. The paper consolidates previous work and covers pre trade risk management, exchange volatility control mechanisms, analysis and exchange based conformance testing. These best practices aim to ensure market safety across various technologies. The tools, developed through collaboration between market participants and exchanges, have effectively limited market disruptions and protected markets. I was scrolling through the news on the Financial Times website when I came across this story, how I learned to stop scrolling. The sub headline is it took a silent retreat to reboot my relationship with smartphones and social media. I think I need to go on a silent retreat, but then I can't shut up and I only know how to march forth.
[00:06:30] Rob Haggerty, senior policy advisor at the US securities and Exchange Commission, rode in his first pan mask challenge in April, and when he did, he checked the box asking if he had undergone cancer treatment. In 2021, he was diagnosed with paraneural basosquamis cell carcinoma after a 15 month treatment regimen of immunotherapy, multiple surgeries, radiation and chemotherapy. He was declared cancer free. Last year. He was designated as a living proof writer, and on the PMC night at the Fenway park, he was selected to ride his bike around Fenway park with other PMC living proof riders prior to the Boston Red Sox game. Needless to say, he was elated. He posted to LinkedIn. You can support his fundraising for the Pan mess challenge with a link in today's newsletter, Euronext shared on LinkedIn that it has successfully migrated Euronext clearing to cover all its commodity derivatives markets, a key milestone in its quote of growth for Impact 2024 strategic plan. This achievement, completed in July 2024, Euronext said, reinforces its position as Europe's leading market infrastructure. It also sets the stage for migrating financial derivatives clearing to Euronext clearing by the third quarter of 2024, marking the final step in integrating the Borsa Italiana group into Euronexthe, a very short version of what happened on Friday with CrowdStrike. While other news has claimed the spotlight this weekend, Friday's it failure still looms large. CrowdStrike is, simply put, antivirus anti malware software. In order to work well, it needs to work at the most fundamental level of your computer, usually called the kernel. When you start your computer, the kernel is the first bit that loads and all the rest is built on top of that. Software like CrowdStrike needs to run at this base level. Since many threats to computers target this level, if they can get control of the kernel, they are in a good place to control everything else. So when Crowdstrike broke that bit via an update, nothing else would work. The foundation was broken and nothing more could be built on it. That made fixing it very difficult. If you cannot start the computer, you cannot fix the computer. The interesting thing here is I think it shows the interconnectedness of our modern world. Maybe your local Starbucks was fine, but when processing your payment, it went to Starbucks Central and then to a payment processor and then to your bank and all the bits in between. If one was down, it all stopped, which is what we saw last Friday of interest to financial markets participants. Some were saying Crowdstrike has almost no liability here. Their shrink rep agreement says they only have to refund the cost of the software. It'll be interesting to see how that works out after they crashed the planet.
[00:09:59] That was from Jeff Berkstrom. Our most read stories from our previous edition of JLN options were Ostra adds Spectra axes FX options offering to network from fow.
[00:10:12] CBO participates in latest european digital currency trial from fow and european markets trading normally through Microsoft outage from fow. Subscribe to the free JLN Options newsletter with a link in today's JLN. Here are more stories from the first read section of today's JLN. Here's a commentary I wrote over the weekend.
[00:10:34] Immigrants are risk takers, and I like risk takers. Last week during the GOP convention in Milwaukee, we heard a lot of bad things about immigrants. This is actually a very old story in american politics. A bill passed by the very first Congress of the United States, the Naturalization act of 1790, limited naturalization to free white persons of good character, explicitly excluding Native Americans, indentured servants, enslaved people, free Africans and Asians from citizenship.
[00:11:14] Here's a press release from Lotus markets. Lotus six month trading volumes rose 73% transfer agent business continues momentum Lotus markets, the only fully automated online marketplace to buy and sell alternative investments, reported 366 trading transactions for the first half of 2024, a 73% increase from a year ago. The period also included the launch of the Lotus transfer agent TA business as the firm supports investors through the alternative investing lifecycle. From client onboarding through an investment secondary sale on Lotus, multiple TA clients are partnering with Lotus and others are joining this quarter. My comment there is a nice video on the about page of Lotus website featuring Brian King explaining the value proposition of being able to trade alternative investments and real estate more efficiently via Lotus.
[00:12:15] Here's another story, this one from the Wall Street Journal. The headline a stock market rotation of historic proportions is taking shape. Few investors saw the shift coming, and many are puzzled by what is behind it. The stock market has suddenly turned upside down. The market's laggards have sprung to life in recent days, while the seemingly impervious, magnificent seven group of technology stocks has stumbled. Investors are even more focused than usual on corporate earnings as they try to anticipate what comes next. The Russell 2000 index of smaller stocks beat the S and P 500 over the seven days through Wednesday by the largest margin during a period of that length in data going back to 1980, 919 86, according to Dow Jones Market data. The Russell 1000 value index, meanwhile, notched its biggest lead over its growth stock counterpart since April 2001 after the.com bubble burst. My comment do you remember the disclosure in the sponsored content for the Russell reconstitution? Welcome to the churn. Here are the top three stories from Fridays. JLN our top story Friday was the Wall Street Journals global Finance contends with it outage. Are the companies affected? Second was how concentrated is the clearing ecosystem and how has it changed since 2007? From the Federal Reserve bank of Chicago. Third was from ATM's to flights epic it crash leaves trail of chaos from Bloomberg here are the top three stories from the lead section of today's JLN the first story Joe Biden drops out of us election and endorses Kamala Harris president's historic decision up ends White House contest against Donald Trump US President Joe Biden has abandoned his reelection bid following overwhelming pressure from fellow Democrats and endorsed his vice President Kamala Harris to succeed him, saying it was, quote, in the best interest of my party and the country for me to stand down, unquote. The president announced his decision to quit the race in a letter published to social media on Sunday, throwing this year's White House contest into turmoil with less than four months to go until voters in the biggest economy elect their leader on November 5. Here's another story, this one from Bloomberg. The headline crypto industry wants Trump to win and call off the SEC Trump's crypto embrace sparks vision of softer enforcement fate of outstanding SEC cases against crypto remained uncertainty the crypto industry is hoping the upcoming us presidential election will put someone in the White House who has a softer approach on enforcement, thereby ending prolonged battles with Wall Street's top cop. Former President Donald Trump has lately cozied up to the $2.5 trillion crypto industry, even inviting supporters to a bitcoin focused fundraiser on July 27. Although the republican nominee criticized cryptocurrencies while in office, his recent comments have been more favorable and lawyers expect that if he wins, the US securities and Exchange Commission will stop pursuing the digital asset space so aggressively.
[00:15:43] Here's another story, this one from Bloomberg. The headline CBO to offer traders another way to hedge S and P 500 swings CBO Global Market Inc. Wants to give traders another way to hedge against volatility in the us stock market rates. The exchange, which already has options and futures on its closely watched volatility index, or VIX, expects revamped CBO S and P 500 variance features to begin trading on September 23, subject to regulatory review. The contracts will allow traders to hedge against realized volatility calculated from the trading range each day in the S and P index, CBO said Monday in a statement. That differs from the existing VIX contracts that reflect expected swings in the future.
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