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Friday, November 1, 2024
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SEC Chair Gary Gensler Highlights Accomplishments

By
Anna Lyudvig
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Gary Gensler, SEC

Since taking the helm at the Securities and Exchange Commission in April 2021, Gary Gensler has initiated a wide-ranging set of rules, according to ISDA IQ.

“We’ve already proposed and adopted more than 40 items during my time here. More than three quarters of those are well into the implementation phase and have not been challenged in court,” Gensler told ISDA IQ in an interview.

SEC Chair Gary Gensler

“We recently halved the US settlement cycle for equities and corporate and municipal bonds, along with Canada and Mexico. We’ve adopted and implemented some really critical items related to corporate governance. We’ve taken some very important steps in cyber, both for companies and issuers that have material cyber events and, more recently, for individuals,” he said.

“We’ve adopted and are working with clearing houses and market participants on implementation of some key reforms in the Treasury market related to central clearing,” he said.

“We’ve addressed some of the repeated instabilities in money market funds and adopted rules last year that are still being implemented. We adopted rules on truth in advertising for registered investment companies and we have updated a 24-year old rule in that area,” he added.

ISDA IQ said that there has been an active debate about the regulation of crypto assets, and whether they should be considered as securities. When asked what is the appropriate model of regulation for this market, Chair Gensler said: “Without prejudging any one asset, it’s pretty straightforward: most crypto assets are likely to be securities and should be regulated as such.”

Gensler said there are 15,000-20,000 tokens and there’s nothing incompatible about the accounting ledger they’re stored on with the securities laws.

“The principle is consistent – it’s about making proper disclosure to investors so they can decide whether they want to buy or sell a particular crypto asset,” he said.

In July 2023, the SEC proposed rules to require broker-dealers and investment advisers to take steps to address conflicts of interest associated with the use of predictive data analytics and similar technologies. When ISDA IQ asked how the SEC is approaching the rapid development of artificial intelligence (AI), Chair Gensler replied that AI is among the most transformative technologies of our time. 

“It’s already being used in finance to protect customers from fraud, to survey markets and for compliance with anti-money laundering and sanctions regimes,” he said. 

“It’s used by traders to assess the markets, by investment advisers to set up robo-advising applications and by insurance companies for claims processing,” he said.

“It’s used by all sorts of financial institutions for opening accounts, and I think it will lead to significant changes in corporate issuance and risks and opportunities in different parts of the economy,” he added.

“Our role here at the SEC remains consistent – it’s all about making sure firms disclose the material information that is needed and that those disclosures are not misleading,” he said.

“Just as in other areas of transition, sometimes folks will exaggerate what they’re doing with this new technology, whether it’s an investment adviser bragging about the use of AI when they’re not really using it or a company that says it’s doing something but it’s not true.”

We need to beware of misleading the public in any material way – so-called AI washing. Fraud is fraud and bad actors will try to use new technologies to do bad things. That’s been true since antiquity. If firms are using an AI model, they shouldn’t think they can now do a bad thing and blame it on the model. If you deploy the model, you have a certain responsibility and obligation, particularly if you’re a fiduciary or advising people.

“If you’re using a model to front run or manipulate a market or perpetrate a fraud, there’s still a human somewhere who is responsible. Finally, we have a proposal outstanding about potential conflicts,” Gensler said.

“If you’re using an algorithm that’s putting the investment adviser or the broker-dealer into the mix of your engagement with customers, the basic concept in the US is that you’ve got to put the investor first. You must make sure the algorithm hasn’t got it the other way around by putting the investment adviser or broker-dealer first,” he said.

The three areas of focus for the SEC are AI washing, fraud and deception, and conflicts, according to Chair Gensler.

“But I also think there’s a risk that goes well beyond the US, which is that the use of AI will lead to certain fragilities in capital markets. That is why both the models and the data are likely to end up being quite centralised,” he noted. 

“We already have a system in the US where there are three large cloud providers, two of which are used by around 75% of the financial sector. There are natural economics of networks that are at play, and that is likely to also happen with AI. If everyone relies on the same model or the same data set, this could drive the market to a bad place, but that’s a challenge we all share,” he said.

The interview also discussed the Treasury market reforms, the climate-related disclosures, cross-margining arrangements, as well as the SEC’s proposal on safeguarding advisory client assets.

Read the full interview here

Fixed Income Helps BlackRock AUM Reach Record $11.5tr

By
Shanny Basar
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Larry Fink, BlackRock

Assets under management at BlackRock reached a record $11.5 trillion at the end of the third quarter of this year, boosted by net inflows to fixed income strategies and exchange-traded funds.

Laurence Fink, chairman and chief executive of BlackRock, said on the third quarter results call on 11 October that assets under management have risen $2.4 trillion year-over-year, driven by $456bn of net inflows and positive market movements. Total net inflows in the first nine months of this year were $360bn, which was more than full-year net inflows in both 2022 and 2023.

BlackRock had $456bn of net inflows in the last 12 months, including a record $221bn in the third quarter, which represented 8% annualized organic asset growth. Net inflows were positive across client type, product type, active and index, and regions according to Fink.

He said: “Organic growth is accelerating as we execute on a strong pipeline and clients turn to Blackrock to move in size. The opportunities ahead have never been better than we see now.”

 Source: BlackRock

Fink described public and private markets; iShares, the ETF franchise; whole portfolio outsourcing and its proprietary technology platform, Aladdin, as structural growers which are poised to accelerate to year end, as the fourth quarter is typically the strongest for BlackRock.

Martin Small, chief financial officer, said on the results call that iShares leads the industry in global flows, with approximately $250bn in net inflows in the first nine months of this year, which is 40% more than historical total annual flows. ETF net inflows were $97bn in the third quarter, with $48bn into fixed income. Fink added that on a stand-alone basis, BlackRock’s fixed income ETF platform would be in the top five.

 Martin Small, BlackRock

Small said: “iShares’ fixed income assets now stand at over $1 trillion, nearly 40% higher than at year-end 2021.”

Fixed income delivered over $60bn of net inflows across BlackRock and the firm believes a continued path of central bank normalization will support sustained inflows across bond funds and ETFs.

“Fixed income remains a compelling organic growth opportunity for BlackRock,” said Small.

In the third quarter, BlackRock launched a spot ethereum ETF, which Fink said has gathered more than $1bn in assets in the first two months of trading. BlackRock’s Bitcoin ETF, which launched in February this year, has grown to $23bn.

Private markets

BlackRock closed the acquisition of Global Infrastructure Partners on 1 October 2024, adding $116bn of client assets under management and $70bn of fee-paying assets under management. Fink said the firm is already seeing the power of BlackRock and GIP together as it drives increased access to the enormous investment potential of infrastructure, especially to support AI innovation. GIP is expected to add approximately $250m of management fees in the fourth quarter according to Small.

“We believe we are building the model portfolio solution that will democratize retail access to private markets,” Fink added. “And our planned acquisition of Preqin will enhance data and risk analytics needed to support growing private markets allocations.”

Small described private markets as a strategic priority for BlackRock. He added that the closure of the GIP acquisition triples BlackRock’s infrastructure assets under management and doubles private markets’ run-rate management fees.

In June this year BlackRock announced a £2.55bn acquisition of Preqin, an independent provider of private markets data. At the time Fink said that BlackRock wanted to bring the principles of indexing, and even iShares, to the private markets.  He added: “We anticipate indexes and data will be important future drivers of the democratisation of alternatives, and this acquisition is the unlock.”

In September this year BlackRock, GIP, Microsoft, and MGX,  an Abu Dhabi-based artificial intelligence and advanced technology investor, announced the Global AI Infrastructure Investment Partnership. It will make investments in new and expanded data centers to meet growing demand for computing power, as well as energy infrastructure to create new sources of power for these facilities. The partnership will initially seek to unlock $30bn of private equity capital with the intention of mobilizing up to $100bn in total investment potential when including debt financing. Small cited the partnership as the first example of the growth synergies that BlackRock and GIP can create.

There is also growth potential in providing access to private markets to wealth plans. BlackRock manages more than $300bn of assets across model portfolios and separately managed accounts for wealth managers, which could benefit from increased exposure and more efficient access to the asset class.

“We believe the model portfolio solution will revolutionize access to private markets for wealth managers and improve portfolio outcomes for millions of households,” said Small.

The announced acquisition of Preqin will accelerate this potential by providing private markets’ data and analytics. Small said the deal is due to close at the end of this year, subject to regulatory approvals.

 Larry Fink, BlackRock

Fink continued that BlackRock has never shied away from making big bets to better serve clients, such as creating technology platform Aladdin and unlocking new markets through ETFs. He said client enthusiasm for the planned integration of GIP has exceeded BlackRock’s own high expectations and predicted that their private market allocations will continue to grow as they want inflation-protected long-term  returns. In addition, Fink said standardized, transparent data and analytics will become increasingly important.

“The growth of private markets is underpinned by the continued rise of infrastructure which presents a generational investment opportunity,” added Fink. “$75 trillion is needed to repair ageing infrastructure, and to invest in data centers and decarbonization technology.”

In addition, BlackRock has an $85bn private credit platform, which Small said is a huge growth opportunity, particularly with  insurance clients.

“We are the largest core fixed income manager in the world for insurance companies and manage $700bn of insurance company general account assets,” Small added. “If we can flip just 10% into private credit strategies, that is $70bn of opportunity sitting with existing clients in the capabilities we have today.”

Financials

Third quarter revenue and operating income were both records. Revenue increased 15% year-over-year to $5.2bn, which BlackRock said was driven by the positive impact of markets on average assets under management, organic base fee growth, and higher performance fees. Operating income increased 23% year-over-year to $2bn. BlackRock expanded its margin by  45.8% to 350 basis points year-on-year and the firm generated 5% annualized organic base fee growth, the highest for a quarter in three years.

Small said that in the third quarter one large US asset manager selected BlackRock’s proprietary technology platform, Aladdin, to unify its investment management technology across public and private markets.

“Our results highlight the power of Aladdin as a unifying technology,” said Small. “Aladdin enables new capabilities to drive top-line business growth for clients, while also unlocking scale and efficiency.”

In October Royal Mail Pension Plan said it has launched the UK’s first Collective Defined Contribution (CDC) scheme and appointed BlackRock as investment manager of the plan. Sarah Melvin, head of UK & Europe at BlackRock, said in an email: “The certainty of an income for life that Collective Defined Contribution schemes provide will be deeply reassuring for many, and we applaud Royal Mail, the Trustees, the Communications Workers Union and Unite CMA for the innovation and work they have undertaken to introduce this to the UK.”

Cash management had net inflows of $61bn in the third quarter. Fink said many investors have large cash holdings but will have to re-risk to meet their long-term return needs by investing in opportunities in technology, AI and the unprecedented need for new infrastructure.

“Blackrock is exceptionally well positioned in front of that $9 trillion of money market funds across the industry,” Fink added. “As that cash makes its way into public and private markets, we are connecting our clients to opportunities and working with them in an integrated portfolio to help them deploy their capital.”

Small argued that BlackRock has historically delivered outsized organic growth in periods of investor rerisking, around election cycles and changes in central bank policy and the fourth quarter has also been historically strong for inflows.

ON THE MOVE: Chris Dearie Joins TraditionData; Temenos Hires Barb Morgan

By
Anna Lyudvig
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Chris Dearie

TraditionData has hired Chris Dearie as Chief Operating Officer. Dearie has nearly 25 years career in financial services in a range of senior positions. From managing global teams at Reuters, responsible for acquiring market data services, he then joined Tullett Prebon where he played a key role in building and expanding their commercial data business through the acquisition of ICAP, and the subsequent establishment of Parameta Solutions, where he was Deputy CEO. 

Barb Morgan

Temenos has appointed Barb Morgan as Chief Product and Technology Officer. Reporting to Temenos CEO Jean-Pierre Brulard, Barb will join the company’s Executive Committee and lead the technology and product organization. She brings over 25 years of experience leading global product development organizations, particularly in banking and financial services. Barb joins Temenos from the London Stock Exchange Group (LSEG), where she served as Group Head of Product for Data and Analytics, leading the Microsoft-LSEG partnership.

Jesper Cordes

Enfusion has appointed Arman Artuc to Head of Engineering and Jesper Cordes to Head of Client Services Americas. Previously, Artuc served as Managing Director, Global Head of Liquidity Technologies at Instinet, where he spearheaded the development of Instinet’s flagship Algorithmic Trading Engines as part of his responsibilities. Cordes joins Enfusion from SimCorp where, as Vice President of Customer Success Management, he oversaw the development of their client success teams and led the global transformation of their client engagement model.

FINBOURNE Technology has appointed Francesca Lubbock as its new Chief Operating Officer. She brings a wealth of experience in strategic leadership, operational efficiency and business growth from within the fintech space including leadership roles at ZoomInfo, high-growth startups, and a prominent hedge fund. 

Northern Trust Asset Management (NTAM) has announced two strategic hires focused on serving Northern Trust Wealth Management. Michael Gottesman, CIMA, CPWA has joined as National Sales Manager, Wealth Management and Wesley Urick has joined as Head of Strategic Accounts, Wealth Management.

Jill R. Whitelaw has joined the Managed Fund Associated (MFA) as Vice President and Senior Counsel, Regulatory Affairs. Whitelaw’s decades of experience in the alternative asset management industry will enhance MFA’s regulatory advocacy in the U.S. and around the globe. Most recently, Whitelaw served as Executive Director at Morgan Stanley Investment Management, where she managed a range of legal and regulatory matters.

If you have a new job or promotion to report, let me know at alyudvig@marketsmedia.com

Beyond Fundamental Analysis: What Does it Take for Active Traders to Get an Edge in Stock Markets?

By
TradeStation
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David Russell, TradeStation

By David Russell, Global Head of Market Strategy, TradeStation

Volatility may be an everyday occurrence in global markets, while it can make life difficult for traders to decisively determine where stock prices are headed. But active traders who look beyond fundamental analysis by working within a framework, can often quickly understand any business, in any sector. Going outside traditional comfort zones can help traders unravel the mystery as to what’s moving prices that may be a route to profitable trades. Here’s why.

For active traders, price action reigns supreme. Whether trading on momentum or dissecting chart patterns, the “why” behind stock movement often takes a backseat to the fact it is moving at all. But here’s the kicker: understanding the major forces behind those moves – like economics and market fundamentals – can be a game-changer. Breaking down the drivers underlying price swings can offer a new perspective and an extra edge, morphing chaos into structured opportunity. It’s another potential tool in the arsenal that can help lead to more informed trades.

Using a playbook to identify stocks that are signaling a breakout provides an unemotional mindset for active traders to help decide whether a trade is good or bad. This eliminates some of the need to pore over analysts’ reports and time-consuming research that, in many situations, can be overwhelming and might limit how quickly a trader can react.

Instead, active traders working against a roadmap are often better positioned to act on sudden changes in sentiment toward individual stocks or the overall market. One could liken this mindset to how triaging takes place in the ER to quickly decide which patients need the most immediate help. Traders who adopt a framework can quickly wrap their heads around understanding what is needed to make trading decisions. 

So what does this framework look like? 

Here are seven catalysts that can help give traders a head start. Let’s call this framework ‘The Catalyzers.’ 

  1. Volumes. These may be expressed in units, orders or bookings, and are important measures of the amount of business being done.
  2. Margins. Are a company’s margins rising or falling? Margins are correlated with changes in volumes, while changing products – part of business transformation outlined below – can also improve profitability. Margins are affected either by a company increasing prices or reducing its cost base. Companies that can increase margins can usually see their share prices rise.
  3. Macro events. What’s happening with the economy, interest rates and commodity prices are events outside the control of companies, but may impact an entire sector, either positively or negatively. For example, as markets now anticipate further rate cuts, companies in consumer related stocks may benefit. Active traders can pivot quickly and potentially take advantage of macro events.
  4. Strategic developments. Actions such as potential mergers or acquisitions, stock splits, dividends and stock buybacks are board-led decisions aimed at improving capital efficiency, but they don’t change the business model or deal with the strategy of the business.
  5. Investor rotation. Big ticket developments such as interest rate cycles, or market moving events such as the rapid rise of Generative Artificial Intelligence (GenAI), may signal a reordering of investors’ priorities. 
  6. Business transformation. As businesses mature, there’s frequently a necessity to adjust business in the pursuit of increased revenues. This might include new products, strategies or customer segments that can lead to higher margins or volumes.
  7. Balance sheet/Credit. Leverage can have a material impact on the outlook for companies. Heavily indebted companies tend to be more volatile, and a shift in sentiment can affect its ability to rollover debt. Meanwhile balance sheets may contain pointers that can drive share prices, such as a sudden change in asset values. Other issues include interest rate changes, divestitures and moves by management to raise capital. Individually or together these factors can influence stock prices.

Let’s take a look at some recent examples of the system in action. 

Volumes

GenAI has led to a surge in investor appetite for tech stocks. NVIDIA has become a sales growth machine and a bellwether for the AI sector. Since early 2023, the chipmaker’s GPU quarterly revenues have stunned markets, achieving a blistering 265% year-on-year growth in the fourth quarter of last year. That capped increases of 206% and 101% in the two preceding quarters, and the growth story has continued this year. With its stock price up around 3000% since 2019, NVIDIA is a prime example of how changes in volumes can propel stock prices.

Margins

Meta has cut around 13% of its workforce during the last year. The tech giant is engaged in an ongoing round of belt-tightening that with the reduction in headcount, has substantially boosted profits. For example, Meta’s net income more than tripled to $14 billion, or $5.33 per share, from $4.65 billion, or $1.76 per share, a year earlier when it reported its Q4 2023 earnings in February of this year. Taken together Meta’s actions saw profits rise faster than revenues as a result of the cost cutting measures. The surge in profits also led Meta to declare a dividend and signal that it would be buying back more stock, a strategic development which is discussed below.

Macroeconomic events

The Federal Reserve cut interest rates for the first time in four years in September and is signaling another 50 basis points could take place this year. Rising interest rates led to a bear market in 2022, but lower inflation has since improved the macro rate outlook, allowing the stock market to recover. This clearly demonstrates how the macro environment can impact stock prices. Additionally, interest rates are a proxy for sentiment surrounding small caps and gold prices. With expectations that the Fed will continue to reduce rates into 2025, and the looming U.S. presidential election in November, these are potentially market-moving developments that could transcend individual companies. A spike in oil prices could also be a major event that may impact stock markets.

Strategic developments

Kellanova (K), a leading company in global snacking, international cereals and noodles, North American plant-based foods and frozen breakfast foods, recently agreed to be acquired by Mars, Incorporated, for a total consideration of $35.9 billion. Kellanova shareholders will receive $83.50 per share in cash, which represents a 33% premium to the stock’s closing price as of August 2, 2024. This acquisition was made possible by Kellanova’s prior spinoff, which unlocked value and breathed new life into what was considered ‘dead money.’ For active traders, the transaction could present some interesting trading opportunities. 

Business transformation

Walmart reported strong sales and beat estimates in its latest quarterly earnings report. Of note was a 21% year-on-year increase in e-commerce revenues and is an example of a business undergoing transformation. Walmart is embracing tech in a big way, including the use of generative AI. Using Large Language Models (LLMs), Walmart was able to create or improve 850 million data sets – a task that would have required 100 times the current headcount to analyze everything from shelf trends to customer buying habits. With Amazon in its sights, Walmart is overhauling its business model.

With so much noise in financial markets, understanding what’s moving prices can help traders evaluate stocks in sectors that they may not usually consider. Using the ‘triage’ methodology alleviates some of the need for detailed analysis, potentially helping active traders to quickly determine a plan that might be a pathway to higher returns.

MIAX Sapphire Reaches 1.1% Market Share in September

By
Press Release
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Aerial Photography Panoramic Shot of the Downtown Miami from Key Biscayne.

Miami International Holdings, Inc. (MIH), a technology-driven leader in building and operating regulated financial markets across multiple asset classes, reported September 2024 trading results for its U.S. exchange subsidiaries – MIAX®, MIAX Pearl®, MIAX Emerald® and MIAX Sapphire™ (collectively, the MIAX Exchange Group), and MIAX Futures™.

September 2024 and Year-to-Date Trading Volume and Market Share Highlights

  • Total multi-listed options volume for the MIAX Exchange Group reached 124.6 million contracts, a 7.0% increase year-over-year (YoY). September 2024 market share reached 14.2%, a 7.1% decrease YoY. Total year-to-date (YTD) volume reached 1.2 billion contracts, a 0.3% decrease from the same period in 2023.
  • MIAX Sapphire reached a monthly volume of 9.8 million contracts, with September 2024 market share reaching 1.1%. MIAX Sapphire launched trading on August 12, 2024, listing a single class for the first week and additional classes in multiple phases on a weekly schedule through the week of October 21, 2024, at which time more than 3,800 classes will be available for trading.
  • MIAX Options reached a monthly volume of 52.6 million contracts, a 12.9% increase YoY. September 2024 market share reached 6.0%, a 2.0% decrease YoY. Total YTD volume reached a record 506.0 million contracts, a 4.6% increase from the same period in 2023.
  • MIAX Pearl Options reached a monthly volume of 28.8 million contracts, a 39.9% decrease YoY. September 2024 market share reached 3.3%, a 47.9% decrease YoY. Total YTD volume reached 372.0 million contracts, a 25.5% decrease from the same period in 2023.
  • MIAX Emerald Options reached a monthly volume of 33.5 million contracts, a 52.0% increase YoY. September 2024 market share reached 3.8%, a 32.0% increase YoY. Total YTD volume reached a record 316.6 million contracts, a 39.8% increase from the same period in 2023.
  • In U.S. equities, MIAX Pearl Equities™ reached a monthly volume of 4.1 billion shares, an 8.7% increase YoY and representing a market share of 1.7%, a 5.2% decrease YoY. Total YTD volume reached a record 37.9 billion shares, a 17.0% increase from the same period in 2023. YTD market share reached a record 1.7%, a 9.5% increase from the same period in 2023.
  • In U.S. futures, MIAX Futures, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reached a monthly volume of 185,195 contracts, a 3.6% decrease YoY.

Additional MIAX Exchange Group and MIAX Futures trading volume and market share information are included in the tables below.

 Multi-Listed Options Trading Volume for MIAX Exchange Group, Current MonthYear-to-Date Comparison
Multi-Listed Options
Contracts		Sep-24Sep-23% ChgAug-24% ChgSep-24Sep-23% Chg
Trading Days2020 22 188187 
U.S. Equity Options Industry879,099,779763,134,85915.2 %962,386,101-8.7 %8,136,518,1107,560,157,1027.6 %
MIAX Exchange Group124,601,088116,458,2847.0 %131,705,816-5.4 %1,205,501,7411,209,591,615-0.3 %
MIAX Options52,557,58446,537,74712.9 %61,027,610-13.9 %506,029,246483,939,3424.6 %
MIAX Pearl28,765,23747,901,118-39.9 %30,611,320-6.0 %372,010,823499,215,133-25.5 %
MIAX Emerald33,473,28522,019,41952.0 %39,015,174-14.2 %316,604,978226,437,14039.8 %
MIAX Sapphire(1)9,804,982––1,051,712832.3 %10,856,694––
Multi-Listed Options ADVSep-24Sep-23% ChgAug-24% ChgSep-24Sep-23% Chg
U.S. Equity Options Industry43,954,98938,156,74315.2 %43,744,8230.5 %43,279,35240,428,6487.1 %
MIAX Exchange Group6,230,0545,822,9147.0 %5,986,6284.1 %6,412,2436,468,404-0.9 %
MIAX Options2,627,8792,326,88712.9 %2,773,982-5.3 %2,691,6452,587,9114.0 %
MIAX Pearl1,438,2622,395,056-39.9 %1,391,4243.4 %1,978,7812,669,600-25.9 %
MIAX Emerald1,673,6641,100,97152.0 %1,773,417-5.6 %1,684,0691,210,89439.1 %
MIAX Sapphire(1)490,249––47,805925.5 %57,748––
 Multi-Listed Options Market Share forMIAX Exchange Group, Current MonthYear-to-Date Comparison
Multi-Listed Options Market
Share		Sep-24Sep-23% ChgAug-24% ChgSep-24Sep-23% Chg
MIAX Exchange Group14.17 %15.26 %-7.1 %13.69 %3.6 %14.82 %16.00 %-7.4 %
MIAX Options5.98 %6.10 %-2.0 %6.34 %-5.7 %6.22 %6.40 %-2.8 %
MIAX Pearl3.27 %6.28 %-47.9 %3.18 %2.9 %4.57 %6.60 %-30.8 %
MIAX Emerald3.81 %2.89 %32.0 %4.05 %-6.1 %3.89 %3.00 %29.9 %
MIAX Sapphire(1)1.12 %––0.11 %920.6 %0.13 %––
(1)MIAX Sapphire launched trading on August 12, 2024, listing a single class for the first week and additional classes in multiple phases on a weekly schedule through the week of October 21, 2024, at which time more than 3,800 classes will be available for trading.
 Equities Trading Volume forMIAX Pearl Equities, Current MonthYear-to-Date Comparison
Equities Shares (millions)Sep-24Sep-23% ChgAug-24% ChgSep-24Sep-23% Chg
Trading Days2020 22 188187 
U.S. Equities Industry237,154206,83114.7 %252,333-6.0 %2,194,8902,054,7616.8 %
MIAX Pearl Volume4,0543,7308.7 %4,0031.3 %37,87432,37617.0 %
MIAX Pearl ADV2031878.7 %18211.4 %20117316.4 %
MIAX Pearl Market Share1.71 %1.80 %-5.2 %1.59 %7.8 %1.73 %1.58 %9.5 %
   
 Futures & Options Trading Volume and Open Interest for MIAX
Futures, Current Month		Year-to-Date Comparison
Futures ContractsSep-24Sep-23% ChgAug-24% ChgSep-24Sep-23% Chg
Trading Days2020 22 188187 
MIAX Futures Volume185,195192,064-3.6 %373,653-50.4 %2,411,6252,191,52310.0 %
MIAX Futures ADV9,2609,603-3.6 %16,984-45.5 %12,82811,7199.5 %
MIAX Futures Open Interest79,68275,2345.9 %81,709-2.5 % 

Source: MIH

FLASH FRIDAY: FIX Trading at 30

By
Editorial Staff
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FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.

The FIX Trading Community celebrated its 30th anniversary this year – and people will be talking about it next week.

The FIX Americas Trading Conference 2024, to be held in New York on October 16, will feature the panel FIX at 30: Reflecting on Three Decades of Market Transformation. Speakers including Scott Atwell, FIX Connectivity Manager at American Century Investments; Amy May, Executive Director, Electronic Trading at Morgan Stanley; and Sneha Savalgi, Vice President, Electronic Trading at Goldman Sachs, will trace FIX’s evolution and impact on trading, and what the next 30 years might hold. 

Not just surviving, but thriving and sustaining relevance for three decades is no mean feat in an industry that is constantly evolving. 

Scott Govoni, Regional Director for the Americas at FIX, recently discussed the upcoming conference and some of the industry group’s recent initiatives on FinTech Focus TV. 

The New York conference is FIX’s flagship event. “It’s an opportunity to bring the community together to talk about the topic of electronic trading and everything regarding that,” Govoni said. “It’s also a great networking opportunity.”

Govoni said the COVID pandemic forced FIX to scale back some of its regional meetings in the Americas, but the industry group is planning a comeback in that area over the next few years, with networking meetings already on the docket for Boston and Chicago, and plans to return to Toronto.

Meeting locations, as well as content and format are all ultimately a function of demand. “We are a member-driven operation – we’re just facilitating the conversations.” 

Aside from the FIX at 30 panel, Govoni discussed the Streamlining Trades: Reviewing T+1 Trade Processing in Financial Markets panel, which he said will cover what did and didn’t work in the US’s move to T+1 earlier this year, and what lessons European market participants and infrastructure providers can take. He also highlighted the panels Forging a Path: Women in FIX; Digital Assets Unveiled: Navigating the Future of Trading; and AI Insights: Revolutionizing Financial Trading panels, as well as the fireside keynote with Caroline Pham of the US Commodity Futures Commission.   

Going forward, Govoni said “there are pockets of FIX supporters everywhere. It is ubiquitous, it’s not going away and it’s a critical component of the financial industry. Any major city has financial institutions using FIX and involved in electronic trading.”

Added Govoni: “We’re just trying to get people together to talk about the things that matter.”

Cboe Shifts EDGA Equities Exchange to Maker-Taker Model

By
Cboe
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Oliver Sung, Cboe Global Markets

Cboe North American Equities Update

Valued Customers,

As you know, beginning November 1, Cboe will transition the EDGA® Equities Exchange from an inverted venue to a maker-taker venue. I am excited to share that in addition to this change, we will also be implementing a high rebate, tier-free pricing model.

I wanted to share more about our decision to implement these changes ahead of their implementation next month. First and foremost, across the industry, the market share for inverted markets has shrunk dramatically in recent years. We determined we could better serve the market by providing another maker-taker venue and focusing our inverted strategy on just one exchange, BYX Equities.

Additionally, extensive conversations with customers, including many of you, made it clear there is a need for an equities exchange with a no-tier pricing model. We strongly believe customer choice is key to a healthy market. Volume- based rebates are an important tool for exchanges as they help spur competition and lower costs, however, different pricing models work for different types of market participants, and EDGA will now be able to support a wide variety of customers. Most importantly, we believe the market can support multiple market models simultaneously, enhancing accessibility across the board by catering to different segments.

We envision EDGA’s simpler pricing model attracting firms who are attracted to a simpler market model. Most importantly, we expect these changes to make EDGA an exchange with faster fill rates, more stable quotes and simpler workflow.

As always, we will strive to be transparent with you through these changes. Our North American Equities Execution Consulting team will be analyzing the market following this transition and we will share their findings after a few months. If you have questions, please contact me or a member of our team.

Thank you for your continued partnership,

Oliver Sung
Vice President, Head of North American Equities
Cboe Global Markets

Source: Cboe Global Markets

Architect Securities Approved as Broker Dealer

By
Press Release
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Brett Harrison, Architect Financial Technologies

Architect Financial Technologies announced that its subsidiary, Architect Securities LLC, received regulatory approval from the Financial Industry Regulatory Authority Inc. (“FINRA”) to operate as an Introducing Broker Dealer. With this registration, the Company furthers its aim to provide a platform for comprehensive technologically-forward brokerage services in the growing securities and security derivatives markets.

Architect’s advanced trading platform offers institutions and individual investors a novel suite of trading and portfolio management tools. In May, the Company’s affiliate, launched a Commodity Futures Trading Commission (“CFTC”) Introducing Brokerage regulated by the National Futures Association (“NFA”), which offers clients the ability to trade commodity and index futures and options using advanced order types, execution algorithms, transaction cost analysis, and open APIs. With Architect Securities now approved as a FINRA-member firm, the Company will expand its platform to encompass equities, exchange traded funds (“ETFs”), American Depository Receipts (“ADRs”), options and US government securities.

Architect CEO Brett Harrison commented on the news, “Architect has built a new trading technology platform to respond to two market trends in the regulated derivatives space: first, the exponential growth in global derivatives volume in securities and commodities, with demand from both retail and institutions; second, the issuance of novel derivatives products, including private market ETFs and options on digital asset ETFs. With this new registration, we look forward to leveraging our platform to meet the significant client demand we’ve observed in these areas, and expand our offering to include SEC-regulated securities in addition to CFTC-regulated derivatives.”

Source: Architect

Matrix Executions Launches US Listed Options ATS

By
Press Release
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Joe Corona, Matrix Executions

October 07, 2024 06:41 AM Eastern Daylight Time

CHICAGO–(BUSINESS WIRE)–Matrix Executions, an agency-only broker dealer and trading technology provider, is thrilled to announce the imminent launch of its new electronic Alternative Trading System for US listed options, Matrix QRX ATS. This innovative tool is designed to advance trading for institutional investors, delivering advantages in price improvement, liquidity enhancement and best execution practices.

Matrix QRX ATS features an emphasis on price improvement and liquidity enhancement. The system employs advanced technology that offers traders access to liquidity provider pricing and exchange auction mechanisms at the touch of a button. The functionality not only improves price, liquidity and trading cost outcomes but also contributes to a more efficient market experience.

The ATS is specifically engineered to increase liquidity in US listed equity and index options by linking a diverse pool of order flow and liquidity participants by use of electronic, blind indications of interest (IOI’s). The innovative approach allows traders to navigate the marketplace without revealing direction or price indication, creating a layer of anonymity. The ATS then allows Liquidity participants on the platform to compete for the order flow by providing two-way responses to the IOI’s, which inherently improves depth and/or pricing.

The process is deeply integrated within the Matrix algo suite making the QRX ATS extremely flexible and available with low latency. With speed in mind, matching interest between participants within the ATS occurs in a fraction of standard exchange auction times making no material impact on routing time to the exchanges.

“With the ATS being tightly tied into our existing technology, any algo strategy can be enabled with the ability to quickly ‘ping’ liquidity providers with an IOI prior to commencing the routing operation for simple, complex and tied orders,” mentioned Joe Corona, Chief Strategy Officer at Matrix Executions.

The design of the QRX ATS incorporates multiple competitive-based order auctions at both the system and exchange levels. Once matched in the ATS, Matrix facilitates a paired crossing order, as all US listed options trades must print on an exchange. The paired orders are subject to an additional opportunity for price discovery or liquidity enhancement at the exchange level through the native auction mechanisms. By facilitating these auctions, Matrix Executions and the QRX ATS empower participants to capture optimal prices while implementing trades of any size without significantly affecting market structure or violating quantity or trade restrictions in both the Global (GTH) and Regular (RTH) trading hour sessions.

“At Matrix Executions, our goal is to transform the trading experience for institutional traders. Matrix QRX ATS accomplishes that by introducing a competitive auction process focusing on the core needs of traders – price discovery, liquidity, and trading cost mitigation. We believe this will elevate the market experience and trading efficiency for our clients,” stated Jordan Naylor, CEO of Matrix Executions.

About Matrix Executions:

Matrix Executions is a Chicago based agency-only broker dealer specializing in innovative trading solutions for Equities and Options. Our mission is to provide cutting-edge products that empower traders in an ever-evolving market landscape with a focus on transparency, customization, and innovation. We are dedicated to delivering exceptional solutions and results to the institutional trading community.

For more information about Matrix Executions and the new options ATS, please reach out to sales@matrixexecutions.com or visit our website at www.matrixexecutions.com

Cboe to Launch Options on VIX Futures on Monday, October 14

By
Press Release
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Catherine Clay, Cboe Global Markets

  • New CFTC-regulated options on futures will physically settle into front-month Cboe Volatility Index (VIX) Futures
  • Designed to offer market participants the ability to more granularly manage volatility
  • Further expansion of Cboe’s volatility complex following launch of Cboe S&P 500 Variance (VA) futures

Chicago – October 9, 2024 – Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, today announced its new Options on Cboe Volatility Index (VIX) Futures (Ticker: UX) are planned to begin trading on Cboe Futures Exchange, LLC (CFE) on Monday, October 14.

The new Options on VIX Futures will provide investors an additional tool to help manage U.S. equity market volatility, complementing Cboe’s existing securities-based VIX Index options, which are designed to provide similar risk management and yield enhancement capabilities. Utilizing an option-on-future structure, the new product may allow more market participants, including those restricted from accessing securities-based options, to trade a VIX options product.

Cboe’s VIX Index options have seen record trading volumes during the last two years, with average daily volumes reaching over 851,000 contracts in 2024, up approximately 60% from 2022, as more investors have sought utility the options offer.

“Investors have long utilized VIX options and VIX futures to help hedge and manage volatility exposure, and Cboe is proud to expand our volatility product suite at such a critical time,” said Catherine Clay, Global Head of Derivatives at Cboe. “With its options-on-futures structure, the new Options on VIX Futures will look to meet growing customer demand as Cboe works to provide an efficient and seamless experience to both existing and new CFE market participants. The launch will complement our existing volatility offerings, including the recently launched Cboe S&P 500 Variance futures, and enable more investors with the ability to help manage volatility and risk through the election season and beyond.”

“20 years after Cboe launched VIX futures, followed by VIX options, and helped establish volatility as an asset class, we continue to prioritize product innovation, engage with our customers and bring new exchange-traded volatility derivatives to market,” said Rob Hocking, Head of Product Innovation at Cboe. “We believe there is a strong demand for risk management tools, especially as investors prepare for the upcoming election and the recent change in the Fed’s monetary policy. We’ve seen a shift in how investors are using options on a day-to-day basis, and with Options on VIX Futures having a mid-curve structure and the ability to offer short-term exposure, investors are expected to be able to manage short-term volatility with greater precision.”

Christine Hansen, CEO at IMC US, said: “We are proud to support the expansion of listed volatility offerings from Cboe to meet the varying needs of investors”

Tom Chlada, Chief Operating Officer at Prime Trading, said: “Prime’s investment philosophy is to protect and grow capital, and Cboe’s new Options on VIX Futures will be a very welcomed addition to our toolkit, enabling us to better express views on volatility and fine-tune our risk management approach. We believe the new options will help boost participation and trading opportunities in the volatility space, and we look forward to incorporating this tool in our portfolios.”

Keith DeCarlucci, Chief Investment Officer at Melqart KEAL Macro Fund, said: “VIX futures and options play an important role when managing portfolios, and we welcome Cboe’s further expansion of its exchange-traded volatility tools with Options on VIX Futures. Combined with the recent variance futures launch, we have two new products to leverage.”

Options on VIX futures will have European-style exercise, P.M. settlement and physically settle into front-month VIX future. At launch, CFE will list contract expirations for every day the week of October 21 with two additional Friday expirations. Each weekday beginning October 21, CFE plans to list a new contract for trading expiring on the same weekday in the week or weeks following.

The contracts will be regulated by the Commodity Futures Trading Commission (CFTC) and cleared by The Options Clearing Corporation (OCC).

The upcoming launch of Options on VIX Futures follows the recent launch of Cboe S&P 500 Variance (VA) futures, which are designed to offer a streamlined approach to trading the spread between implied and realized volatility. Both products add to Cboe’s existing volatility suite and provide investors with exchange-traded solutions to manage market volatility ahead of and following the U.S. election.

Source: Cboe Global Markets

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