The Weekly News Roundup is your weekly recap of CBOE features, options industry news and VIX and volatility-related articles from print, broadcast and online and social media outlets.
The “Father of Financial Futures” and Creator of Listed Options Unite
Environmental Financial Products, LLC (EFP), headed by Dr. Richard Sandor, universally recognized as the “father of financial futures,” has joined with CBOE to create the American Financial Exchange (AFX), an electronic marketplace for small and mid-sized banks to lend and borrow short-term funds.
AFX was designed to bring the benefits of exchange-trading, including standardization, transparency and a rule-based process, to interbank lending while substantially reducing transaction costs through an electronic market. Importantly, AFX will also respond to the critical need for a transaction-based interest rate benchmark through weekly auctions of a new benchmark rate for U.S. interbank lending, called AmeriborTM.
For more information, see the press release or the transcript for yesterday’s press conference at CBOE. Press Release Transcript
“Sandor and CBOE Team Up to Create Interbank Lending Exchange” – Philip Stafford, Financial Times
“CBOE, Northern Trust and Sandor Team on New Financial Exchange” – Lynne Marek, Crain’s Chicago Business
“EFP and CBOE to Launch American Financial Exchange” – hedgeweek
“CBOE, Sandor Partner on Interbank Lending Exchange” – Markets Media
Volatility in the RVX Index (the VIX Index for small-cap stocks) has historically outpaced volatility levels in the VIX Index (a measure of volatility in large-cap stocks). Recent global macro-events have caused this normality to change direction. This week, volatility levels in the RVX Index fell below the level of the VIX Index for the first time ever. Do investors think small-caps investments are safer?
“Risk Reversal in Stocks as S&P 500 Volatility Passes Small Caps” – Oliver Renick and Dani Burger, Bloomberg
‘VIX of Small-Cap Stocks’ Falls Below ‘Fear Gauge’ For First Time Ever” – Chris Dieterich, Barron’s
After record-setting volatility in August, volatility has drifted to more subdued levels, Recent positions taken in the VIX by market participants suggest more volatility could loom ahead. Is this the all clear or just the calm before yet another storm?
“Hedge Fund VIX Positions Double in Bet Stock Turbulence to Last” – Inyoung Hwang, Bloomberg
“Hedge Funds Buying VIX Futures on Expectations of Continued Volatility”-- FIN alternatives
“VIX Futures and Volatility Aftershocks” – Adam Warner, Schaeffer’s Investment Research
“Fear Scaring Investors Right to the Bottom” – John Shmuel, Financial Post
14 Years Ago
Before the markets reopened the morning of September 17, 2001, the trading floor of CBOE paused to honor the victims of the September 11 terrorist attacks. #NeverForget