Tradition Launches Volatis, a New Volatility Futures Platform

Interdealer broker Tradition has announced the launch of Volatis, a new hybrid platform for trading realized variance pay-off Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term futures of CME Group listed and cleared products. In its prepared statement, Tradition explained that “Volatis has been designed to facilitate improved Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term and access to the volatility market, along with greater pre- and post-trade transparency. “ The platform is being deemed a hybrid as it incorporates both voice and electronic negotiation of pricing along multiple asset classes. According to Tradition, this will provide the opportunity for trading “correlation spreads between realized and implied volatility.”

In the initial phase, Volatis will offer indications in block trades of cash settled futures contracts offered by CME Group exchanges on: NYMEX WTI crude, NYMEX Brent crude, NYMEX natural gas, COMEX gold, COMEX silver, and CME currencies EUR/USD, AUD/USD, GBP/USD, USD/JPY. Tradition explained that daily fixings are being provided by a recognized neutral market data provider, to ensure “an accurate reflection of realized volatility.”

Commenting on the product launch:

Rupert Hodges, CEO of Tradition FX, Energy and Equities said: “Volatis is the first platform that allows negotiation and subsequent clearing of realised volatility futures across asset classes with a variance payoff. The offering enables volatility exposure without the strike risk and complexity inherent in an options portfolio. It also gives access to increased trading opportunities which, in turn, means better hedging of your exposure to, or correlation trading against, implied volatility.” Hodges added: “The combination of focused technology tailored to users’ trading objectives and our experienced broking team means that the hybrid nature of the derivatives market is fully replicated to enable deeper liquidity and a smooth negotiation process.”

Derek Sammann, Senior Managing Director at CME Group said “this suite of futures products offers an innovative way for our customers and other market participants to manage their exposure to price movements across the currency and commodity markets. During periods of high volatility, when liquidity and counter-party risk can increase, CME Group’s variance futures provide a sophisticated new way for customers to hedge against systemic risk in a centrally cleared environment.”