Just over a year ago, Thomas Bonville joined New York-based, prime brokerage Clear Street as managing director, head of derivative sales. During his first quarter at the firm, he launched a weekly commentary on ETF markets – the equity derivatives ETF monitor: “In a time when people are receiving thousands of emails a day, it’s generating dialogue,” he reports.
Bonville has more than 20 years’ experience in equity derivatives, including senior equity derivative sales roles at Nomura, Bank of America and Goldman Sachs, followed by eight years as managing director of equity derivative sales at Wells Fargo.
Clear Street offers clearing and custody; execution; prime financing; and active trading services. It started up in 2018, with the goal to “modernise the brokerage ecosystem” and has since grown to employ more than 400 people, across a total of nine locations in the US, Canada, the UK and Sweden.
In 2023, it has expanded its asset-class capabilities to include fixed income and also acquired a futures clearing platform. In addition, Clear Street hired four senior investment bankers, to build an investment banking and advisory service for the firm.
In its end-of-year report, the firm announced that it had onboarded more than 160 institutional prime-brokerage clients and had been processing around 2.5 per cent of the notional US equities volume on a daily basis. Clear Street also noted that this represented around USD15 billion-worth of activity through its platforms:
“The speed at which this firm operates is faster than anything I’ve seen,” comments Bonville: My background is in large investment banks or large commercial banks, which definitely have a more measured pace.”
Explaining the goal of the commentary, Bonville says: “It’s meant to be a tool for monitoring what’s going on in the options market. The idea behind it was to create a ‘heatmap’, which looks at what’s moving and why. The point is to create something that an investor or market participant can look at and very quickly get a sense of what’s going on.
“The themes may not change dramatically from week to week but there will be different highlights and different things to note,” he explains. The main topics covered by the commentary include implied volatility, total return and skew.
Looking at the current ETF market trends from a trader’s perspective and what this means for the market, he says: “The trend is the continuation of the existing multi-year theme to convert mutual funds to ETFs.”
Considering product-specific trends in the ETF space at the moment, he comments: “We’ve observed that more managers are launching leveraged long/inverse ETFs and option-based ETFs to provide yield.”
Bonville explains that the format of the commentary provides possibilities for expansion: “There are other iterations that we could provide, to customise it, for instance, we could look at a portfolio or an ETF of a particular sector and benchmark it against the rest of the sector.”
He concludes: “It’s a good mechanism for Clear Street to provide more commentary, as an additional service to our existing customers and also for our prospective customers.”