Hedging demand perks up even as volatility craters
Saqib Iqbal Ahmed – Reuters
Soaring U.S. share prices and plunging market volatility measures may paint a picture of optimism, but there are signs in the equity options market that investors have started to question how long this goldilocks period can last.
Derivatives market is short of a $3.7tn lifeboat
John Dizard – Financial Times
For institutions that use derivatives, collateral put up by their counterparties provides the same reassurance lifeboats do on a ship. Unfortunately, for all the post-crisis reforms, it would appear that we are a couple of trillion dollars short of the collateral lifeboats we would need as we head into the iceberg.
****SD: A very loose approximation – $3.7tn in $100 bills arranged in normal sized pallets would take up more than 8 acres. So, it’d take a hell of a lifeboat to fit it all.
Trapped China Cash Breathes Life Into Hong Kong Yuan Banking
Alfred Liu and Molly Wei – Bloomberg
Banks in Hong Kong are finding a new source of revenue in helping multinational companies deal with a growing headache: how to cope with tightening restrictions on transferring profits and dividends out of China.
****SD: Freeeeeedom! – Mel Gibson
Sebi mulls derivatives reforms
Business Standard News
The Securities and Exchange Board of India, monitor for commodity derivatives, is mulling changes in the regulations on these. Permitting of options trading in commodities will be decided very soon, say sources in the know.
****SD: They mull and mull and mull — must have some pretty warm cider.
Stocks climb to new record highs on Trump trade resurgence; energy rises 1%
Fred Imbert – CNBC
U.S. equities traded at record highs on Friday a day after President Donald Trump promised to release a tax plan in the near future. The Dow Jones industrial average rose about 80 points, with Goldman Sachs and Boeing contributing the most gains. The S&P 500 gained 0.3 percent, with energy rising 1 percent to lead
****SD: Also see Reuters’ Trump tax cut talk, Chinese data spur risk rally
Maverick Trading Releases 2016 Returns
PR Newswire via Yahoo
Maverick Trading, named the Best Proprietary Trading Firm in 2016, recently released its 2016 portfolio returns for both its Options and FX Divisions. Maverick discussed its portfolio returns in a private presentation to traders in each of its divisions. The firm’s Options Division portfolio generated well in excess of 50 points of alpha. The firm’s FX Division portfolio returned nearly 3,000 pips, handily exceeding its yearly goal of 2,400 pips.
Exchanges and Clearing
World Federation Of Exchanges Publishes 2016 Market Highlights
The World Federation of Exchanges (“WFE”), which represents more than 200 market infrastructure providers including exchanges and CCPs, today published its 2016 Market Highlights.
CME Group Reports YoY Drop in January FX Options
Aziz Abdel-Qader – Finance Magnates
CME Group (NASDAQ: CME), the holding company for CBOT, NYMEX, and COMEX exchanges has just released its Options Monthly Review for the month ending January 31, 2017 which showed an underperformance across all the group’s six product lines, according to a CME statement.
Nasdaq plans venture arm to invest in financial technology: sources
Anna Irrera – Reuters
Exchange operator Nasdaq Inc (NDAQ.O) plans to set up a venture capital arm to invest in financial technology companies that can help grow its own businesses, two people familiar with the plans told Reuters.
US Futures Volume Surges to Yet Another Record Year
Tom Lehrkinder – TABB Forum
Fourth quarter volatility driven by the political uncertainty around the November Presidential election helped push 2016 US futures trading volume to a record 3.6 billion contracts for the year. Meanwhile, the number of FCMs continued to consolidate, bringing the total to 65 at the end of December 2016.
NYSE, NYSE Arca And NYSE MKT Short Interest Reports
NYSE today reported short interest as of the close of business on the settlement date of January 31, 2017.
Regulation & Enforcement
Financial Deregulation: Repeal or Adjust?
Claude Lopez, Milken Institute – TABB Forum
In light of the leadership overhaul at the regulatory agencies, the blueprint defined by the Financial Choice Act, and the softer tone regarding Dodd-Frank revamping, the Trump administration may first focus on changes that would provide regulatory relief to the financial sector without altering the formal rules. The Milken Institute offers five potential targets for early change.
Republican plan would ease Wall Street rules, as party embraces deregulation
Patrick Rucker – Reuters
The Republican chairman of a key House of Representatives committee has laid out his plan to roll back Wall Street rules and consumer protections conceived after the 2008 financial crisis, a step that will largely define the financial deregulation debate in the Trump era.
ESMA Revises MiFID Standard On Position Reporting
The European Securities and Markets Authority (ESMA) published today a revision of its draft Implementing Technical Standards (ITS) on position reporting under the Markets in Financial Instruments Directive (MiFID II).
The Stock Market’s Biggest Bull Says the Trump Rally’s Just Beginning
Adam Haigh and Lu Wang – Bloomberg
Binky Chadha, Deutsche Bank AG’s chief global strategist and the most optimistic stock market analyst on Wall Street, says the rally since Donald Trump’s election is only beginning.
Stock Market VIX Cycles Set to Explode in March/April 2017
Chris Vermeulen – The Market Oracle
My recent analysis of the markets has shown what I believe to be an explosion in market volatility set to starting happening between February 21, 2017 and March 30, 2017. The historical VIX cycles have been running about 18~22 week intervals for expansion and extreme volatility levels.
****SD: Aaaand boom goes the dynamite.
How the Flash Crash Trader’s $50 Million Fortune Vanished
Liam Vaughan – Bloomberg
It took Navinder Singh Sarao a long time to accept that he might have been scammed out of $50 million. Stuck in London’s Wandsworth prison, wracked with anxiety and unable to sleep, the realization dawned on the man dubbed the “Flash Crash Trader” as slowly as spring turned to summer outside the barred window of his jail cell.
Goldman’s No. 1 is so bullish on Wall Street, he coined a term for it
Although uncertainty abounds regarding how stock and bond markets will digest a host of potential pitfalls on the horizon, Goldman Sachs’s top dog appears undaunted—even bullish about future prospects for the financial markets.
****SD: Good strategery leads to growthiness.