Observations & Insight
Long-Time Options Industry Leader Gina McFadden is First Woman to Receive 2017 Sullivan Award
OCC, The Options Industry Council (OIC) today announced that Gina McFadden, a long-time leader in the U.S. listed equity options industry, will be the first woman to receive the 2017 Joseph W. Sullivan Options Industry Achievement Award. This award is given to individuals in recognition of outstanding contributions to the U.S. options industry. The award will be presented at the 35th Annual Options Industry Conference on May 12 in Scottsdale, Arizona.
****SD: Congratulations! She is also our MarketsWiki Page of the Day today.
World Federation Of Exchanges & Five Partner Organisations Bring Together 43 Stock Exchanges To ‘Ring The Bell For Gender Equality’
The World Federation of Exchanges (“WFE”), which represents more than 200 market infrastructure providers including exchanges and CCPs, is pleased to confirm that its member exchanges are taking part in the third annual ‘Ring the Bell for Gender Equality’ series this week.
Freakish Peace Envelops Bull Market as Eighth Year Rolls By
Lu Wang – Bloomberg
If the bull market is worried about dying, it’s not letting on. Eight years along and no existential crisis plagues this advance, whose unbroken march from the depths of the Great Recession is the second longest ever. Valuations are stretched and going by its age the rally is in rarefied air. But volatility, the ticker tape of investor anxiety, is nowhere to be found.
****SD: “I’m melting (up)!” – Wicked Witch of the Street now
While Donald Trump may have stocks up, some hedge funds managers are bracing for a selloff
Kate Kelly, NYT – Financial Post
Stocks have marched higher and higher — up 5 per cent since President Donald Trump took office six weeks ago — and the rally has become one of his favourite boasts. And there is plenty of economic data to justify the ebullience. So why are some hedge fund managers bracing for a selloff? It’s all in the details.
****SD: “I’m melting!” – Wicked Witch of the Street eventually
Fed Takes Fear Out of Markets as Volatility Plunges in Bonds, FX
Brian Chappatta – Bloomberg
From traders in the $13.9 trillion U.S. Treasury market to those dealing currencies around the globe, signs are mounting that there’s little in the pipeline for them to get worked up about in the days ahead.
****SD: “What’s melting?” – the Fed
Schwab and TD Ameritrade: Fee Wars, What is it Good For?
Crystal Kim – Barron’s
Fee wars broke out into a multi-front affair last week as the action bled into the brokerage arena. Charles Schwab (SCHW) took the first shot early February. Then Fidelity dropped its online trading commission on stocks and exchange-traded funds to $4.95 last week, which prompted pretty much every online broker to slash prices including TD Ameritrade Holding (AMTD), and E*Trade Financial (ETFC).
****SD: Even an investor in a brokerage that stands to lose some money benefits in the end from the decrease in overhead for their overall trading.
Deflated S&P 500-Based VIX Pulling Other Volatility Measures Down
John Kicklighter – DailyFX
The VIX has already found itself deflated to what are arguably natural lows around the 10-11 handle region. Where equity based volatility measures are already deflated, there is still premium to work off in other assets. Despite heavy price activity, crucial event risk ahead and a build up of exposure; volatility reads are dropping fast
Cash Levels at Two-Decade Low Boost Market Risks
Mark Kolakowski – Investopedia
It’s another stark warning sign for investors. Total cash holdings in funds have fallen to their lowest level in nearly two decades, a signal that investors worldwide are seriously underweight in cash, according to a study from Ned Davis Research cited by Bloomberg. As a result, “There’s not a lot of cash to act as a shock absorber,” Ed Clissold, the firm’s chief U.S. strategist, told Bloomberg.
The Dollar’s Barely Budged Ahead of a Rate Rise
Lananh Nguyen – Bloomberg
When the Federal Reserve chair telegraphs an imminent rate increase, it’s usually a good signal to buy the dollar. Not this time.
Exchanges and Clearing
Nasdaq Targets Options Growth
Terry Flanagan – Traders News
Nasdaq, whose purchase of International Securities Exchange eight months ago increased its share in U.S. options to about 40%, is working to expand what has been a largely stagnant market over the past few years.
ASX automates futures and options contracts
Hayley McDowell – The Trade
The Australian Securities Exchange (ASX) is automating the creation and rollovers of 20,000 futures and options contracts annually through the use of GoldenSource’s technology.
****SD: They’re outsourcing our jobs to electrons in motion!
Collapsing Deutsche Boerse deal increases home focus at LSE
Samuel Agini – Financial News
London Stock Exchange Group – whose EUR29 billion merger with Deutsche Boerse is on the brink of collapse – could focus on expanding two nascent areas of its business to fill in missing gaps instead. Xavier Rolet, chief executive of the LSE since 2009, told analysts on March 3 that the company has two “homegrown” solutions to build listed futures and global collateral management businesses which are currently “missing capability of size”.
Brexit threatens clearing model for UK buy-side
Paul Walsh – The Trade
The UK’s decision to leave the European Union may act as “the straw that broke the camel’s back for the clearing business” by increasing pressure on existing challenges the industry faces.
From Trading Floor Into App Store
Carsten Kengeter, CEO, Deutsche Boerse AG
The looming Brexit is blowing the winds of change over Frankfurt as a financial centre. We all have to be prepared for a whole new world, in which the United Kingdom and the continent of Europe are no longer walking at the same pace. For Frankfurt, this change entails significant opportunities, of which most are closely connected to the role of Deutsche Börse Group. Hence, in the past few months I have been thinking constantly about what exactly a stock exchange is nowadays – and how to communicate that in the best way possible, since I have been holding intense discussions with representatives from various stakeholder groups about locational policies, competitiveness and – most of all – about the future.
CBOE Holdings Announces Additional Listing On Bats BZX Exchange
CBOE Holdings, Inc. today announced its plans to be dually-listed on the Bats BZX Exchange, Inc. and on NASDAQ Global Select Market. Shares of CBOE Holdings common stock have been listed on NASDAQ since the company’s initial public offering in 2010. In addition, the company will also be listed on the BZX Exchange beginning today. CBOE Holdings will continue to trade under the ticker symbol “CBOE.”
Nasdaq Philadelphia Relocation
Nasdaq is excited to announce that we are relocating Nasdaq offices at 1900 Market Street and the Philadelphia trading floor to the Circa Center South building at 2929 Walnut Street, Philadelphia.
Ex-Goldman derivatives head on why he left shrinking investment banks for an expansionary fintech firm
Paul Clarke – eFinancialCareers
John Macpherson’s final job in investment banking, as head of European head of listed derivatives at Citigroup in London, lasted around two months. He is, he says, the “guy you bring into grow a business” and Citi’s ambitions to expand did not match his own. He’s now landed in the most obvious place for someone looking for quick growth – fintech.
****SD: At one juncture in his career he got frustrated when he “ended up reporting to people who didn’t understand the secret sauce…” which is a common reason for job dissatisfaction anywhere.
Investment banks to choose artificial intelligence over humans
Samuel Agini – Financial News
Under constant pressure to slash costs and boost returns, investment banks are set to replace humans with artificial intelligence. Stamford, Connecticut-based research firm Greenwich Associates thinks investment banks will seek to deploy artificial intelligence across research, sales, trading, and compliance.
****SD: We created the game, manufactured the equipment and now get picked last for the team…
Regulation & Enforcement
CFTC Keeps Doing Business With Only Two Commissioners
Richard Hill – Bloomberg BNA
President Donald Trump’s decision to withdraw a pair of pending CFTC nominations isn’t likely to incapacitate the agency, thanks in part to a good working relationship between the two remaining commissioners. Acting Chairman J. Christopher Giancarlo, a Republican, and Commissioner Sharon Bowen, a Democrat, are the only ones serving on the five-member Commodity Futures Trading Commission since former Chairman Timothy Massad left the agency Feb. 17.
****SD: Two of five is only good in baseball.
PwC blames Corzine for MF Global demise as trial starts
Jonathan Stempel – Reuters
PricewaterhouseCoopers LLP [PWC.UL] pinned blame for MF Global Holdings Ltd’s collapse squarely on the commodity brokerage and its former chief executive officer, Jon Corzine, as a trial over the auditor’s own responsibility got under way on Tuesday.
****SD: Corzine is also responsible for the Best Picture Oscars flub.
Mifid II to revive interoperability – expert
Julie Aelbrecht – FOW
Differences in risk models are one hurdle on the way to CCP interoperability The open access rules under Europe’s Mifid II directive will re-invigorate the debate around clearing interoperability and could see the scope of interoperability widen to include more categories of derivatives, a clearing expert has told FOW.
SEC nominee Clayton vows separation from his Wall Street law firm
Amanda Becker – Reuters
Wall Street attorney Jay Clayton, President Donald Trump’s pick to head the U.S. Securities and Exchange Commission, has vowed to recuse himself from agency matters involving his law firm and former clients, according to an ethics agreement made public on Wednesday.
Courts Will Define Boundaries of Friendship in Insider Trading
Peter J. Henning – NY Times
Insider trading law is heating up again, with a trial involving the high-profile gambler Billy Walters scheduled to start next week.
Global Binary Options Regulations Overview – The Full Breakdown
Avi Mizrahi – Finance Magnates
The online trading business is by its very nature global, reaching anywhere that the internet is accessible, even if all you have is a mobile phone. Regulations, however, are still tied to your actual geographical location and following all the conditions in every country of the world can be difficult and time consuming.
****SD: More binary reg stuff – The Times of Israel’s Canada calls on Israel to ban all binary options ‘immediately’ and FinanceFeeds’ Quebec’s binary options ban plan faces opposition
Buy-Side Tech Spend in Focus
John D’Antona – MarketsMedia
So, what are trading desks around Wall Street spending their money on? According to a recent report from Greenwich Associates, institutions are allocating their increasingly scarce resources to fixed income pursuits and technology. Furthermore, these managers are approaching overall major changes with trepidation and are cautiously watching how the macro economic picture shakes out under President Trump. Why fixed income? Why not equities or options or foreign exchange?
Interest in computer trading hedge funds heats up
Becky Pritchard – Financial News
Investor interest in computer trading hedge funds is on the rise, according to a survey by Deutsche Bank. Five out of the top ten most in-demand hedge fund strategies this year use computers rather than humans to make trading decisions, according to the bank’s 15th annual Alternative Investment Survey.
Technology outsmarts the human investor
John Gapper – Financial Times
To grasp why Standard Life agreed to buy Aberdeen Asset Management for GBP3.8bn this week, it helps to recall an experiment at the Oregon Research Institute in the 1960s, that rated how good doctors were at making judgments compared with formulas they helped to design.
Turtles Trade Trends
Kira Brecht – The Ticker Tape
We’ve all heard the saying “the trend is your friend,” and for good reason. There’s an entire group of traders and money managers who swear by the so-called “trend-following” approach.
How to Trade Weekly Options
Elizabeth Harrow – Schaeffer’s Research
Weekly options expire on Fridays outside of the traditional monthly expiration week (normally the third Friday of each month). Weekly stock options are available on a wide variety of popular stocks, which essentially means that every week is now an expiration week. As a result, it’s possible to be stingy about how much time value you’re buying, since you can fine-tune the time frame of your trades to line up almost exactly with your forecast for the stock’s expected move.
Chinese exchanges back futures insurance schemes
Luke Jeffs – Futures & Options World
Dalian, Shanghai and Zhengzhou exchanges are promoting the State-backed scheme
The largest Chinese commodity futures exchanges are promoting an innovative Chinese state-backed programme to use futures contracts to underpin insurance schemes for farmers. The Dalian Commodity Exchange (DCE) said on Wednesday it hosted in Beijing a forum to promote the “insurance+futures” pilot which was created in 2015.
Goldman Sachs’ lessons from the ‘quant quake’
Robin Wigglesworth – Financial Times
It was a typical New York summer day, the kind where arriving at Goldman Sachs’ perfectly air-conditioned offices in downtown Manhattan was a blissful release from the humid weather outside. But for Gary Chropuvka it proved to be one of the worst days of his life.