BOX Options Exchange Obliterates Status Quo with New Trading Floor Plans
Jeff Patterson – Finance Magnates
A well-defined options playing field could see some degree of a shakeup as BOX Options Exchange moves to secure a greater percentage of the overall market share. The group is planning on opening a new floor with approximately 40 human traders. Consequently, the move is being met with widespread discontent from other exchanges, many of which filing complaints or letters criticizing the ambitions of BOX.
Pipe Down and Enjoy the Calm
Nir Kaissar – Bloomberg
Investors are hard to please. They wail and moan when markets are volatile. And when markets are quiet, well, they complain about that, too.
Not me. I say that the recent calm in markets is pure bliss. The CBOE Volatility Index — the widely followed gauge of U.S. stock market volatility better known as the VIX — has averaged 19.5 since its inception in 1990. But so far this year, the VIX has averaged just 11.5. (The lower the VIX, the lower the volatility, and vice versa.)
BlackRock says stock market investors are not taking enough risk
Akin Oyedele – Business Insider
Investors are taking on too little risk in the stock market as they overthink why it remains calmer than normal, according to BlackRock, the world’s largest asset manager with $5.4 trillion in assets under management as of March 31, 2017.
This caution is being reflected in measure of investor fear, such as the CBOE’s Volatility Index for the S&P 500, which sits below its historical averages, suggesting to some that the market is too complacent. The VIX on Wednesday was near 10.35, lower than its long-term average of 18.82.
Stock market hasn’t been this quiet since Lyndon B. Johnson was president
Ryan Vlastelica – MarketWatch
The last time Wall Street trading was this quiet, Lyndon Johnson was president, The Sound of Music was the movie to see, and on the radio, the Rolling Stones were searching for satisfaction.
According to an analysis by Michael Batnick, director of research at Ritholtz Wealth Management, volatility in the U.S. equity market hasn’t just been in short supply of late, it’s on track for its lowest level in 52 years.
Money managers question if trend to passive investment is lowering volatility
Sophie Baker – Pensions & Investments
The rise of passive investing might be affecting the measure of short-term implied market volatility, some money managers say.
With the Chicago Board Options Exchange Volatility index, known as the VIX, hovering at the lower end of its 52-week trading range, these managers wonder if that isn’t a result of the increased popularity of passive investment strategies.
Dip in volatility stirs warnings about too much complacency
Sophie Baker – Pensions & Investments
Global money managers and analysts are split on whether markets and investors are becoming complacent and disconnected from potential sources of market volatility, as the Chicago Board Options Exchange Volatility index — the VIX — dips to decade-low levels and leverage in credit markets creeps higher.
The VIX closed at 11.19 on July 7, as Pensions & Investments was going to press. The 52-week range is between 9.37 and 23.01. The index measures the implied volatility of Standard & Poor’s 500 index options, showing expected market volatility over a 30-day period.
Why Commodity Traders Are Fleeing the Business
Shelley Goldberg – Bloomberg
Profiting from commodity trading often requires a combination of market knowledge, luck and most importantly, strong risk management. But over the years, the number of commodity trading houses has dwindled, and the institutional, pure-play commodity hedge funds that remain, and actually make money, can be counted on two hands. Here is a list of some of the larger commodity blow-ups:
Business Casts Doubt on U.K.-U.S. Post-Brexit Trade Deal
Jill Ward and Charlotte Ryan – Bloomberg
The transatlantic trade deal U.S. President Donald Trump is offering U.K. Prime Minister Theresa May will ultimately prove easy to promise and hard to deliver.
That’s the warning of business leaders and trade analysts after Trump told May last week that the post-Brexit accord she hankers after can be lined up “very, very quickly.”
Yellen maintains plan to hike interest rates, shrink balance sheet
Federal Reserve Chair Janet Yellen said Wednesday that the U.S. central bank remains on track to both raise interest rates and begin shrinking its balance sheet before the end of the year.
In prepared remarks released before her testimony to the House Financial Services committee, Yellen said the Fed is likely to unwind its stimulus despite low inflation.
Exchanges and Clearing
Wall Street Wins Round in Fight With Exchanges Over Audit System
Charlotte Chilton and Benjamin Bain – Bloomberg
The long effort to make it easier to catch cheaters and diagnose the causes of mysterious crashes in the U.S. stock market just suffered another setback.
The Securities and Exchange Commission is reviewing how exchanges plan to pay for the massive database, known as the Consolidated Audit Trail, with fees from brokers, banks and other traders. The decision came after financial firms complained that their concerns were ignored by the exchanges.
NYSE Group Expands Opportunities for Listings of Special Acquisition Companies (SPACs) through Listings Rule Enhancements; Launches Three SPAC IPOs in Three Months Raising $1.2B
The New York Stock Exchange (NYSE), part of the Intercontinental Exchange (NYSE:ICE), has enhanced its listing rules and services platform to attract Special Acquisition Companies (SPACs) to list on the NYSE. A final rule filing for NYSE’s SPAC listings was approved by the SEC late last week.
SEBI seeks views to make equity derivatives healthy
The Hindu Business Line
In a move to weed out anomalies in the derivative segment, SEBI has sought comments from market participants to further strengthen the framework in line with the emerging trends and global best practices.
Comments were sought by August 10 on issues relating to trading in derivatives, participant’s profile, product mix, stock eligibility, leverage-related matters and product suitability framework.
Bitcoin Is Having a Civil War Right as It Enters a Critical Month
Lulu Yilun Chen and Yuji Nakamura – Bloomberg
It’s time for bitcoin traders to batten down the hatches.
The notoriously volatile cryptocurrency, whose 150 percent surge this year has captivated everyone from Wall Street bankers to Chinese grandmothers, could be headed for one of its most turbulent stretches yet.
Bored Traders on Tinder Are a Symptom of Wall Street Revenue Dip
Laura J Keller – Bloomberg
One bond trader says he’s been slipping out early to watch his kids play sports. A fund manager says his office just staged a golf retreat. A trading supervisor at another bank confides he’s swiping through a lot of profiles on Tinder, the dating app.
Welcome back, Wall Street, to the doldrums.