Breaking News

Vela to acquire Object Trading complementing its recent acquisition of OptionsCity; They’re The World’s Fastest Traders. Why Aren’t They Thriving?; Why Everyone’s Trading Volatility

Lead Stories

Vela to acquire Object Trading complementing its recent acquisition of OptionsCity; Acquisition enables Vela to offer a comprehensive software and managed services solution across the entire electronic trading workflow
Vela Trading Technologies LLC (Vela), an award-winning global leader in high performance trading, market data, and analytics technology, has signed a definitive agreement to acquire Object Trading, a global provider of a fully-managed Direct Market Access (DMA) platform, pre-trade risk controls, and analytics applications.
/goo.gl/qzVNsV

****SD: Who’s going to be number three? My Spidey sense is tingling a bit. When Brian Cassin, Vela’s head of product strategy, spoke at our MarketsWiki Education event in NY on Tuesday (most of which was about handling mergers and integration btw), he said the company was working on something else he couldn’t talk about. For some reason, I didn’t expect for the deal to hit the wire quite so soon. Quite the evolution we’re witnessing.

They’re The World’s Fastest Traders. Why Aren’t They Thriving?
Annie Massa and Charlotte Chilton – Bloomberg
Soul-searching speed traders seek new income in quiet markets; ‘Outside the box’ thinking is required, one HFT exec says
High-speed traders have hit the wall. Even as critics of high-frequency firms have argued their speed and technology give them an unfair advantage, the traders are facing diminishing returns. For one thing, there’s been relatively little turbulence in this bull market, a challenge for high-frequency traders and other market makers because it restrains volatility and trading volume, curbing their profits.
/goo.gl/edYDpZ

****SD: Sometimes being forced to tighten up the belt and reevaluate is a good thing. Hopefully, this is one of those cases.

Why Everyone’s Trading Volatility
RCM Alternatives Blog
Does a question about the VIX over a 4th of July weekend barbecue count the same as the shoeshine boy giving stock tips? We’re not sure it’s quite the same… it was an innocent question about what the VIX is… not a full-on treatise on how to trade it, but the evidence keeps mounting that more and more investors are trading the VIX these days, now seeing the fear gauge as a tool to generate returns, not just an indicator. Whether we’re in peak VIX mode or not – it was high time we wrote a whitepaper on all the ins and outs of volatility trading via the VIX – read it here.
/goo.gl/Dh2sSJ

The Fed has frustrated and confused the markets: Terry Duffy
Nick Giampia – Fox Business
On Wednesday, Federal Reserve Chairwoman Janet Yellen announced that the Fed will continue to raise rates and start paying down its immense bond portfolio.
CME Group CEO Terry Duffy explained why the Federal Reserve has caused “frustration” and “confusion” in the market place.
jlne.ws/2udfveZ

Volatility Index Could Double in the Next 12 Months, Says Natixis
Cormac Mullen – Bloomberg
Volatility index at risk of rising above 20 within a year; Political instability, business cycle, central banks cited
/goo.gl/REcnVN

****SD: In more turbulence related news, MarketWatch has Stock market hasn’t been this quiet since Lyndon B. Johnson was president and CNBC has One of Wall Street’s favorite ways to time the stock market may not work at all.

Exchanges and Clearing

NEX revenues grow despite tough market conditions
The Trade
NEX Group has seen revenues grow 10% on a constant currency basis during the first quarter of its financial year.
The market operator and post-trade specialist was formerly known as ICAP, but became NEX last year when it sold its voice broking business to TP ICAP.
jlne.ws/2udtZvz

Regulation & Enforcement

Foreign Banks to Seek Relief From India’s Derivatives Rule
Santanu Chakraborty and Bei Hu – Bloomberg
Overseas banks met with India’s markets regulator to ask for relief from a new rule that requires investors to liquidate some of their offshore derivatives contracts, people with knowledge of the matter said.
jlne.ws/2udiLac

MIT research scientist arrested for insider trading
Nate Raymond – Reuters
A research scientist at Massachusetts Institute of Technology was arrested on Wednesday on charges that he engaged in insider trading based on information he obtained from his wife, a corporate lawyer working on a deal involving a mining company.
/goo.gl/jse3xA

****SD: Or as Dealbreaker phrases its article Once Again: Do Not Insider Trade While Posing As Your Own Mother
****JB: Apparently part of what helped catch him was he Googled ‘insider trading’.

New S.E.C. Chairman Pledges to Look After Ordinary Investors
Matthew Goldstein – NY Times
In his first public speech as the nation’s top securities cop, Walter J. Clayton sought on Wednesday to send a message that he would not shy away from looking out for the interests of mom-and-pop investors.
jlne.ws/2udsVI5

Technology

Interactive Brokers Now Offers Sterling Trading Tech’s Suite of Trading Platforms
Finance Magnates
Sterling Trading Tech (STT), a US-based provider of trading solutions for the equities, options and futures markets, today announced that its suite of trading platforms is now available to clients of Interactive Brokers LLC. Interactive Brokers is a global electronic multi-asset broker and market-maker listed on Nasdaq.
/goo.gl/PzxkUD

****SD: If you recall, Sterling acquired the Livevol X execution platform from CBOE in March.

BestX plans TCA expansion to liquid rates
Helen Bartholomew
Start-up foreign exchange analytics platform BestX is set to expand its transaction cost analysis tool in 2018 to fixed income markets, enabling participants to define and demonstrate best execution for liquid rates products in compliance with MiFID II.
/goo.gl/DUxMEk

****SD: “A pre-trade analysis tool was added at the start of this month, while TCA for vanilla FX options will be launched in the coming weeks.”

Strategy

Bond Trader Bets $10 Million That Volatility Revival Is Imminent
Brian Chappatta, Edward Bolingbroke – Bloomberg
Volatility in the bond market is about to stage a comeback. At least that’s what one trader is betting, judging by options-market activity signaling a conviction that Treasuries will either win big or fall hard in the next two weeks. The success of the wager, which involves an unusually large amount of money for an options strategy of this kind, isn’t tied to the direction of yields. Rather, it depends on the return of the kind of turbulence that hasn’t been seen in months.
/goo.gl/hDZogH

****SD: I’m sure a lot of people would like to strangle this market.

Calendar Spreads: Options Strategy for the Dog Days of Summer
Scott Connor – The Ticker Tape
Ah, summertimeó a time of barbecues, lounging poolside on extended vacations. Perhaps it’s time to kick back and open up a…calendar spread?
/goo.gl/Hy3iqW

VXX: Fed Policy Changes To Drive Volatility
Seeking Alpha
Stock market activity has slowed to a near halt, and market investors are starting to look for potential catalysts that might propel trends in the iPath S&P 500 VIX ST Futures ETN. The ETF has become notorious for its lack of movement but there are building market forces that could start to jar these expectations.
jlne.ws/2udC8QJ

VIX At A Seasonal Turning Point
Callum Thomas – Investing.com
The topic of seasonality is a controversial one among investors. Some swear by it, referring to studies that present evidence for a reliable seasonal pattern across the year, verified across global equity markets. Others dismiss it as noise; nothing but a random assembly of outliers – or ignore it due to a lack of reliability.
jlne.ws/2udpVvf

Goldman Sachs relaxes dress code for techs in fight for talent
Olivia Oran and Anna Irrera – Reuters
Traditionally buttoned-up Wall Street bank Goldman Sachs Group Inc (GS.N) has relaxed the dress code for its computer engineers in a bid to attract tech talent with a more casual environment.
/goo.gl/fuvRfv

***SD: Now this is what I call strategy.

Miscellaneous

Research: Hiring Chief Risk Officers Led Banks to Take on Even More Risk
Kim Pernell, Jiwook Jung and Frank – Harvard Business Review
Risk taking by big U.S. banks exploded in the years leading up to the 2008 financial crisis, with disastrous consequences for American firms, markets, and households. Much of the added risk, of course, came in the form of complex, opaque financial instruments like derivatives, the “financial weapons of mass destruction” that played such a central role in the crisis and the panic that followed.
/goo.gl/c8o6gG

****SD: Were any of the CROs in question Harvard grads? Surely the Ivy League was well represented.

BMO launches enhanced income covered call ETFs
James Lord – ETF Strategy
BMO Global Asset Management has launched a suite of enhanced income ETFs on London Stock Exchange. The three ETFs – tracking UK, eurozone and US equities – provide exposure to stocks with sustainable dividend yields and also utilise a covered call option overlay strategy.
/goo.gl/3RxcPM

Someone held up a ‘buy bitcoin’ sign during Yellen’s testimony to Congress
Evelyn Chang – CNBC
An unidentified man held up a sign saying “buy bitcoin” during Fed Chair Janet Yellen’s testimony Wednesday before the House Financial Services Committee.
/goo.gl/fWoD3y

****SD: People can look at charts and do all sorts of analysis, but sometimes these anecdotal moments are what really make me think about asset bubbles.

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Graduate of University of Minnesota School of Journalism and Mass Communication