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Vela vs. Trading Technologies; Witching days not so scary; OCC to work with SEC

Lead Stories

Trading Technologies International sues Vela Trading Technologies over trademark infringement
Maria Nikolova – FinanceFeeds
Trading Technologies International accuses Vela Trading Technologies of infringement of its registered trademarks, including TRADING TECHNOLOGIES and TT.

****SD: The recent acquisitions of OptionsCity and Object Trading by Vela were the tipping point. TT’s general counsel is Mike Ryan. Filing attorneys for TT are from Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, a widely recognized law firm focused on intellectual property. One of the attorneys on the filing, Paul Borovay, has a random tidbit on his bio page – “Before returning to law school, Paul recorded his own rock album and created a website which successfully promoted his band and led to a U.S. tour.” He has a YouTube channel.

Witching Days Not As Scary As They Once Were
Dan Rosenberg – The Ticker Tape
Back in the 1980s and 90s when JJ Kinahan, chief market strategist for TD Ameritrade, traded in the storied Chicago futures and options pits, there were certain days he had to be more wary than usual about potential risk to his pocketbook.

OCC to Work With SEC as U.S. Court of Appeals Remands Capital Plan to Agency
OCC, the world’s largest equity derivatives clearing organization, today said it would provide Commissioners and staff of the U.S. Securities and Exchange Commission any information it needed to evaluate OCC’s capital plan in light of the decision by the U.S. Court of Appeals for the D.C. Circuit to remand it to the agency for further review.

Low market volatility now, but when it comes it could be huge
Chris Weston – IG UK
The streak that last occurred in 1995. In fact, it has been 75 trading sessions since we saw a rally of 1% in the S&P 500.
Financial markets, outside of crypto-currencies have simply lacked anything that even resembles a pulse.
Traders have been eyeing the US volatility index (also known as the ‘VIX’), which is the options markets pricing of implied volatility in the S&P 500 over the next 30 days and again this has been at such subdued levels. Culminating in the index closing under 10% for 10 consecutive days through late July.

****SD: Relevant charts from Zero Hedge regarding some of the points made in the piece – There Has Never, Ever, Been This Many Trades Betting On VIX. And of course, today we have a vol jump. More from the FT. As of this writing, VIX jumping around the 15 handle.

Former HK commodities exchange chief charged with conspiracy to defraud regulator: court
Prominent businessman Barry Cheung, who founded the now-defunct Hong Kong Mercantile Exchange, appeared in a Hong Kong court on Thursday charged with conspiracy to defraud the securities regulator and fraud.

Exchanges and Clearing

Central Counterparties Help, But Do Not Assure Financial Stability
Claude Lopez and Elham Saeidinezhad, Milken Institute – TABB Forum
Central counterparties play a pivotal role in the post-crisis reforms of derivatives markets. Despite their critical role in ensuring trades, however, regulators may become over-reliant on CCPs as a bulwark to safeguard the financial system. Vigilant oversight by the public sector over the efficacy of other systemically important aspects of CCPs may still be needed to ensure the continuity of trading activities.

World Federation Of Exchanges releases steady H1 2017 market results
Valentina Kirilova – LeapRate
The World Federation of Exchanges (WFE), which represents more than 200 market infrastructure providers including exchanges and CCPs, today published its H1 2017 Market Highlights report.

Deutsche Boerse board discusses Plan B amid CEO investigation: WirtschaftsWoche
Deutsche Boerse’s (DB1Gn.DE) supervisory board has discussed contingency plans in case CEO Carsten Kengeter has to step down amid an investigation over possible insider trading, German magazine WirtschaftsWoche reported on Wednesday.

****SD: The accompanying picture of Kengeter is pretty great.

Bank Negara slams SGX’s introduction of ringgit futures
Daily Express Newspaper
Bank Negara Malaysia has slammed the Singapore Exchange’s decision to introduce the ringgit futures, saying that the ringgit is a non-internationalised currency and thus offshore trading of ringgit on exchanges abroad is against the country’s policy.

****SD: Statement says – “offshore trading of ringgit, in any form whether as a non-deliverable forward traded out of offshore financial centres or as a futures, options and other derivative contracts on exchanges outside of Malaysia, is against Malaysia’s policy.”

CME Group Foundation Awards $2.6 Million in First Half of 2017 to Support STEM Education in Illinois
CME Group
CME Group Foundation today announced it will provide strategic support and grants of $2.6 million to 14 organizations in Illinois to support STEM education initiatives from pre-kindergarten through college.

TMX beats profit expectations as it cuts costs
Canada’s dominant stock exchange operator, TMX Group Ltd (X.TO), posted better-than-expected quarterly profit and revenue late on Wednesday, as it saved more in costs than it lost in revenue from several businesses it discarded.


Barclays Is Said to Hire Nomura’s Tyndall for Currency Trading
Sonali Basak – Bloomberg
Barclays Plc hired Michael Tyndall from Nomura Holdings Inc. as a senior trader for foreign exchange options, according to a person familiar with the move.

Virtu slashes KCG staff by more than a third
Hayley McDowell – The Trade
Virtu Financial has cut more than a third of KCG’s employees, mostly from management level, as the firm looks to trim costs following its acquisition.

Regulation & Enforcement

FRTB: proxy risk factors may trigger model failures
Louie Woodall –
Using proxies for illiquid risk factors in regulatory capital models might prove to be a double-edged sword – potentially shrinking capital charges for market risk while increasing the possibility of model failures, market participants say.
Non-modellable risk factors (NMRFs), which are those not based on a required number and frequency of past price points, will attract whopping capital add-ons under the Basel Committee’s incoming market risk capital framework…

****SD: I’m assuming N. Korea ICBMs fall in this category?

Ferc’s Collins defends manipulation rule
Dan DeFrancesco –
US energy market watchdog is “serious” about its surveillance role


Are VIX Futures Rewarding Volatility Sellers Adequately?
Nick Cherney, Janus Henderson Investors – Seeking Alpha
The short volatility trade has been popular over the past several years. Volatility traders buy and sell options on the Chicago Board Options Exchange. As my colleague John Fujiwara recently pointed out (Lower Volatility Forever? Don’t Bet on It), the non-options traders among us can understand selling an option as something similar to selling an insurance policy on the market.

Dollar down but not out: Goldman
It is too early to declare the dollar is heading into a protracted decline despite experiencing a rough 2017, especially against the euro, Goldman Sachs (GS.N) analysts said on Wednesday.

****SD: Also from Reuters – Asia FX bulls add to bets as dollar sags, long yuan positions near three-year high: Reuters poll

Is It Time to Bet Against Nvidia?
Steven M. Sears – Barron’s
JPMorgan is telling clients to wager against Nvidia ahead of late Thursday’s earnings report, a rare bearish recommendation on one of the market’s hottest stocks.

****SD: This stock has been the epitome of Ralph Kramden’s catchphrase – “to the moon!” Also from Barron’s, Nvidia: Does This Tech Darling Have Legs?


How VarSwaps Work And Why Knowing Is Important
Stuart Barton – Seeking Alpha
Exchange traded volatility products like ETFs and ETNs continue to grow in popularity, and this rapid expansion into a relatively complex asset class has left many investors confused about some of the fundamental concepts needed to reasonably understand the market that underlies these popular retail products.

The Commitments Of Traders Reports
Michael Fairbourn, Investools – Benzinga
Traders use the Commitments of Traders (COT) reports to gain perspective on the commodity market, as it provides insight into where the market’s biggest participants are moving their money. However, a common challenge that some traders initially face is how to decipher information from the report. In this article I’ll explain some of the key information from the COT reports. The reports can be obtained by clicking here.


Breaking Down Cryptocurrency Liquidity for Brokers
Alex Nekritin – Finance Magnates
Cryptocurrencies have experienced massive growth in 2017 and with a record breaking market cap of over $120 billion dollars it is fairly evident that they are not going away. With opportunities like leveraged trading, investing, mining and ICO’s people are eager to get into the crypto currency action.

****SD: Something to keep in mind as options exchanges prep for bitcoin products.

World Agricultural Supply and Demand Estimates

****SD: Link to a PDF of today’s release.

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Graduate of University of Minnesota School of Journalism and Mass Communication