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VIX pioneer Dan Galai interview; Betting on risk is risky; FX Options Update

Lead Stories

A pioneer of the VIX says the market is looking at volatility all wrong; VIX pioneer Dan Galai interview
Joe Ciolli – Business Insider
Stock market volatility — or the lack thereof — has been a hot-button topic on Wall Street of late.

The VIX, VXX, SVXY, and volatility-linked ETFs: Betting on risk is risky
Allison Schrager – Quartz
No risk, no reward. That maxim has suffered recently, as the stock market has rewarded investors with steady returns amid historically low volatility. Traders looking to beat the market have fewer options in such placid conditions, so some have turned to betting on risk itself.

FX Option Market Update: September 1, 2017
Saxo Bank’s latest FX options market report details some interesting developments in the volatilities space, particularly in terms of USDJPY.

Traders Are Girding for a Political Shake-Up in New Zealand
Masaki Kondo – Bloomberg
It seems Jacinda-Mania has caught the attention of the currency market.
New Zealand’s dollar spiked lower Thursday as an opinion poll put the country’s opposition Labour Party, under new leader Jacinda Ardern, in front of the ruling National Party for the first time ahead of the Sept. 23 election.

****SD: Above Saxo FX update has some details on this kiwi/aussie stuff.

Weak wage data won’t help Fed convince markets on hikes
ING Think
It wasn’t the best jobs report overall, but for the Fed, it’s the weaker wage growth that will be most frustrating. It is worth pointing out that this might be explained away by statistical quirks. There were two additional work days in August than July, and that tends to skew the overall average hourly earnings figure downwards (this isn’t adjusted for, rather strangely). But in any case, it won’t help the Fed convince markets that it wants to hike rates faster than investors currently anticipate.

Exchanges and Clearing

BOX Files for Floor Fee
Rob Daly – MarketsMedia
The BOX Options Exchange has filed a request with the US Securities and Exchange Commission to establish a $1,500 per month booth fee for its recently open-outcry trading floor.

CBOE Holdings: Still Plenty Of Unrealized Upside
Seeking Alpha
CBOE still hasn’t fully realized a proper valuation from its acquisition of Bats Global Market and partnership with bitcoin exchange, Gemini.
The stock looks expensive, but I explain why the valuation is justifiable.
CBOE is more profitable than Nasdaq Inc, sports higher margins, yet is priced lower. A full-year’s worth of results accounting for Bats acquisition and bitcoin derivative launch should change that.

Japan Exchange Group Trading Overview In August 2017
Japan Exchange Group released Trading Overview in August 2017.

****SD: New volume record for Nikkei 225 weekly options.

Regulation & Enforcement

Trump to nominate Robert Jackson for seat on SEC: source
U.S. President Donald Trump is expected to nominate Columbia University law professor Robert Jackson to be a member of the Securities and Exchange Commission, a person with knowledge of the matter said on Thursday.

Goldman Executive Tapped by SEC to Advise on Brexit, MiFID
Benjamin Bain – Bloomberg
U.S. regulators have turned to a top Goldman Sachs Group Inc. executive to help them deal with two of the most daunting issues confronting Wall Street: Brexit and new European rules that will upend banks’ research businesses.


Market Access: New Interfaces Launched
Over the last few months, Vela has released the following market access interfaces to support additional Equity, Options, and Derivatives trading venues. Those marked with an asterisk (*) denotes Exchange-Driven Changes.


Be worried when the dollar and stocks rise together, analyst says
Equities and the U.S. dollar have long tended to enjoy an inverse relationship where if one goes up the other tends to go down. But the pattern was breached this week, and it’s sending a worrying message about investors’ attitude toward risk and valuations, one analyst says.


Literally just 15 mind-boggling stats about bitcoin and cryptocurrencies in 2017
Jessica Marmor Shaw and Ryan Vlastelica – MarketWatch
Eight days.
That’s how long it took bitcoin back in April 2013, to rise from $100 for a single bitcoin to $200.

****SD: I never really liked the phrase mind-boggling because I grew up playing Boggle and always found it very approachable…


Banks risk alarming staff with sensors that track desk use
Judith Evans and Martin Arnold – Financial Times
Office workers planning to sneak out for a long lunch or knock off early should be aware: the bosses may be watching.
Banks and other companies in London’s financial districts this summer alarmed staff by installing a small sensor at each desk that detects a person’s presence through heat or motion readings.

****SD: War is peace. Freedom is slavery. Ignorance is strength.

Shout Out: Bob Grossman, retired trader and current granddad
Daniel I. Dorfman – Chicago Tribune
Bob Grossman, 80, is a retired Chicago Board Options Exchange trader who has lived in Glencoe for 40 years. He and his wife, Phyllis, have three kids and seven grandchildren. His mother is still going strong at the age of 103, living in Florida.

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Graduate of University of Minnesota School of Journalism and Mass Communication