Tempers Flare in U.S.-EU Spat Over Clearinghouse Supervision Regulators trade public barbs at industry conference in Florida; CFTC Chairman J. Christopher Giancarlo has repeatedly said that European supervision of U.S. entities would be unacceptable.
Gabriel T. Rubin – WSJ (SUBSCRIPTION)
Tensions between the U.S. and European Union over the supervision of clearinghouses boiled over publicly on Wednesday, with top regulators trading barbs and recriminations at an industry conference.
***SD: We covered the rowdiness and insults traded at yesterday’s “10 Years On” panel featuring Barney Frank. While that was quite the memorable experience, the above spat is the one that is really important for markets.
Cyber threats force US clearing house on to cloud; Exchanges increasingly concerned over crime risks to financial system
Philip Stafford – Financial Times (SUBSCRIPTION)
Options Clearing Corporation is drawing up plans to move its operations into cloud computing as the exchange industry battles the threat posed by cyber crime. John Davidson, its chief operating officer, told the Financial Times the group has a three-year plan to phase out its 20-year-old technology and put its business on to remote computer servers.
****SD: To use a baseball analogy per Davidson’s comments today at FIA Boca, OCC is in, roughly, the seventh inning stretch of its technology decision making process.
Credit Suisse Sued by Investor Over Crashed Volatility Note
Noah Buhayar – Bloomberg
Credit Suisse Group AG was sued by an investor who got burned last month betting against stock-market turmoil, as more people seek to recoup steep losses on VIX exchange-traded products.
Rajan Chahal filed the lawsuit Wednesday in federal court in New York against the bank, Chief Executive Officer Tidjane Thiam and David Mathers, finance chief, alleging they failed to disclose the company was manipulating its VelocityShares Daily Inverse VIX Short-Term exchange-traded notes, known by the trading symbol XIV. Chahal’s complaint seeks class-action status on behalf of other buyers.
****SD: I imagine there will continue to be a constant trickle of lawsuits over Feb 5 activity.
Cboe Signals Big Plans for Trading Cryptocurrency Derivatives
Annie Massa and Matthew Leising – Bloomberg
Cboe Global Markets Inc., an exchange that’s quickly become one of the biggest believers in cryptocurrencies, wants to expand beyond Bitcoin futures.
Introduced in December, Cboe’s Bitcoin contracts trade thousands of times a day, representing tens of millions of dollars of the digital currency. It wants to introduce derivatives contracts on other cryptocurrencies.
Volatility may be back, but with a whimper more than a vengeance
Jamie McGeever – Reuters
“Volatility is back,” the Bank for International Settlements reckons, and speculators are betting big on its return.
But after a brief and dramatic appearance earlier this year, volatility in fact seems to have slunk back into the shadows.
The Conditions for an Ongoing Bull Market Are Still Here
Dani Burger and Sid Verma
Muted price pressures, mitigated inflation risk revive rally; Options traders price in 2017-like volatility levels
The ingredients for the Goldilocks trading environment are still in the bull market’s cupboard.
After the Bell: Why the Dow’s 250-Point Drop Doesn’t Signal the End of the World
Ben Levisohn and Teresa Rivas – Barron’s
Yesterday, stocks had two reasons to drop. Today, they had many, many more.
The S&P 500 fell 0.6%, to 2749.48, while the Dow Jones Industrial Average dropped 248.91 points, or 1%, to 24,758.12. The Nasdaq Composite declined 0.2%, to 7496.81.
We can offer many reasons for today’s decline: retail sales, which fell for a third straight month; comments by Germany’s Angela Merkel about the possibility of U.S. tariffs and a European response; and sliding Treasury yields. But maybe we should just chalk it up to higher volatility.
We don’t want a copy paste of 2017, say vol veterans
Terri-Ann Williams – City Wire Select
The worst outcome for volatility traders in 2018 would be for a straight re-run of 2017, Assenagon’s Daniel Danon and Tobias Knecht have said.
Cboe Conducts March Settlement of Cboe Bitcoin Futures
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced the settlement of the March expiry Cboe bitcoin (XBT) futures, the third contract settlement conducted since its launch in December.
U.S. regulator approves pilot program to cut exchange fees, rebates
John McCrank – Reuters
The U.S. Securities and Exchange Commision (SEC) on Wednesday agreed to a long-awaited experiment to test the effects of lowering stock exchange fees following criticism the current pricing system ultimately hurts investors.
Is Insider Guessing Illegal? Also bug-exploit shorting, CFIUS, Bear Stearns and bond market liquidity.
Matt Levine – Bloomberg
Equifax insider trading! If you work at a public company, and it suffers a massive data breach, and you find out about it before it is public, and you sell your stock, is that illegal insider trading? I do not want to give you legal advice, and there are some nuances to the question, but the basic answer is, duh, yes. That data breach is probably material to the company’s stock, and you are clearly an insider, and so if you find out about the breach and trade on it then you are breaking the law.
A controversial practice tearing apart Wall Street is about to be put to the test
Frank Chaparro – Business Insider
The Securities and Exchange Commission agreed to move forward a pilot program that would examine a controversial Wall Street practice.
The agency on Wednesday approved the so-called access fee pilot program, which aims to address criticisms of the maker taker stock trading model.
Some stock exchanges charge a small fee for matching buyers and sellers and then compensate market makers and other trading firms for executing stock orders on their venues. Stock market participants have been arguing over the system for more than a decade.
Sebi plans to link retail investors’ derivatives exposure with income
PTI via Business Standard
New Delhi: Markets regulator Sebi is considering linking retail investors’ exposure to derivatives with their income, a move aimed at preventing them from taking unreasonable positions in risky instruments.
$112 Billion Nordic Funds Reject Black Box Mysteries Behind AI
Kati Pohjanpalo – Bloomberg
Some of the biggest investors in one of the world’s most technologically advanced corners don’t want robots to replace people when it comes to managing money. Ilmarinen and Varma of Finland, which oversee a combined 91.2 billion euros ($112 billion) in pension assets, say artificial intelligence just isn’t sophisticated enough to replicate the complex, forward-looking analysis that humans are capable of.
APEX to launch new customised clearing system provided by Cinnober
Institutional Asset Manager
Asia Pacific Exchange (APEX) is to launch a new and customised clearing system for OTC and exchange-traded markets, delivered by Cinnober.
CQG Partners with Nasdaq Futures (NFX) to Offer Trading Platform for NFX Products
CQG, Inc., a leading global provider of high-performance trading, market data, and technical analysis tools, today announced a new partnership with Nasdaq Futures (NFX), a leading futures exchange, to provide a trading solution for clients trading NFX products. NFX, leveraging CQG Desktop for its trading system, now makes that offering available with zero fees, providing direct trading access of NFX listed products to its clients.
Options Announces New 40Gb Managed Network To All NY Exchanges
Options, the leading provider of global market data and colocation services for trading firms, has today announced the completion of a major 40Gb backbone upgrade of all its managed WAN circuits across NY metro data centers. The infrastructure expansion has enabled clients to connect to high volume exchange data feeds at Mahwah, Carteret, NY4 and NJ2, without bandwidth restrictions. Additionally, all clients connecting to NYSE data have been upgraded to SFTI 40Gb LX.
How algo trading affects volatility-based funds
Terri-Ann Williams – City Wire Selector
Investment professionals have long debated the impact algorithmic trading has on stock prices, and with volatility spiking many are questioning what role algo has to play in market turbulence.
However, Feri Trust’s Daniel Lucke and Steffen Christmann, who manage the OptoFlex fund at the firm, told Citywire Selector they have grown indifferent to the topic.
Arun Chopra – Seeking Alpha
The Advance-Decline Line (AD Line) is a breadth indicator based on Net Advances, which is the number of advancing stocks less the number of declining stocks. Simply put, an AD Line that rises and records new highs along with the underlying index shows strong participation that is bullish and vice versa.
So where are the markets today post the Vix Massacre?
Algos Go Nuts Over White House Headlines
Davin Blythe – Nadex
On March 6th, Gary Cohn resigned his post as Trump’s top economic adviser. Monday, John McEntee, Trump’s personal assistant, was fired and escorted from the White House for online gambling and mishandling his taxes; and yesterday, President Trump fired Rex Tillerson as Secretary of State. Larry Kudlow is supposed replace Gary Cohn, and Central Intelligence Agency Director Mike Pompeo is to succeed Tillerson.
Crude Oil Could Become Range Bound
Andrew Hecht – Nadex
There are bullish and bearish factors at play in the crude oil market these days, and that could present opportunities for traders looking to take advantage of a trading range that seems to be developing.
VIX, Crypto, Blockchain, Futures and/or Options: Could These Be Considered by a Prudent Investor?
CFA (location: Paris)
New 2018 studies address the topics of whether and how VIX-based products, cryptocurrencies, blockchain, futures and/or options are being considered by investors.
***SD: Matt Moran of Cboe will also be speaking at CFA events in [[https://goo.gl/r51GZr|Amsterdam,]] [[https://goo.gl/N1n17J|Brussels,]] and [[https://goo.gl/8Po9Lv|Zurich.]]
Countdown Begins For World’s Leading Clearing & Derivatives Conference
The World Federation of Exchanges (“The WFE”), the global industry group for exchanges and CCPs, is pleased to confirm details of its 35th IOMA Clearing & Derivatives Conference, taking place from 11-13 April 2018 in Chicago, USA.
Imagine Wall Street Without Jamie Dimon and Lloyd Blankfein
Hugh Son – Bloomberg
The succession plans at JPMorgan and Goldman say a lot about where the companies—and the Street—are headed.