Observations & Insight
Treasury Pushing For Capital Rule and Volcker Changes
Jim Kharouf – JLN
The US Treasury Department is addressing capital intensive rules that have constrained market participants from capital markets to community banks under the Volcker rule. Craig Phillips, counselor to US Treasury Secretary Steven Mnuchin, speaking at the WFE IOMA conference in Chicago last Friday, said the department is looking at a variety of issues and challenges for market participants, ranging from restrictive leverage ratios and how those are calculated, to easing restrictions on banks and institutions in the capital markets to promote liquidity, to changes in the Volcker Rule.
FINRA Sweeps BDs for Info on VIX-Linked Products
Emily Zulz – ThinkAdvisor
The exam sweep covers member firms and advisors selling these products between October 2017 and February 2018.
The Financial Industry Regulatory Authority said it is conducting a targeted review of products linked to the Chicago Board Options Exchange Volatility Index (VIX). FINRA posted an exam letter saying that its review will focus on the supervisory processes followed by the firm to identify and mitigate sales practice risks associated with recommendations to non-institutional purchasers of VIX-linked products. This includes, but is not limited to, unsuitable recommendations, misrepresentations and appropriateness of any required disclosures to customers.
Earnings Season Is a Catalyst to Crush Volatility Once Again
Luke Kawa – Bloomberg
Hold the financial fireworks: this earnings season is poised to restore tranquility to an equity market that’s been anything but. The Cboe Volatility Index — a gauge of the S&P 500 Index’s implied volatility over the next month derived from options prices — has been running below the 10-day realized volatility of the benchmark for nearly three weeks. One upshot: the earnings season that’s just getting underway is expected to serve as a salve for jittery markets.
****SD: If the VIX action thus far today holds up, we’ll have the lowest close of the month.
Sharp Drops in Currencies Hint at Spreading Volatility; Declines in the Russian ruble, Turkish lira and other currencies signal that recent turmoil in stocks may be hitting other assets
Chelsey Dulaney and Ira Iosebashvili – WSJ
The currencies of places as diverse as Russia, Hong Kong and Kazakhstan slid last week, an alarming sign to some investors who worry that the geopolitical volatility affecting U.S. stocks is spreading to other markets.
New Volatility Regime
Euan Sinclair – Highly Evolved Vol
The equity market hasn’t really decided what it wants to do. However, we are now very clearly in a new volatility regime. From the start of 2017 through to the end of this January, realized volatility was 6.9%. In February and March, it was 23.6%.
The Global Trading Map Looks Really Confusing Right Now
Dani Burger, Sid Verma – Bloomberg
Volatility and correlation measures are sending vexing signals; The dollar has decoupled from once reliable risk-off behavior
You aren’t just imagining it: global markets are flashing conflicting signals as they struggle to price trade friction, an easing of global synchronized growth, and the excesses of an aging bull market.
****SD: Things like the following Reuters story add to the perplexing picture – Russia’s Putin predicts global ‘chaos’ if West hits Syria again.
Exchanges and Clearing
CME Group Reaches Record International Average Daily Volume of 4.7 Million Contracts in Q1 2018, Up 38 Percent from Q1 2017
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it reached an all-time high quarterly international average daily volume (ADV) of 4.7 million contracts during first quarter 2018, up 38 percent over the same period last year.
****SD: Also see The Trade.
Cboe Debuts Trade and Data API Suite
Cboe Global Markets has launched its Cboe DataShop is offering customers access to its market data and trade analytics through a suite of four application programming interfaces. The APIs allow easy interaction with other websites or programs, facilitating customization of access for trading firms’ specific needs and budgets.
****SD: In case you missed the news on Friday.
European stock indices including Cac 40 draw a blank this morning after Euronext suffers “technical incident”
Lucy White – City A.M.
The opening levels across a number of European stock indices failed to appear to traders this morning after the Euronext exchange suffered a “technical incident”.
****SD: From the FT – Euronext glitch delays stock indices across Europe
NSE studying technical, legal aspects of SGX’s India futures
Bypassing the NSE ban, SGX has introduced new products India equity derivative products that mimic the Nifty futures and options and use the closing Nifty price to settle the new contracts
IHS Markit acquires DeriveXperts
IHS Markit (Nasdaq: INFO), a world leader in information, analytics and solutions, today announced it acquired DeriveXperts, a provider of valuation services for OTC derivatives and other complex financial securities.
Hedge funds build record bullish position in Brent: Kemp
John Kemp – Reuters
Hedge funds are holding a near-record bullish position in crude oil and refined fuels but the buying seems to have run out of momentum and is increasingly concentrated only in Brent.
China to allow foreign investors to trade iron ore futures starting
China will allow foreign investors to trade in domestic iron ore futures markets starting on May 4, the country’s securities regulator said in a news briefing on Friday.