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Goldman blames mom-and-pop investors for volatility; Five of the largest US FCMs lose customer business

Mom and pop.

Lead Stories

Goldman blames mom-and-pop investors for volatility in stocks
Ryan Vlastelica – MarketWatch
The U.S. stock market has seen volatility rear up in 2018, with major indexes experiencing wild swings on a nearly daily basis. There have been a number of causes often cited for the recent bout of turbulence, including concerns over inflation, geopolitical uncertainty, and the first-quarter earnings season, but one of Wall Street’s most prominent investment banks fingers one key culprit: Main Street.

****SD: It would be a different world if the Mackay classic had been titled “Extraordinary Institutional Delusions and the Madness of Professionals,” right?

Five of the largest US FCMs lose customer business
Julie Aelbrecht – Global Investor Group (SUBSCRIPTION)
Half of the ten largest US brokers have reported declines in customer funds held during March, after business picked up earlier this year. US futures commission merchants (FCMs) held a total of $159.5 billion in customer assets under segregation at the end of March, a 1% uptick from the $158 billion held in February. Five out of the ten top US brokers reported gains for the month, according to the latest data released by the US Commodity Futures Trading Commission.

****SD: Biggest decline was at UBS and Goldman was the big winner.

Commissioner Quintenz warns “grim” budget situation threatens CFTC functioning, may cause staff cuts
Lene Powell, J.D. – Jim Hamilton’s World of Securities Regulation
CFTC Commissioner Brian Quintenz warned that if the CFTC does not get a funding increase for FY 2019, the agency may be forced to cut staff and may have trouble meeting its core market surveillance and enforcement missions. Blaming mismanagement and “political gamesmanship” by past CFTC chairs for current budget woes, Quintenz emphasized that the budget request is rigorously calculated to meet agency needs without overspending.

The VIX Is Starting to Look a Lot Like Its Old Normal Self Again
Richard Richtmyer – Bloomberg
For five years starting in 2013, it was a world of peace and tranquility for stock investors. Then came the tempests of February, convincing many of them that the days of calm were over.
By one measure, they just came back.

****SD: How is creeping closer to the 40-year lows of last year “old normal”? The FT here and MarketWatch here.

Rising salience of derivatives market
ET Editorials
There is much volatility in the rupee exchange rate lately, and it underlines the need for a vibrant currency futures and options market; we need a more complete derivatives market across asset classes for bonds, equities, currencies, interest rates and commodities to better manage intrinsic risks.

Exchanges and Clearing

Nasdaq Precise Reminds Subscribers of the Availability of ‘Done-Away’ Order Management

Cboe to Provide Market and Trade Data to dxFeed Bookmap
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced that it is now providing its EDGX Depth real-time stock quote and trade information to dxFeed Bookmap, an innovative full order book pattern detection and analysis software.


SociÈtÈ GÈnÈrale wins veteran derivatives trader; SociÈtÈ GÈnÈrale has hired a veteran derivatives trader as its head of equities and equity derivatives.
Nell Mackenzie – GlobalCapital (SUBSCRIPTION)
Alexandre Fleury will return to SociÈtÈ GÈnÈrale, where he previously worked for 10 years, trading structured equity derivatives and structured credit derivatives.

Regulation & Enforcement

FIA responds to IOSCO consultation on volatility controls
On May 4, FIA submitted comments to the International Organization of Securities Commissions about how trading venues can keep order amid extreme volatility.

****SD: Takeaway = “There is no single one-size-fits-all approach.”


Robinhood Raises $363M in Fresh Funding Round, Closing In On Rival E*Trade
Robinhood’s offering is particularly popular among the “millennial” ?population.
Aziz Abdel-Qader – Finance Magnates
Commission-free investing app Robinhood has officially raised its latest round of funding, bringing in $363 million at a $5.6 billion valuation. The investment is led by DST Global, the firm run by Russian billionaire Yuri Milner, and includes participation from new investors Iconiq, Capital G, Sequoia Capital and KPCB, as well as old investors NEA and Thrive Capital.


Two-Sided Trading Returns in 2018
Sage Anderson – tastytrade blog
For traders that felt disappointed by the 2017 trading year, and perhaps the associated trading results, a new episode of Market Measures may help you reset in 2018.


30th anniversary of Vanderbilt finance conference explores the rise – and risks – of exchange-traded products
Vanderbilt University
Despite external shocks like Brexit, the rise of Donald Trump and the threat of warónuclear and tradeóglobal financial markets have appeared almost eerily calm over the last two years.

****SD: Robert Whaley of VIX renown is the director of the conference.


Hedge fund Citadel emerges as player in US natural gas market; Breaking with other funds, the Ken Griffin-led fund buys and sells physical gas
Gregory Meyer – Financial Times (SUBSCRIPTION)
Citadel, a $28bn hedge fund titan, last year traded enough natural gas to meet more than a month of US residential demand, becoming an unusual force in a market dominated by merchants, energy producers and utilities. Its trading of physical gas makes Chicago-based Citadel, led by Ken Griffin, unique among hedge funds. Other funds limit their gas trading to futures and options contracts, which allow price exposure without the complexity of handling fuel.

Former Fed official Fischer worried by Iran, international tensions
Lawrence Delevingne – Reuters
Stanley Fischer, the former vice chairman of the U.S. Federal Reserve, said the Trump administration’s decision to pull out of the Iran nuclear deal and other geopolitical developments were cause for concern given the potential for international conflict.

****SD: Included simply because Fischer phrased it thusly, “My internal VIX went up a lot.”

Amazon’s Alexa is the biggest challenge for brands since the internet
Nathaniel Meyersohn – CNNMoney
Amazon’s Alexa is laughing at users and creeping them out
Americans are turning to Alexa to fill their pantries and stock their medicine chests. That’s a challenge for brands ó maybe the biggest in two decades.

Record Buybacks Help Steady Wobbly Market
Ben Eisen and Akane Otani – WSJ (SUBSCRIPTION)
S&P 500 firms are on pace to have returned almost $1 trillion to shareholders for the 12 months through March though dividends and buybacks

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Graduate of University of Minnesota School of Journalism and Mass Communication