Observations & Insight
Chicago Venture Capital Firms Are Funding Fintech
Sarah Rudolph – JLN
Chicago may not be doing as well as some other cities in certain areas, but it is leading the charge in technological innovation in the financial world and in the crypto world. Several Chicago-based venture capital companies took part in a panel on financial innovation moderated by Chuck Mackie, consultant at Maven Wave Partners and contributing editor to John Lothian News, at The Trading Show Chicago on Thursday.
DRW works with companies on development in the later stages. Its Digital Asset Holdings venture, headed by Blythe Masters, is building a database to speed up trading, clearing and settlement using blockchain technology. But the company’s projects are diverse, including work on digitizing legacy portfolios and streamlining swaps dealing with Asian counterparties, said DRW Venture Capital director Kimberly Trautmann.
To read the rest of this commentary, go here.
Robinhood Founders Are Billionaires in Silicon Valley Minute
Tom Metcalf and Julie Verhage – Bloomberg
Baiju Bhatt and Vlad Tenev founded trading platform in 2013; More than 4 million consumers have signed on with the startup
It took decades for Wall Street titans Jamie Dimon and Lloyd Blankfein to become billionaires. Baiju Bhatt and Vlad Tenev did it in a Silicon Valley minute.
****SD: Robinhood’s crypto offering is live in select states, and they rolled out free options trading this year too. The free trading platform had a $1.3 billion evaluation in March 2017 – after this funding round it is $5.6 billion.
Is the VIX Rigged?
Tom Lee, CFA – Parametric
What if the only thing we have to fear isn’t fear itself but rather how we measure it? That’s been the concern lately about the Cboe Volatility Index—often referred to by its pithy acronym, VIX, but arguably better known as the fear gauge. Why “fear”? Because the VIX attempts to measure the market’s 30-day implied volatility assumption by tracking the implied volatility of short-dated options. And why the concern about the VIX? Because from many investors’ perspective, funny things have been happening lately with the index—not ha-ha funny but strange funny.
****SD: Maybe it’s because it’s Friday, but this is what I thought of. “Lethal Weapon” isn’t usually on my mind…
Markets and investors face a sudden outbreak of normalcy
Investors thrown off balance by swirling markets this year now face a new wrinkle: a sudden outbreak of normalcy.
****SD: Again with this “normal” thing…
Exchanges and Clearing
CME and LCH bet on FX options clearing
Eva Szalay – FXWeek (SUBSCRIPTION)
Financial infrastructure providers CME Group and rival LCH are set to introduce clearing services for foreign exchange options this year, following years of delay, but the two firms have made radically different bets on the future path of the product.
Launch Date of Flexible Options (June 25, 2018)
Osaka Exchange, Inc. (OSE) has decided the launch date of Flexible Contract Months as June 25, 2018. As announced earlier, Flexible Contract Months is a new listed options trading method for securities options trading and index options trading.
Update: Nasdaq PHLX Intra-day Electronic Quoting Requirements
Effective Thursday, May 10, 2018, the Exchange has amended its electronic quoting requirements.
Regulation & Enforcement
Mark Tepper Law Firm Alerts Investors as Barclays and Credit Suisse Announce ETNs closing
The Mark Tepper Law firm today alerted investors that Barclays is retiring or replacing about half of its US Exchange Traded Note offerings.
****SD: Mark Tepper is also investigating claims regarding LJM.
Ex-JPMorgan Trader Latest Charged for Currency-Market Scam
Chris Dolmetsch and David McLaughlin – Bloomberg
A former JPMorgan Chase & Co. trader was charged with taking part in the rigging of African, European and Middle Eastern currencies, the latest person to be accused in a global crackdown on currency manipulation.
Trump administration will allow AI to ‘freely develop’ in U.S.: official
David Shepardson – Reuters
The Trump administration will not stand in the way of the development of artificial intelligence in the United States, a top official said on Thursday, while acknowledging that the burgeoning technology will displace some jobs.
****SD: Can’t we at least give it a curfew?
Volatility’s Back, But UBS Urges Investors to Stick With Stocks
Joanna Ossinger – Bloomberg
The return of volatility in the stock market this year doesn’t mean the good times are ending, but investors need to be savvy about their exposure to risk.
****SD: It’s back but it isn’t? Seems like it depends on who you ask and on what day.
Riding European Stocks Higher
Gunjan Banerji – Barron’s
In an unusual turn of events, shares of European companies have recently outperformed those in the U.S. At the same time, expected swings in European stocks have dwindled relative to domestic ones.
The Standard & Poor’s 500 index is up 3.2% this quarter. The Euro Stoxx 50 index is up 6.2%, after underperforming U.S. equities in recent years.
****SD: TL;DR – Buy Euro Stoxx 50 calls; sell S&P calls to finance the trade. Caveat: beware dollar strength.
Dan Loeb’s hedge fund increases short bets against market
Carleton English – NY Post
Billionaire hedge funder Dan Loeb is seeing more opportunities to bet against the market this year.
GlobalCapital Americas Derivatives Awards 2018: the winners
Derivatives market participants gathered at the Metropolitan Club in New York on Thursday to celebrate the winners of this year’s GlobalCapital Americas Derivatives Awards.
Virtu Financial Announces Pricing of its Secondary Offering Nasdaq:VIRT
Virtu Financial, Inc. (“Virtu”) (Nasdaq:VIRT), a technology-enabled global market maker, announced today the pricing of the underwritten secondary offering of 15,000,000 shares of its Class A common stock at a public offering price of $28.00 per share.
****SD: That’s $420 million of stock.
U.S. Pullout of Iran Nuclear Deal: What Next for Oil, Business?
Blu Putnam – CME Group
The U.S. announced on May 8, 2018, its withdrawal from the Joint Comprehensive Plan of Action (JCPOA) – aka, the Iran nuclear deal. In the week prior to this decision, expectations were rising that the U.S. would pull out of the deal. A variety of European leaders flew to Washington and lobbied the U.S. Administration to remain in the deal. French President Emmanuel Macron flew into Andrews Air Force Base (technically Joint Base Andrews), was received with a State dinner, and failed to convince the Republican Administration to change its mind. German Chancellor Angela Merkel arrived at Dulles International Airport, received a less formal welcome, and also failed to convince the U.S. to change its mind. Even UK Foreign Secretary Boris Johnson, a supporter of the U.S. President, showed up in Washington to make the case for staying in the Iran deal. He even appeared on Fox News and talked to the Republican base, to no avail.
JPMorgan Applies to Launch Joint-Venture Brokerage in China
Allison Prang and Emily Glazer – WSJ (SUBSCRIPTION)
Bank is the latest to explore opportunity after Chinese authorities loosened rules on foreign businesses