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Daily email newsletters from the John Lothian News staff.

Options hedging impact during downturn; Bulls punished; EU derivatives update Standard

Lead Stories JP Morgan’s widely followed analyst Kolanovic sees market bounce Friday and continuing next week Thomas Franck – CNBC J.P. Morgan’s Marko Kolanovic told clients Friday that a combination of technical factors should lead to a market bounce during the session and into next week. “Given the rapid selloff yesterday, the reverting feature of yesterday’s option hedging impact should have a positive market impact today,” he said. Kolanovic has blamed the recent sell-off on so-called systematic strategies like risk parity funds and options hedging rather than fundamental forces. /goo.gl/T7WCEA ****SD: ‘Option hedging is a temporary impact (intraday momentum) that…

U.S. Banks Make Hay of European Trading Rules Standard

First Read Hits & Takes JLN Staff The winner of the Innovator of the Year Award at FIA Expo 2018 was FreightWaves, the company that is creating the first Trucking Freight Futures contracts to help bring hedging to transportation costs, primarily for agricultural companies. Congratulations to the company and to its founder, Craig Fuller. Interestingly, this is the second year in a row that the winner was an “agtech” company (last year’s winner was Tellus Labs). It’s also the third year in a row that Chuck Mackie has correctly predicted the winner.~SR Speaking of Chuck Mackie, here is his writeup…

U.S. midterms a mere blip on equity options traders’ radar Standard

Lead Stories U.S. midterms a mere blip on equity options traders’ radar Saqib Iqbal Ahmed – Reuters Less than a month before the U.S. congressional elections, data suggests equity options traders do not view the election as a big catalyst for setting the direction of U.S. stock market in the immediate aftermath of the vote results. /reut.rs/2ExMqBH ****JB: For a different view on this from Yahoo Finance – Markets think the midterms could be as big as the presidential election Federal Reserve minutes indicate interest rates will have to rise high enough to slow down the economy Greg Robb –…

US threatens to bar EU banks from exchanges Standard

First Read Hits & Takes JLN Staff FIA Expo, which began Wednesday, is an international conference, with participants coming to Chicago from all over the world, so of course Brexit and reconciliation of EU and US rules were big topics. CFTC Chairman Christopher Giancarlo woke up the crowd when he criticized the EU’s planned EMIR amendments, calling them “unprecedented and wholly unacceptable.” He said he hoped to be able to negotiate changes, but held out the threat – if that doesn’t work – of stopping EU banks from using US exchanges. ~SR The Exchange Leaders panel was lively, with Nasdaq…

Options Market Quality Hovers at Best Levels in Five Years Standard

Lead Stories Options Market Quality Hovers at Best Levels in Five Years TABB Forum Options LiquidityMatrix Year-to-date options volumes remain strong, with September 2018 volume up almost 44% year over year. For the first nine months of 2018, more than 3.6 billion contracts have traded, an increase of 18.7% versus the first nine months of 2017. /goo.gl/8g3D5Z ****SD: Due to the record setting pace in 2018, all exchanges are experiencing growth in volumes, however, market share is shifting a bit. “Cboe year-to-date market share has dropped, from 41.8% to 37.7%, and Nasdaq’s share is down, to 35.4% from 36.8%. NYSE…

SEC Rules NYSE, Nasdaq Didn’t Justify Market Data Fee Increases Standard

legal gavel

First Read Hits & Takes JLN Staff John Lothian News is working on a documentary video series on the history of financial futures. We are looking for people with stories to tell about the development of the early financial futures contracts in Chicago, New York, London, Frankfurt, Tokyo and elsewhere. If you see one of us at the FIA EXPO, feel free to stop us and share your stories. We need your help to tell the history of financial futures as completely, fairly and effectively as possible.~JJL John F. Notorangelo, 52, passed away suddenly recently. He was a former futures…

Why Hedge Funds Will Stick With Ever-Risky Short Volatility Trades Standard

Lead Stories Why Hedge Funds Will Stick With Ever-Risky Short Volatility Trades Yakob Peterseil – Bloomberg It’s a familiar spectacle on Wall Street: the short-volatility complex takes a beating — and prophets of doom warn money managers the strategy is running out of steam. But the trade isn’t going to be pounded into submission, even as late-cycle bears sharpen their claws and assets in passive products that bet against equity-price swings shrink to their smallest since 2013. /bloom.bg/2EqbOce Does Increased Volatility Mean The Bull Market Is Over? Adam Sarhan – Forbes The short answer is only time will tell. But…

Saudi Arabia Breaks 45-Year Taboo With Veiled Threat to Use Oil as a Weapon Standard

First Read Hits & Takes JLN Staff Welcome to all our readers and friends who have descended upon Chicago for the FIA’s EXPO. We look forward to saying hello and catching up.~JJL CME Group is holding a press lunch today in Chicago for FIA EXPO. Cboe is holding a press event this evening, and ICE is holding one Wednesday evening. The ICE event is just one of two events all year where their senior leadership is all together to meet the press.~JJL Check out CQG’s landing page for FIA, which features new solutions from the long-time fintech provider.~JJL JLN is…

Upstart Exchange Looks to Profit From Wall Street Fear Standard

Lead Stories Upstart Exchange Looks to Profit From Wall Street Fear Gunjan Banerji – WSJ (SUBSCRIPTION) Just after the stormiest week for U.S. markets in months, investors may get a new way to bet on Wall Street fear. Miami International Holdings Inc., a small but rapidly growing exchange operator, won regulatory approval on Friday for options on an index that tracks expectations for U.S. stock volatility. The measure, called SPIKES, competes head-to-head with the already established Cboe Volatility Index, known as the VIX. /on.wsj.com/2CKKtQC ****SD: Recall that Bats (pre-CBOE acquisition) gave SPIKES a try, but it never had a product…