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How the Biggest E-Mini Futures Trade of 2016 Sent the Market Soaring; Calypso Technology to Hire Aggressively in 2017, Following a Record Year in 2016; Good Lessons From One Bad Deal That Destroyed Four Bad Banks John Lothian Newsletter,Newsletter

First Read Bits and Pieces By JLN Staff Tis the season for people moves. Kevin Wolf, formerly chief business and product development officer at Eris Exchange, has moved on to ViableMkts, a firm that focuses on market structure and fintech advisory services. As a principal at the firm, he will bring his interest rate market knowledge to the team. Interestingly, ViableMkts is led by Chris White, who provided one of the more entertaining and participatory talks at our MarketsWiki Education event last year. Wolf spoke at our MarketsWiki Education event in New York this year. Meanwhile, another MarketsWiki Education speaker,…

Market Calm Back as Short-Term Volatility Falls Most Ever; OCC News; Post-Trump About-Face Triggers 2 Rare S&P Signals Newsletter,Options

Observations & Insight 2016 Could Be The Year Of The CEO By Jim Kharouf, JLN Editor-in-Chief Forget the Chinese New Year plunge, Brexit, The Donald or even the Cubs. This is also shaping up as the year of the new CEO, with exchanges and clearinghouses especially, in moves that could reshape our markets in the coming years. The two biggest CEO changes came within days of each other, with Terry Duffy taking the reins as CEO at CME Group from Phupinder Gill and Adena Friedman at Nasdaq, taking over from longtime CEO Robert Greifeld at the start of 2017. They…

Ding-dong the VIX is dead (but risk is rising); Europe is ‘unlikely’ to seize euro-based clearing from London, says S&P; Yellen Signals Fed Remains Likely to Raise Rates Next Month Newsletter,Options

Lead Stories Ding-dong the VIX is dead (but risk is rising) James Saft – Reuters The VIX, the so-called fear gauge, is dead but the real risk-appetite index is falling. The dollar is the new and true North Star of global markets, according to a study released on Tuesday by the Bank for International Settlements, with a rising dollar coinciding with falling risk tolerance. This just in time for the Trump era, widely expected to bring with it rising inflation and interest rates driving a rising dollar. /goo.gl/UckqBt ****SD: Maybe people always inferred too much from the VIX? Whatever the…

Derivatives traders forced to provide $27bn collateral post-Brexit; CFTC – ‘too-big-to-fail’ clearinghouses resilient to shocks; House Foe of Dodd-Frank Says Overhaul Will Face Test in Senate John Lothian Newsletter,Newsletter

First Read Step Right Up By John J. Lothian Last Thursday I had the honor of co-chairing the LaSalle Trading Tech Awards for the Pathway to Adventure Council of Boy Scouts of America with XR Trading President Matt Haraburda. This year’s program was different. We did not have a “Committee” for the event, but a “Task Force.” Our task includes not just the event, but to put on three weeks of merit badge workshops this summer in Chicago. We want to hold five straight days in June, July and August of STEM focused merit badge workshops in the offices of…

Sailing the Chaos of a Trump Rally; Why A Trump Presidency is Fed Positive; Stock market struggles to extend last week’s postelection rally Newsletter,Options

Observations & Insight A Basel netting issue: Pushing for less burdensome capital requirements in the options market Spencer Doar – JLN The unintended consequences of financial regulation have been seeping into the markets since the first rule was made in the wake of the financial crisis. One prime example is the leverage ratio, which determines the required capital of general clearing members. The actual calculation of the capital requirement within the Basel III leverage ratio framework is a particular sticking point for the OCC. Right now, the Current Exposure Method (CEM) is used in the calculation, whereas the OCC and…

SPX Options Market Not Certain on Election Results; Cost of Hedging Europe Stocks Rises to Brexit High as U.S. Votes; Election 2016 – Must-Read Market Theories for Before and After the Vote Newsletter,Options

Observations & Insight Something is going to happen Spencer Doar – JLN So, there’s this thing happening that is a real big deal. As a result, I’ve added a U.S. Election section to the newsletter. Hopefully, we will know who won by sometime around 10 p.m. Central tonight, which was about when the 2008 and 2012 elections were called. If that is the case and it looks like there will be a peaceful transition of power, I expect our U.S. Election section will go the way of the dodo in short order. If we get some Florida nonsense or cray…

Options Are Pricing In One of the Biggest Stock Moves on Record for the Election; Hedging activity rises as odds on Donald Trump win fall; Election At Top of Market’s Mind, But More Earnings Could Keep Things Humming Newsletter,Options

Observations & Insight Wizards of Today’s Markets: Jack Schwager, Part 1 Trading Technologies We recently ran our third “Wizards of Today’s Markets” Q&A, rounding off our trio of Chicago trading legends with TransMarket Group’s Ray Cahnman. To close out the series, we thought it would be fitting to talk with the originator of the “Market Wizards” moniker himself, Jack Schwager. Jack authored “Market Wizards”—a series of interviews with some of the most successful traders in a variety of different markets—in 1989 after publishing the more technical “A Complete Guide to the Futures Markets” in 1984 (a revised version of which…

Dealing with structural complexity in global derivatives markets; The VIX – Not So Fearsome After All?; Treasury Yield Curve Flattens as Draghi Downplays Altering QE Newsletter,Options

Observations & Insight Run Gary Run By Jim Kharouf It has been almost two years since Gary Gensler left the Commodity Futures Trading Commission as perhaps its most talked about, debated and in some circles, despised chairman. To some, his unrelenting drive to pound home rules established by the Dodd-Frank Act was considered a declaration of war against the derivatives industry. To his supporters, his determination was lauded, and he was considered one of the guys who was ready to stand up to Wall Street and LaSalle Street all in the name of Main Street. Now Gensler has grabbed attention…

FIA’s Walt Lukken on Reg AT and the 2016 Agenda Blog,Regulation,Video

Walt Lukken, president and CEO of the FIA, spoke with JLN about what is in store for the rest of the year at the trade organization. The FIA has been coordinating with 10 working groups on what upcoming rules about automated trading (Reg AT) should look like for the futures industry. Lukken said that the FIA believes it would be best to break Reg AT into two more manageable parts.  The first portion would focus on getting pre-trade risk controls up to snuff, and the second part would delve into the more contentious parts of Reg AT, such as definitions…