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John Lothian Newsletter: ICE sets November date for delayed Singapore launch; Operation to steady China stocks a success, but patient comatose; Deutsche Boerse puts Asia exchange on back burner John Lothian Newsletter,Newsletter

First Read MarketsReformWiki Reaches a Milestone Doug Ashburn – JLN While we were sleeping, some time between midnight and 3 a.m. this morning, the page counter on MarketsReformWiki, our regulatory database, topped the 10 million mark, four and a half years after going live. The site was started in 2011, just as the CFTC, SEC and other regulators began proposing rules and hosting roundtables, and market participants responded with comment letters, white papers and other research. The goal of the site was simple – cut through the thousands of pages of legalese and present the information in a way that…

John Lothian Newsletter: FDIC Chief Martin Gruenberg: Big Bank Failure Won’t Imperil System; Castleton joins oil trade titans with Morgan Stanley deal; Small investors focus of trading shake-up John Lothian Newsletter,Newsletter

First Read Options Industry Perspectives: Exchange Leaders Trade Viewpoints at OIC 2015 Sarah Rudolph – John Lothian News At the Options Industry Conference this year, the exchange leaders panel directly followed a presentation by Andy Nybo, head of derivatives at The Tabb Group, that offered a rather bleak look at the options industry. Total volume year-to-date was down 8.7 percent compared to a year earlier, bid-ask spreads have been getting wider, and options exchanges are finding it difficult to compete in a field of 12-going on-14 players. Given that “dark cloud” the industry appears to be under, moderator John Lothian…

JLN Options: Senator questions widespread tax dodges used by wealthy; Hedge fund failures not enough to stop asset inflows in 2015 – survey; How Unusual is the Current Volatility Lull? Newsletter,Options

Lead Stories Senator questions widespread tax dodges used by wealthy Mark Schoeff Jr. – Investment News The top Democrat on the Senate tax-writing committee called Tuesday for curbing complex investment tactics that help high-net-worth investors lower their taxes. A report released by the Democratic staff of the Senate Finance Committee outlined several investment instruments — such as options, derivatives and swaps — that can be used to skirt “tens of billions of dollars” in taxation. It asserted that reining them in through legislative and regulatory changes would make the tax code fairer. jlne.ws/1AILF9J ***DA: Ask 100 people to define “fair…

My Realization: BOX and VolX Team Up to List Options on RealVol SPY Index Blog,Commentary,Options

Doug Ashburn

When assessing actual exposure in the market, why does the listed world use measures of implied volatility? That is the question VolX CEO Bob Krause asks to anyone who will listen. Why, he wonders, is the listed derivatives market dominated by the VIX, a measure of 30-day volatility expectations? The standard in the OTC market, by contrast, is the variance swap – a contract where the payoff is in terms of actual movement in the underlying (“realized volatility” if you will). He says the OTC market is doing it right, in that participants are hedging actual market exposure with actual…

John Lothian Newsletter: Singapore Exchange Forging Ground in Derivatives; Regulators to MF Global: Make customers whole over mishandled funds; China Extends Forwards, Swaps Trading to Three More Currencies John Lothian Newsletter,Newsletter

First Read Bits & Pieces by John J. Lothian Happy Boxing Day! Today is the day employers give gifts to their employees, or something like that. Being an American, I normally think of boxing as something one does with gloves in a ring. But Happy Boxing Day, nonetheless. I also think of this day for something that happened on December 26, 2002. That was the day the Wall Street Journal’s Peter A. McKay wrote a story about me with a dot drawing titled “Analyst or Broker? Critic Draws Criticism.” Well, the broker thing is no longer true, but the analyst…

Small Caps Coming Up Big: Russell’s Pat Fay on the One-Year Anniversary of the CBOE Russell 2000 Volatility Index Options,Video

Investors have been flocking to equities lately, but the interest in small caps is apparently outpacing that in large caps, measured by closing prices for the RVX compared to large cap implied volatility as measured by the VIX prices. The CBOE Russell 2000 Volatility Index (RVX) futures contract was launched on November 18, 2013. One year later, JLN caught up with Patrick Fay, director of listed derivatives for Russell Investments, at FIA Expo Chicago, to talk about the RVX index and small cap volatility. Small cap volatility has always tended to be higher than large cap volatility, but this gap…

JLN Financials: Addendum to the CME Gold Futures Story; Sovereign Bonds Head for Two-Week Decline on Fed Policy; The only two words that will matter at the Fed Blog,Financials,Newsletter

First Impressions Addendum to the CME Gold Futures Story Sarah Rudolph – JLN The lead story in yesterday’s John Lothian Newsletter was a Reuters report that said CME Group is planning to launch a gold futures contract in Hong Kong by year end. We were a little uncertain about how this would work, since the CME does not have an exchange located in Hong Kong, so we spoke with the CME about it. According to a CME spokesman, the news was announced by the CME’s managing director of metals products, Harriet Hunnable, during the China Gold Congress this week in…

Index Evolution: Guillermo Cano Looks at the New Generation of Equity Indexes Financials,Interview,Options,Video

Russell Indexes has long been known as “the small-cap company,” due to the success of its flagship Russell 2000, which is comprised of the smallest 2000 stocks by market capitalization. These firms’ market caps range from roughly $129 million to $2.6 billion, as of May 2013, and represent the bottom two-thirds of the 3000 largest publicly held firms in the U.S. According to Guillermo Cano, Senior Product Manager at Russell Investments, the firm has evolved considerably since its start in 1984. In fact, equity indexes in general have come a long way in recent years. “The indexes we created in…

Happy 10th Anniversary, VIX Futures! Commentary,Options

Today is the 10 year anniversary of the launch of VIX futures, traded at the CBOE Futures Exchange (CFE). CFE has achieved tremendous success with these futures, based on its proprietary CBOE Volatility Index (VIX). It has also expanded into other volatility-based products, as volatility as an asset class has exploded in recent years. There are currently eight VIX-related contracts traded on the CFE. But the CBOE still thinks of VIX futures as a relatively new product, with much more to come in the near future. Jim Lubin, senior managing director of CBOE Futures Exchange, said the past few years…