| March 04, 2019 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
The Spread - OTC Options: Prescription Needed? - 3/1
JohnLothianNews.com
If Christopher Walken were a derivatives exchange executive, he might be known for the quote, "I got a fever, and the only prescription... is more clearing!"
Watch the video and see the stories referenced here »
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February 2019 Options Exchange Marketshare via OCC
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OCC Comment Letter Regarding Notice of Proposed Rulemaking for the Standardized Approach for Calculating the Exposure Amount of Derivative Contracts
OCC
In a February 15 letter to the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation, OCC commented on the notice of proposed rulemaking regarding the standardized approach for calculating the exposure amount of derivative contracts. While OCC expressed deep appreciation for the proposal addressing its primary concerns, OCC also commented that initial margin should be recognized in the calculation of the leverage ratio.
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****SD: Will 2019 finally be the year the SA-CCR/CEM debacle straightened out?
| | | | | | Lead Stories | | | A storied name in Chicago trading stumbles; An SEC smackdown dings Options Clearing Corp.'s executive chairman Craig Donahue and disrupted his growth strategy.
Lynne Marek - Crain's Chicago Business
After arriving at Options Clearing Corp. in 2013, Executive Chairman Craig Donohue launched an ambitious plan to bolster the sleepy financial utility's capital base, boost dividends to its big exchange owners and upgrade its technology.
/jlne.ws/2ELsvgr
As Stock-Exchanges Multiply, Miami Wants In on the Game
Alexander Osipovich and Gunjan Banerji - WSJ (SUBSCRIPTION)
A new competitor is set to enter the stock-exchange business, planning to launch a marketplace even as some on Wall Street question whether another trading venue is necessary.
/jlne.ws/2NFMNe3
****SD: Then there's the necessary futures exchange Miami would need to launch to list futures on SPIKES... Reuters with the equity exchange story here. As for Miami's new options exchange, here are the details: MIAX Emerald, the 16th U.S options exchange, opened for business on Friday. Emerald features a hybrid fee structure. According to OCC data, 155 contracts traded on Emerald on Friday. The OCC welcomed MIAX Emerald to the fold in this release. The exchange is trading IBM for this first week.
JPMorgan Pulls Crop Brokers From Chicago Options Trading Floor
Isis Almeida - Bloomberg News (SUBSCRIPTION)
JPMorgan Chase & Co. is pulling its agricultural commodity brokers from the options floor in Chicago amid a shift to electronic trading. The bank will no longer have a floor presence in agricultural options including corn, soybeans and wheat, the company confirmed. JPMorgan has six brokers trading farm-commodity options on the floor of the Chicago Board of Trade, according to people familiar with the matter, who asked not to be identified because they aren't allowed to speak to the media.
/jlne.ws/2ELiEap
****SD: The other day I was riding the elevator and a broker was getting off on the pit floor with a stack of library books under his arm. I said, "Things that slow down there you're catching up on your reading list?" He laughed, then said, "Actually, I just need to return them as they're overdue, but you have a point..."
Sleepy forex markets avoid usual volatility triggers
Katie Martin - Financial Times (SUBSCRIPTION)
Major markets are stuck in a deep sleep. On the face of it, there is enough macroeconomic news around to move currencies and asset markets. News on the potential for a breakthrough in trade talks between the US and China gave Asian equities a kick higher, for example, at the start of last week.
Options On Bond ETFs Are More Important Than You Think
Peter Tchir - Forbes
State Street Global Advisors just announced a reverse split on their high yield ETF - JNK. While part of that is to reduce trading costs on the ETF itself, I believe the main driver is to increase options activity on the ETF, which in turn drives trading and fund flows. HYG, the iShares ETF has by far more open interest in its options contracts than JNK. Much of that can be attributed to far lower trading costs.
/goo.gl/3VxLd5
XTX Markets: A New(ish) Player Enters the Fray
Paul Rowady - Alphacution Blog
It is as of the writing of this very short post - mid-afternoon on a lazy Friday - that we've just found that XTX Markets' very first US filing to the SEC database is not yet 24 hours old. We have been scratching our heads about this one for a little while now, wondering if and when we would ever receive any real evidence about this newish entrant to the market making landscape. After all, it does seem to us that a) we don't see many new players surviving in this neck of the jungle - Alphacution's structural alpha zone, and 2) ~100 employees and counting tends to suggest that there is something mildly sustainable going on here.
/goo.gl/U47cWP
Virtu closes $1 billion ITG acquisition
Hayley McDowell - The Trade
High-speed trading firm Virtu Financial has officially closed its $1 billion acquisition of agency brokerage ITG, after announcing plans to merge in November.
/goo.gl/rQtbMB
In a Down Market, ETFs Could Make Things Even Worse; New research suggests that the proliferation of exchange-traded funds could create problems in a volatile market
Simon Constable - WSJ (SUBSCRIPTION)
There's a potential problem lurking in the financial markets, and it is partly a result of exchange-traded funds. While ETFs have been widely praised for lowering trading costs, and have soared in popularity with investors, there have been concerns dating back at least to 2011 that the profusion of ETFs based on the same or similar stocks makes markets more vulnerable in times of volatility.
/goo.gl/j3AiWC
Brexit Do-Over?
Bluford Putnam - CME Group (VIDEO)
Will Prime Minister Theresa May's proposal win the day for Brexit or will there be another referendum? The British pound is caught in the middle.
/jlne.ws/2EviFy8
| | | | | | Exchanges and Clearing | | | OCC February Volume Down 25.9 Percent After Strong 2018
OCC
OCC, the world's largest equity derivatives clearing organization, announced today that total cleared contract volume in February reached 354,013,604 contracts. This was a decline of 25.9 percent compared to last February, which was the fifth-highest volume month in OCC's history. OCC's year-to-date average daily cleared contract volume is 19,415,614, down 18.9 percent compared to 2018's record-breaking pace.
/jlne.ws/2TlFRs6
CME Group Averaged 19 Million Contracts Per Day in February 2019
CME Group
CME Group, the world's leading and most diverse derivatives marketplace, reached average daily volume (ADV) of 19 million contracts in February 2019. This is up 7 percent from January 2019, but down from a record 27.3 million contracts per day in February 2018. Open interest (OI) at the end of February was 126 million contracts, up 3 percent from January 2019, but down 3 percent from February 2018.
/jlne.ws/2VzUTba
MIAX Emerald Successfully Launches Trading Operations
PRNewswire
MIAX Emerald, the newest U.S. equity options exchange, successfully launched trading operations on March 1 with the rollout of options on its first symbol, IBM. MIAX Emerald will continue listing options on IBM for its first week of trading and begin rolling out additional symbols thereafter. With its launch, MIAX Emerald joins current options exchanges MIAX Options and MIAX PEARL as part of the MIAX Exchange Group. All three exchanges are subsidiaries of Miami International Holdings, Inc.
/goo.gl/swA45x
Higher demand for Equity Derivatives at Eurex
Eurex
In February, demand for European Equity Derivatives at Eurex went up 2 percent to reach 31.9 million, compared to 31.1 million in February 2018. Overall, trading volumes decreased by 17 percent. The number of traded contracts reached 142.1 million compared to 170.9 million in February 2018. The reason for this is mainly that that the figures in the reference month for 2018 were comparatively high due to a number of events and geopolitical risk in Europe and beyond. In the meantime, these risks have already been discounted by the market.
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Nasdaq Raises Offer Price for Oslo Børs VPS and Reaffirms its Commitment to the Offer
Nasdaq
Nasdaq AB, an indirect subsidiary of Nasdaq, Inc. (Nasdaq: NDAQ) ("Nasdaq"), announced today that it remains highly committed to its offer (the "Offer") to acquire all of the issued shares of Oslo Børs VPS Holding ASA (NOTC: OSLO/OTCMKTS: OSBHF) ("Oslo Børs VPS") made pursuant to its offer document published on February 4, 2019 (the "Offer Document") and to completing its acquisition of Oslo Børs VPS, which provides the best long term solution for the Norwegian financial ecosystem.
/jlne.ws/2EtBZf0
| | | | | | Moves | | | Cinnober chief to step down following Nasdaq takeover
John Brazier - The Trade
The chief executive of Cinnober has announced he is to leave the company after the closure of Nasdaq's acquisition of the Swedish exchange and clearing technology provider.
/goo.gl/8mh8GD
| | | | | | Regulation & Enforcement | | | The Fall of 'America's Money Answers Man'
Ron LIeber - NY Times
Spin your radio dial, download a podcast or sit down at your next corporate gathering and you'll have no trouble finding a self-styled financial guru to tell you what to do with your money.
What you may not know: Financial experts, even those with bulletproof credentials, may be trying to sell you something.
/jlne.ws/2TqWN0i
Whistleblowing complaints to UK regulator rise 24%; FCA figures reveal how companies treat their customers is a major concern
Caroline Binham - Financial Times (SUBSCRIPTION)
The number of whistleblowing complaints made to the UK's financial regulator has soared, with concerns about how companies treat their customers making up a sizeable proportion, according to data.
/jlne.ws/2VBid8h
| | | | | | Strategy | | | VIX has a Cheaper Competitor
Jay Soloff - MoneyShow
When it comes to trading volatility, The Cboe Volatility Index (VIX) has long held the crown as the most viable product on the market. Products based on the VIX, the S&P 500 Implied Volatility Index, have been one of the most notable additions to the trading universe in the 21st century. In fact, the Cboe Global Markets (CBOE) introduction of tradeable VIX products has essentially turned volatility into its own asset class.
/jlne.ws/2NGT3lX
Morgan Stanley Keeps Faith in Some of EM's Worst Currency Losers
Robert Brand - Bloomberg (SUBSCRIPTION)
South Africa's rand, Turkey's lira and Brazil's real may be among the worst-performing emerging-market currencies in the past month, but Morgan Stanley isn't giving up hope.
/jlne.ws/2NGQ4tV
Dollar extends rising streak as investors hunt for yield
Saikat Chatterjee - Reuters
The dollar edged higher against its rivals on Monday on the back of widening weakness in the euro, with a broad low volatility environment encouraging hedge funds to add to bullish bets.
While the Federal Reserve has pressed the pause button on its multi-year rate hike cycle, higher U.S. bond yields in relation to peers means the interest rate advantage still lies firmly with the United States, especially against the backdrop of receding fears about the outlook of the global economy.
/jlne.ws/2NG6YIY
Some Currency ETFs for Brexit Bets
Nick Ravo - WSJ (SUBSCRIPTION)
What will happen on March 29, and how will the pound react?
Well ahead of Britain's scheduledÂand possibly messyÂdeparture from the European Union, numerous investors are using currencies, futures and derivatives to bet on the direction of the pound. The U.K. currency has fluctuated as the deadline nears without new trade and economic agreements in place.
/jlne.ws/2NEijt9
| | | | | | Miscellaneous | | | Matt and Jill Malandrino on Nasdaq TradeTalks TV
ORATS
Catch Matt Amberson, Principal of ORATS, on TradeTalks with Jill Malandrino. Jill and Matt discuss big data, backtesting, Quandl and the future with Nasdaq.
/goo.gl/t2kzWE
'Billions' ripped off hedge fund performance coach: suit
Dana Schuster - New York Post
The tagline for season four of "Billions," out March 17, is, "Leave them with nothing."
Mission accomplished, says Denise Shull. "They've left me with nothing and then went out of their way to make me look bad for telling the truth," said Shull, a NYC-based performance coach for hedge funds.
/jlne.ws/2NHMEqx
Federal Reserve's fundamental rethink about inflation
Gavyn Davies - Financial Times (SUBSCRIPTION)
The US Federal Reserve has announced that it will conduct a root and branch review of its monetary policy framework in the next 18 months. The results could be of first order importance for financial markets, especially the bond market.
Richard Clarida, the Fed's vice-chairman said last month that the motivation was not any great dissatisfaction with the present policy. Both of the twin objectives  maximum employment and stable prices  were close to target.
/jlne.ws/2NESUzk
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