| June 23, 2017 | | | | | Spencer Doar
Associate Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Making the Johannesburg Stock Exchange a Global Player
JohnLothianNews.com
"The JSE, for eight years in a row now, was rated number one, two or three in the world by the World Economic Forum for the quality of financial market regulation."
The Johannesburg Stock Exchange is in the process of adjusting much of its infrastructure. It already transitioned from T+5 settlement to T+3 settlement (with no failed trades thus far); the derivatives trading technology is being replatformed; Cinnober is supplying a new clearing system that will be live at the start of 2018; and London Stock Exchange Group's MTS is playing a role in revamping bond trading on JSE.
Looking ahead, CEO Nicky Newton-King said there are three general goals she has for the exchange. One, she wants to help lift the general sophistication of market participants by sharing information and building necessary financial skillsets. Two, JSE is focused on providing access to its capital markets to top African issuers. There shouldn't be a need to go to London to raise capital when they can stay on the continent. And third, she sees potential for people to use their existing connectivity to JSE to route orders to other local markets.
Read the rest and watch the video »
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| | | | | | Lead Stories | | | It's time to brace for 'market turmoil', warns JPMorgan
Financial Times
Global financial markets have been unusually calm for an extended period, meaning now is a good time for investors to begin preparing for a bout of "market turmoil" that is likely on the horizon, JPMorgan Chase strategists have said.
Risk assets, like stocks, have been rallying "for years", sending market volatility near "record lows", Marko Kolanovic, the New York bank's global head of macro, quantitative and derivatives research, said.
on.ft.com/2sZnhZh
****SD: Latest look at some of Marko's research. VIX hovering at/around 10 as of this writing.
Goldman Sachs: Here's how to make a killing this earnings season
Joe Ciolli - Business Insider
You'd think that investors would have trading on corporate earnings down to a science by now. Think again, says Goldman Sachs.
Investors are frequently ill-positioned for the preannouncements companies often make leading up to their scheduled earnings releases, Katherine Fogertey and the Goldman derivatives team wrote in a client note on Thursday.
They've gleaned this information from the options market. While traders are braced for increased volatility during the period most jam-packed with actual earnings reports, they're woefully out of position in the weeks leading up to those releases.
read.bi/2sZnLOI
****SD: BI really overuses the phrase "make a killing." What is a killing? Who/what is being killed? What is the value of a killing? Probably depends on who you hire for the hit, right?
BofA: "Central Banks Are Now In A Desperate Dilemma"..."Start Buying Volatility"
Zero Hedge
One week after the second biggest weekly inflow to Wall Street on record, the "risk on" rotation ended abruptly in the ensuing five days, when as Bank of America writes overnight, it observed "Inflows to structural "deflation", outflows from cyclical "inflation"; with oil the "poster child" for this trend."
/goo.gl/X6vXx5
****SD: The recommendation comes in a note called "Bubble, bubble, oil & trouble" Â just another example illustrating the ongoing trend of quirk-ifying research to garner more interest. (I just made that word up.) I'm assuming research will continue to embrace eccentric thematics as MiFID II alters how it is distributed and paid for.
Traders Are Staying Short on the U.K. a Year After Brexit
Cecile Gutscher, Anooja Debnath and Namitha Jagadeesh - Bloomberg
The risks are stacking up for investors a year after Britain's historic vote to abandon the European Union: unstable politics, fears of stagflation and a currency nursing emerging-market-sized losses.
/bloom.bg/2sZkrmY
****SD: Related from Reuters - Forget euro zone breakup, sterling now deemed riskier
High-Speed Trader to Pay $101 Million in Landmark China Case
Bloomberg
China handed down a $101 million penalty and two suspended prison sentences in its first criminal case against a high-speed trading firm.
The case had been closely watched by the trading community on the mainland, looking to shed light on Chinese authorities' stance on high-frequency trading, which remains a controversial practice in jurisdictions across the world.
/bloom.bg/2sZkWgG
****SD: The issue came down to how they acquired their speed advantage, not that they had a speed advantage. Here's the crux of the matter - the firm "illegally plugged its proprietary trading system into the China Financial Futures Exchange in early 2015, the court found. From June 1 to July 6 that year, the firm capitalized on the speed advantage gained by circumventing brokerage systems to trade futures on the CSI 300 Index and CSI 500 Index." As China slowly opens its markets (and adds more options) firms need to be aware of a different variety of operational/regulatory risk. This is a futures story but has far reaching ramifications.
| | | | | | Exchanges and Clearing | | | Explore Options on the MSCI Emerging Markets Index (MXEF)
Matt Moran - CBOE Blog
CBOE offers options on the MSCI Emerging Markets Index (MXEF) for investors who wish to manage global equity exposure.
bit.ly/2sZaTZ4
CME to double position limits for Russell 2000 suite
Julie Aelbrecht - Global Investor Group
The Chicago Mercantile Exchange has filed with the US futures regulator to double the monthly position limits on some of the contracts for its upcoming Russell 2000 derivatives suite.
/goo.gl/vrUZyF
****SD: From 60k to 120k lots.
Exclusive - London Metal Exchange to cut fees, see if volumes can be lured back: sources
Pratima Desai - Reuters
The London Metal Exchange is expected to cut trading fees within months after two years of complaints but might only do so for a trial period of up to six months to see if volumes that moved to over-the-counter markets return to the exchange, sources said.
reut.rs/2sZxcOv
****SD: Question is does this return business or merely stop the bleeding?
Gold: Options on gold futures may be launched in August
Ram Sahgal - Economic Times
Traders of equity options will soon get a new product to punt or hedge on - options on gold futures. MCX, the country's largest commodity derivatives exchange, could introduce the options by August, two persons familiar with the development said.One of them said the chief draw for equity option players would be the cheaper cost to trade.
/goo.gl/ifCahS
Intercontinental Exchange Executives to Testify Before Congress on Central Clearing and Equity Market Structure
Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that Chief Financial Officer Scott Hill will appear before the House Agriculture Committee on June 27 to discuss central clearing and systemic risk, and NYSE President Thomas W. Farley will appear before the House Financial Services Capital Markets Subcommittee to discuss equity market structure.
bit.ly/2sZDEoE
| | | | | | Regulation & Enforcement | | | CFTC Denies Asking Renaissance For Code
Mark Melin - ValueWalk
When the New York Post first reported that Renaissance Technologies was asked by the CFTC to provide access to their trading algorithms, it sent shivers up the collective spines of trading lobbying groups as well as the broader technology development world. For a regulator to demand a review what amounts to the secret formula to a business innovation was "precedent-setting," with concerns for the source code leaking a very real possibility. But does the CFTC even have the authority to investigate methods of placing orders on an electronic exchange? And what about the issue if it were to involve a market destabilizing flash crash with potential national security implications? The lines are murky at best - meet Regulation AT.
/goo.gl/PpgLwy
ECB bids for control over Euro clearing in threat to the City
Lucy Burton - The Telegraph
The European Central Bank has stepped up the battle for control over London's lucrative euro-clearing market, asking for extra legal powers in its loudest call yet since the Brexit vote.
/goo.gl/ssurqK
****SD: Ruh-roh.
Giancarlo committed to 'robust enforcement' as CFTC chair
Reuters
Once confirmed as permanent chairman of the U.S. Commodity Futures Trading Commission, J. Christopher Giancarlo, now the regulator's acting chair, will keep the heat on derivatives and commodities markets with tough policing, he said on Thursday.
reut.rs/2sZ89uV
****SD: And he did get confirmed. WSJ - CFTC's Giancarlo Sails Through Confirmation Hearing
New Sebi chief Ajay Tyagi making right moves
Business Standard News
From new fund raising instruments like municipal bonds and infrastructure investment trusts (InvITs) to passing orders in long-pending matters like the Reliance Industries' unlawful gain's case, Ajay Tyagi, chairman, Securities and Exchange Board of India (Sebi) has made some right moves in his first 100 days in office.
bit.ly/2sZCM3j
| | | | | | Strategy | | | Risk measurement? Volatility doesn't cut it
The Market Oracle
Henrique Schneider writes: Almost every investor and almost every portfolio use volatility as an indication of risk. There's nothing awfully wrong with that. But some investors and some portfolios reduce risk to volatility. And this is a serious error, since gauging on volatility is myopic, misinformed and revenue-averse. Why?
bit.ly/2sZsb8f
****SD: More of a portfolio philosophy kind of piece.
| | | | | | Events | | | FIA Launches Third Annual Innovators Pavilion
Mondovisione
FIA launched the third annual Innovators Pavilion today; a showcase for fintech startups that are offering forward-thinking solutions for the global derivatives markets.
bit.ly/2sZzNYF
| | | | | | Miscellaneous | | | A Kansas Investment Firm Spurring Change on Wall Street
Landon Thomas Jr. - NY Times
Tucked away in a sleepy office park in this Kansas City suburb, a $26 billion investment advisory firm is helping drive Wall Street's latest wealth boom.
Inside, there are no televisions tuned to CNBC and there is hardly a Bloomberg terminal to be seen. There is a dentist on the top floor. The boss drives a Honda.
nyti.ms/2sZrFrc
Frankfurt Emerges as Biggest Banking Winner After Brexit
Gavin Finch and Steven Arons - Bloomberg
Morgan Stanley, StanChart, Citigroup eye city for EU hub; Firms planning for worst even as hopes for soft Brexit grow
Frankfurt is emerging as the biggest winner from last year's Brexit vote, with many of the world's biggest banks choosing to base their new European Union headquarters in the German city.
/goo.gl/Mhdeik
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