| July 20, 2016 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
FIA's Walt Lukken on Reg AT and the 2016 Agenda
JohnLothianNews.com
Walt Lukken, president and CEO of the FIA, spoke with JLN about what issues the FIA is working on for the remainder of the year. The trade organization is focusing on Reg AT, the BASEL leverage ratio rules and the ramifications of Brexit.
A big concern for the FIA is the CFTC's desire to get and store, without a subpoena, firms' proprietary algorithms, which have enormous intellectual property value for the firms. As for BASEL, the FIA is worried about the negative impact current rules have on clearing. The surprise Brexit vote added another issue to the FIA's plate and, despite a one-year reprieve, MiFID looms in the background.
Watch the video »
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New York Was A Great Educational Experience
By John J. Lothian
The MarketsWiki Education World of Opportunity series swept into New York yesterday at the Nasdaq MarketSite and it was another banner day for the series. We had about 110 interns and newer employees attend the two sessions and not a single one of them left during the sessions.
Let us just say that the speakers kept the attention of the audience, especially Kenny Polcari from O'Neil Securities. Polcari was so animated in telling his story, and that of the market, that the windows across Times Square from the MarketSite shook and Elmo was knocked over.
We are greatly appreciative of Nasdaq for hosting the event at their Times Square facility. We are also appreciative of the rest of our sponsors, including Global Premier sponsor CME Group. The swag giveaways were a hit with the New York crowd, just as they had been in Chicago. For the second year in a row, each of the participants took home a MarketsWiki Education high quality drawstring backpack with some sponsor swag in it and we raffled off some higher value items, including several Series 3 study kits from The IFM.
But we could not have pulled off this series without the time and dedication of our speakers, who each took time out of their busy schedules to talk to the young audience and pass on some insight, wisdom and even humor. Thank you to all our speakers in New York, and to the Chicago speakers from last week.
We will move on to London, Paris and Frankfurt in the fall and are still looking for venues for each city. So if any of you want to host us, or have some ideas, we welcome them. We are also looking for speakers or suggestions for speakers for each of those cities. If you are interested, or have an idea of someone who would be a good contributor, please let us know.
And lastly, we will need some help getting the word out for the fall series. We have been in London for two years already with the series, but Paris and Frankfurt are virgin territory for it. So we will need some help connecting to employers, schools and the young people in them.
You have all greatly helped us make this program a success and we are grateful. You have told the story, you have helped young people find their way to the series and hopefully to careers in the industry. We could not do this without you, so thank you from the top to bottom of my heart.
| | | | | | Lead Stories | | | No fear: Here's why the VIX has cratered
Annie Pei - CNBC
The CBOE Volatility Index has staged a stunning reversal over the past few weeks, falling by about half as the uncertainty and volatility surrounding the Brexit vote dissipated and the S&P 500 climbed to record highs.
cnb.cx/2aujSGp
Riding shock after shock is a danger for financial markets
Roger Blitz - Financial Times
Pill-popping financial markets are a patient who has swallowed enough central bank medicine to become numb to any shocks, perceived or real. Shocks that previously sent markets into spasms are still being watched closely, but it is not long before they are deemed to have no lasting effect, enabling the market to continue functioning normally. Consider three events of recent weeks, each with a potentially heart-stopping impact on markets  Brexit, China currency depreciation and Turkey.
/goo.gl/uDnHNF
Option Pit and CBOE Livevol Announce Option Pit Custom Scans within the Livevol Platforms
Press Release
CBOE Livevol recently released in their analytics and trading platforms four new live options market scans designed in collaboration with Option Pit. The market scans use a combination of realized volatility, implied volatility and current price performance to help identify real-time actionable trading opportunities.
goo.gl/AJuCjn
Are we entering a Cold War-style stock market?
Dale Jackson - The Globe and Mail
Don't let the recent stock market rally fool you, says Chicago options trader Todd Horwitz. The chief strategist at BubbaTrading.com says it's all part of a carefully crafted feat of financial engineering by the world's central banks. "All the central banks are trying to pump in liquidity. China owns about 60 per cent of their market and every major economy is buying up their own stock markets," he says, pointing out that it was the promise of more stimulus from the Bank of Japan that actually helped spark the July rally.
goo.gl/FnWziX
Russia Dominates Wheat Market as Soggy Fields Push Out France
Manisha Jha and Anatoly Medetsky - Bloomberg
'Black Sea just has so much to sell,' INTL FCStone says
Russia to take 16% of global wheat market: UkrAgroConsult
In the race to supply wheat to the world's biggest buyer, Russia is running away with the prize.
bloom.bg/2auEtKO
COEX taps Tullett after leaving ED&F Man
Luke Jeffs - Futures & Options World
London-based broker has partnered with Tullett Prebon to use its infrastructure
COEX Partners, the firm founded by former Cube chief John Ruskin, has cut a deal to partner with inter-dealer broker Tullett Prebon, drawing a line under COEX's previous agreement with ED&F Man. London-based COEX finalised its agreement with and completed its transition to Tullett in recent weeks, according to sources, meaning COEX's brokers are now using the British IDB's infrastructure to service clients. Ruskin, who co-founded COEX in 2014 with former colleague Alex Gerskowitch, became listed as working with Tullett Prebon on July 13, according to the FCA Register.
goo.gl/f3SykV
Stellar Trading to part ways with Asia head
Alice Attwood - Futures & Options World
Kelvin Chia joined in December from tech firm CQG
Stellar Trading Systems is set to part ways with its Singapore-based head of Asia Pacific operations Kelvin Chia, eight months after he joined the firm to run its third international office.
goo.gl/pI5FKn
GH Financials hires ICE director O'Leary
Alice Attwood - Futures & Options World
Julian O'Leary had been with the US exchange group since 2007
Broker GH Financials is set to appoint Intercontinental Exchange veteran Julian O'Leary as a managing director for technology, according to sources. O'Leary is set to join GH in London in September as managing director for technology and execution, reporting to chief executive officer Mark Ibbotson.
bit.ly/2austZN
Milliman Derivatives Survey 2015
Professional Planner
The economic impact and regulatory changes resulting from the global financial crisis continue to have a major impact on the life insurance industry across the globe. This survey explores trends in risk management practices and derivative usage within the insurance industry. In this report, we present the findings from the 2015 update to this survey, which gives an overview of current usage and practices, as well as a perspective on how derivative usage is likely to change in the future.
goo.gl/1z0Q5I
| | | | | | Exchanges | | | Exchanges Take Opposite Approaches on Depth-of-Book Market Data
Michael Friedman - TABB Forum
NYSE and Nasdaq recently prevailed in a decade-long litigation defending their ability to charge premium prices for depth-of-book market data. Meanwhile, IEX is planning to launch without selling depth-of-book market data at all. Why are NYSE and Nasdaq willing to pay a decade's worth of litigation costs to defend their right to charge a relatively short list of customers for depth-of-book data, while IEX is opting out of that revenue stream completely?
goo.gl/rXq2Nr
Eurex Exchange's Fixed Income Futures & Options: highlights of Q2/2016
Eurex Group
Markets made a confident start to Q2 although the UK's vote to leave the EU overshadowed other developments by end of June. Fixed income derivatives volumes remained relatively robust.
goo.gl/Yu2TrF
****SD: Q2 2016 = 128 million fixed income futures and options
| | | | | | Regulation & Enforcement | | | OCC Comments on Financial CHOICE Act 2016
OCC
The Options Clearing Corporation (OCC) appreciates this opportunity to provide the following initial comments on the Draft. OCC's role as a central counterparty (CCP) and systemically important financial market utility (SIFMU) puts us at the center of a number of the issues addressed in the Draft. The Draft is complex and makes extensive changes to the existing legal and regulatory structure, and we may have additional comments as we further review the potential impacts if legislation were adopted.
goo.gl/R7vDxr
****SD: Click here for a PDF brief on the Financial CHOICE Act.
Republicans' Scary Plan to Restore Glass-Steagall
Paula Dwyer - Bloomberg
One of the biggest surprises from the Republican convention so far has not taken place on its center stage. Yes, I'm talking about the party's call in its 2016 platform to reinstate the Glass-Steagall law. This is the statute that would require large U.S. institutions to break up -- the cause that preoccupied Bernie Sanders's presidential campaign and continues to animate the American left.
bloom.bg/2auCy8M
Experts give mixed reaction to latest Mifid II rules
Julie Aelbrecht - Futures & Options World
RTS 6, which deals with algorithmic trading firms, is expected for release this week
Market experts have offered mixed reactions to the latest set of Mifid II regulatory technical standards (RTS) released on Friday, arguing more clarity is needed on the controversial European reforms. Regulation experts and legal experts have expressed cautious optimism, but also emphasised the challenges ahead with the sweeping regulatory package. "I have been through the RTS, particularly RTS 7, which deals with organisational requirements for trading venues, and although I'm pleased they have been released, ?the objection/comment period is three months, so honestly, there is little to cheer about. Whilst the three month period does not necessarily mean that there will be any objections, it won't be until mid-October until these are finalised," Sam Tyfield, partner at law firm Vedder Price, told FOW.
goo.gl/eS6FkL
| | | | | | Technology | | | Blockchain unlikely to solve settlement issues, says expert
Paul Walsh - The Trade
Implementing blockchain technology for settlement transactions will not be as easy as many believe, according to an industry expert. Speaking at London's FinTech week, Simon Taylor, former Blockchain R&D VP and co-founder of Blockchain 11:FS suggested that in spite of blockchain's origins lying in settlement, the technology should be focused elsewhere.
goo.gl/GtMzzG
| | | | | | Strategy | | | How Judy Greer Might Suggest Cheryl Tunt Hedge Her Portfolio
Russell Rhoads - CBOE Options Hub
I'm using my blogging ability to wish a happy birthday to an American Treasure, Judy Greer. Greer first caught my eye as the younger sister in the under-appreciated classic Chicago movie, Kissing a Fool. Many people may remember her as Jennifer Garner's enemy in 13 Going on 30 (I was rooting for Judy's character). She's also appeared in many TV shows such as Arrested Development and Two and a Half Men. My favorite role, however, just uses Judy's voice as Cheryl Tunt in my favorite animated series Archer. For those unfamiliar with her character in Archer, she works as a receptionist, but is extremely wealthy. I would assume with such wealth Cheryl has a very diversified portfolio and if she watches the markets closely may sometimes be concerned about a pullback in the stock market. If Judy Greer's talents include knowledge of the option markets I believe she would suggest Cheryl Tunt consider a collar with SPX options to lock in the value of her portfolio in a low cost manner.
goo.gl/Yvj0do
****SD: Other important character note: Cheryl/Carol has a pet ocelot named Babou. Archer loves Babou.
Indicator of the Week: What Happens After an S&P Snap-Back Rally?
Rocky White - Schaeffer's Research
It was a tumultuous first two-and-a-half months of 2016, but after that, the S&P 500 Index (SPX) was making steady gains toward its all-time high. Then "Brexit" hit and traders freaked. The SPX endured its biggest two-day drop since mid-2015, falling to its lowest level in over three months. That seems like a long time ago now, with the SPX recently making a new all-time high. This week, I'll take a look at similar times the S&P dropped to lows before spiking to highs in a short amount of time, and see how stocks behaved after these "snap-back rallies."
goo.gl/xhlv4E
A Lesson In Earnings Season Options Protection From Domino's Pizza
Forbes
Earnings season can be a hectic time for investors, especially when they see high-profile stocks like Netflix sell off after reporting. Traders may be torn on whether they should hold or sell a stock, worried about what an earnings miss may do to their portfolio. Luckily, options provide a solution, allowing shareholders to maintain their long-term positions on a stock, while protecting against any short-term speed bumps.
goo.gl/Hu1WhM
****SD: Most lessons I've heard about Domino's Pizza involve not ordering it.
The VIX Is Starting to Look Cheap
Carley Garner - TheStreet
The VIX has been slowly grinding lower day after day, but is this the calm before the storm? As we get closer to late July, a time of year which has seen significant weakness in the S&P, we have to wonder if the VIX is quietly emerging as a significant opportunity for volatility bulls or as an opportune hedge for those holding a hefty equity market position. Seasonal studies are due to turn decisively bearish on stocks in the coming weeks, which would give volatility a boost.
goo.gl/vLnYGR
****SD: No matter the method used to determine the "average" VIX level, this sub-12 level is low. Very low.
| | | | | | Education | | | Exploring the Nature of Trader Intuition
Denise Shull - TABB Forum
Recently, Bloomberg Tradebook released the Trader Brain Exercise, a 'game' that essentially warms up the parts of the brain involved in pattern recognition and prediction. So why should you play the Trader Brain Exercise?
goo.gl/AafnCL
****SD: My performance in the game was decidedly middling.
| | | | | | Miscellaneous | | | Hedge fund party host fires back at accuser
CNBC
The hedge fund trader who was fired after hosting a big party in the Hamptons says the event was "good clean" fun that raised $100,000 for charity.
cnb.cx/2auEYEL
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