| January 17, 2018 | | | | | Spencer Doar
Associate Editor
John Lothian News | |
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| | | | Observations & Insight | | | You Can't Rain On Our Parade: Cboe's Big 2017 Includes Bitcoin Futures. Can It Overcome Regulatory, Margin and Volatility Headwinds?
Jim Kharouf - John Lothian News
To hear Cboe Global Markets Chairman and CEO Ed Tilly tell it, his exchange group is firing on all cylinders and adding new ones to the engine. The exchange boasts the top US equity options market and has a lock on volatility products with the VIX futures and options and related exchange traded products. Cboe now has the top pan-European equity market and the second ranked US stock market, as well as a burgeoning FX business. As the migration of its exchanges onto the Bats trading platform continues, with Cboe Futures Exchange due up next month, its technology is taking a major step forward.
Oh yeah, and it launched the first Bitcoin futures contract in December, a move that shook the trading world. The industry was rocked further by the CME Group's own Bitcoin contract launch a week later.
Read more HERE
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OCC News - January 2018
OCC
Read the latest from OCC News! Includes a note from John Davidson, OCC's President & Chief Operating Officer, an update from OIC and more.
/goo.gl/dpzub1
****SD: Meanwhile, from Twitter - "OCC total cleared volume reached over 30.3 million contracts [on 1/16/18]; the first time since January 2016. Total cleared futures volume at OCC was the fourth highest ever, at 1.1 million contracts."
| | | | | | Lead Stories | | | Third Barclays FX Trader Faces U.S. Charges in Global Scandal
Marcus Wright and Suzi Ring - Bloomberg
DOJ alleges Bogucki tried to rig options at expense of HP; Faces first court appearance in New York later Wednesday
The former head of New York foreign exchange trading at Barclays Plc's investment bank became the lender's third trader to face U.S. charges related to market manipulation, as prosecutors pursue officials responsible for misconduct that has led to $10 billion in fines.
/goo.gl/X7mdgY
****SD: From the article - "...One Barclays trader said he and other traders would 'bash the sh*t out of' and 'spank the market' to depress the price of volatility, according to the indictment." Lotsa foul-mouthed news lately... FT with the story here.
Hudson River Trading to buy rival HFT firm Sun Trading
John McCrank - Reuters
Hudson River Trading LLC has agreed to buy Sun Trading parent Sun Holdings LLC, it said on Tuesday, the latest takeover in a shrinking high frequency trading industry beset by low market volatility and rising costs.
/goo.gl/Cx2yTb
****SD: FT here.
VIX May Have Finally Found Its Floor, Macro Risk Advisors Say
Joanna Ossinger - Bloomberg
Volatility can't stay this low forever -- or so investors have been saying for what feels like forever. They may have finally found their moment.
As the market rallies, "volatility isn't that low anymore," Pravit Chintawongvanich of Macro Risk Advisors said in a report Tuesday, adding that the Cboe Volatility Index (VIX) curve is flattening. The VIX rose as much as 22 percent on Tuesday to as high as 12.41, the highest level in six weeks. That is still around 30 percent below the average of 18.1 since the bull market started in 2009.
jlne.ws/2FPCP5O
****SD: Will very many people disagree with this prediction?
Wall Street 'Fear Gauge' Jumps to 2-Year Record Relative to European Counterpart
Kinsey Grant - TheStreet
Volatility could be staging a comeback.
The Cboe VIX Volatility Index surged 15% on Tuesday, Jan. 16, as stocks failed to hold onto fresh records set the week before. It was the biggest jump that the index, commonly referred to as Wall Street's "fear gauge," has seen in four months.
jlne.ws/2FM3T5D
****SD: CBS with U.S.-centric take - Volatility returns to the U.S. stock market
Vol 411 Follow Up - Historical Look at SPX and VIX Moving Together (VIDEO)
Russell Rhoads - Cboe Blog
When I hosted Vol 411 this morning both the S&P 500 and VIX were higher on the day. The SPX took a turn and finished the day lower so we didn't have a three day streak where both rose. The results of running some numbers is below the video.
/goo.gl/pVjV2X
As the first bitcoin futures expire, price and volume concerns arise
Bob Pisani - CNBC
It's a big day for bitcoin. The Cboe began trading the first bitcoin futures on Dec. 10, and that first contract expires Wednesday, and the initial CME contract expires on Jan. 26.
Investors will be watching to see how smoothly the Cboe contract closes.
Investors in many futures products will typically roll over their contract into the next month, but with bitcoin nothing is certain.
jlne.ws/2FNSPoy
****SD: The Cboe plan = a series of smooth, successful expiries, then the next steps (aka options).
| | | | | | Exchanges and Clearing | | | BSE hits highest turnover in currency derivatives segment
Nikita Singh - Dalal Street Investment Journal
India's largest exchange in the currency derivatives segment BSE touched its highest turnover of Rs. 45,575 crore on Wednesday. Currency derivatives include futures and options, with four pairs of currencies traded at future prices. The dollar-rupee is the most popularly traded pair, holding nearly 95 per cent market share.
/goo.gl/DdPai6
| | | | | | Regulation & Enforcement | | | CFTC, binary options marketers clash over evidence in fraud case
Maria Nikolova - FinanceFeeds
Legal proceedings against binary options fraudsters are extremely tricky, as shown by the case Commodity Futures Trading Commission v. Scharf et al (3:17-cv-00774). The lawsuit, launched in July last year, targets a number of binary options firms, such as Citrades.com and AutoTradingBinary.com, as well as their affiliate marketers Zilmil and Zimil's owner Michael Shah.
jlne.ws/2FP6Jaj
| | | | | | Technology | | | BGC Brokers' Capitalab Announces Its Largest Initial Margin Optimisation In Rates
PRNewswire
Capitalab, a division of BGC Brokers L.P. ("BGC Brokers"), an entity within BGC Partners, Inc. today announced that its Initial Margin Optimisation ("IMO") service has completed its largest G4 Interest Rates IMO to date. More than 15 counterparties have participated in the IMO, thereby multilaterally shrinking delta, vega and curvature bilateral counterparty risks and significantly reducing both non-cleared Initial Margin (IM) and cleared IM at the Central Clearing Counterparty (CCP).
/goo.gl/e1yV7k
****SD: Initial Margin Optimisation - not to be confused with In My Opinion.
| | | | | | Strategy | | | Short VIX, stock market volatility bets are riskier than ever
Joe Ciolli - Business Insider
Despite repeated warnings of a painful reckoning, traders can't seem to wean themselves off one of the market's riskiest investment strategies.
The trade in question is the shorting of stock market volatility using exchange-traded products (ETPs), and the situation has reached an extreme only seen once before in history. The net position of ETPs that track the CBOE Volatility Index  or VIX  has become short for just the second time in their eight-year history, according to data compiled by the equity derivatives team at Goldman Sachs.
jlne.ws/2FMYwmI
How to bet on stocks volatilityÂand why that's a bad idea
Dave Edwards and Helen Edwards - Quartz
It used to be that investors viewed volatility as simply a risk to the predictability of a price at any given moment. But increasingly, investors view volatility investments as a way to protect against downside or as investments in themselves.
jlne.ws/2FLR5fL
A government shutdown could send investors for a ride, history shows
Fred Imbert - CNBC
The U.S. government could shut down later this week and that could spell trouble for investors in the near term, history shows.
CNBC analysis using Kensho found that the S&P 500 falls an average of 0.3 percent one week after the government closes its doors. The benchmark index also trades positive just 40 percent of the time one week after a shutdown.
jlne.ws/2FMxfBd
| | | | | | Education | | | This Is Why WTI Backwardation Is Important
Seeking Alpha
The biggest development in commodity markets is that the WTI crude oil (USO) futures curve is now in backwardation. This happens when contracts further out in time are actually priced lower than contracts closer to expiration. Backwardation benefits traders with long exposure while contango detracts from returns. Most people are familiar with the concept of contango in VIX futures, where VIX futures further out in time are typically priced higher than the front-month contract.
jlne.ws/2FLcUfk
| | | | | | Miscellaneous | | | Goldman Sachs Finishes Tough Year With New Low in Debt Trading
Dakin Campbell - Bloomberg
Fixed-income tumbles 50% to lowest since the financial crisis; Investment-banking surge of 44% offers one bright spot
/goo.gl/oSCCRz
****SD: CNBC, NY Times, Reuters and WSJ
CME Group Announces Henry Hub Natural Gas Futures All-Time Daily Volume Record, Surpassing 1 Million Contracts
CME Group
CME Group, the world's leading and most diverse derivatives marketplace, today announced it reached a daily trading volume record for Henry Hub Natural Gas futures on January 12, 2018, of 1,022,858 contracts - surpassing the 1 million milestone for the first time. The previous single-day trading volume record was 995,129 contracts set on January 11, 2018.
jlne.ws/2FNgVju
BitConnect winds up cryptocurrency exchange operations, BCC crashes
Charlie Osborne - ZDNet
BitConnect is in the midst of closing its cryptocurrency lending and exchange platform following warnings from US regulators and speculation that the platform is little more than a Ponzi scheme.
jlne.ws/2FL0vrP
A Wall Street Giant Makes a $75 Million Bet on Academic Philosophy
Jennifer Schuessler - NY Times
The quants and their algorithms may have taken over Wall Street. But one investment legend is making a big bet on a more old-fashioned mode of analysis: philosophy.
/goo.gl/YTwgNW
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| | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
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Editor
| | | Spencer Doar
Editor
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