| July 07, 2016 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
|
| | | | Observations & Insight | | | "Cannot be done": ISE's Gary Katz Tells The Inside Story Of The Biggest Disruptor To The Options Industry
Jim Kharouf, JLN
It's been quite a ride for almost 20 years for Gary Katz, now officially the former co-founder, president and CEO of the International Securities Exchange
Nasdaq closed the deal to buy ISE from Deutsche Boerse on June 30, ending one of the most pioneering and successful runs for an exchange in the history of financial markets. Co-founded in 1997 by Katz, David Krell, William Porter and Marty Averbuch, the group set out to create the first fully electronic US equity options exchange. The exchange launched in 2000, but the road was bumpy, funny and frustrating, even on good days. But in five years, ISE went from being an interesting upstart to an exchange holding more than 30 percent of the US options volume. The truth is, it wasn't an easy five years, not to mention the years it took to develop and create the exchange.
The first task at hand was to build an all-electronic options trading platform. So the ISE team traveled to Stockholm to partner with Swedish market and technology company OM on the building of a new matching engine.
To read the rest of the story, go to JohnLothianNews.com HERE
++++
Let Me Count the Ways: Nasdaq Looks at All the Possibilities for Options, and Beyond, in ISE Acquisition
Jim Kharouf - JLN
With double the number of US equity options exchanges, Nasdaq has some work to do in the coming months. Nasdaq closed the deal today for $1.1 billion with Deutsche Boerse, giving the exchange three options markets: International Securities Exchange, ISE Gemini and ISE Mercury, to go along with Nasdaq Options Markets (NOM), Nasdaq OMX BX and Nasdaq OMX PHLX. Tom Wittman, executive vice president of Nasdaq and global head of equities at Nasdaq, told John Lothian News that the plan is to integrate and migrate the three exchanges onto the Nasdaq platform. That essentially means the technology team at Nasdaq will have to rebuild the ISE exchanges to provide the same functionality and rules that exist today.
jlne.ws/297EMh4
| | | | | | Lead Stories | | | CBOE Launches Second Index Series That Targets Investment Outcomes
Press Release
Chicago Board Options Exchange (CBOE) today announced it has created a series of 13 "Enhanced Growth Indexes," the second in a family of options-based strategy performance benchmarks designed to target the outcomes of specific investment strategies. The CBOE S&P 500 Enhanced Growth Indexes measure the performance of a hypothetical portfolio of S&P 500 Index (SPX) FLexible EXchange (FLEX) options designed to provide targeted annual returns. CBOE began disseminating daily values for the new benchmarks on June 24, 2016.
jlne.ws/29RNhd9
****SD: CBOE also recently released 30 years worth of data pertaining to their PutWrite Index.
Fed's Urgency to Hike Fades Away as Jobs and Brexit Dim Outlook
Craig Torres and Jeanna Smialek - Bloomberg
The Federal Reserve is losing confidence in its need to tighten any time soon as officials face rising uncertainty about the outlook for growth at home and abroad. U.S. central bankers want proof that job creation has resumed a healthy pace, that the underlying momentum of the economy was intact, and that inflation will eventually hit their 2 percent target. That's according to minutes released Wednesday of their meeting last month, held the week before Britain's June 23 vote to leave the European Union which has further clouded the outlook.
jlne.ws/29RJv3P
Citadel Names Microsoft's Turner to Lead Securities Unit
Bloomberg
Citadel, the investment firm run by Chicago billionaire Kenneth Griffin, hired Kevin Turner, the chief operating officer at Microsoft Corp., to run its securities unit as finance firms seek to help build their technology expertise.
jlne.ws/29zA10L
****SD: Financial Times' take here. From the Bloomberg story: Turner was known for "delivering motivational speeches with folksy maxims at sales events at Microsoft." So, I guess names will never hurt him?
U.S. SEC approves NYSE request for new market volatility rules
Chuck Mikolajczak - Reuters
The U.S. Securities and Exchange Commission has approved plans by the New York Stock Exchange to speed up and smooth early morning trading in times of market stress. In a ruling released on Tuesday, the SEC said the NYSE could allow stocks to open for trading on particularly volatile days, even in the absence of clear price disclosure that is normally required before trading opens.
jlne.ws/29RIVTo
Wall Street scion Caspersen pleads guilty to $38 million fraud
Nate Raymond - Reuters
Former Wall Street executive Andrew Caspersen pleaded guilty on Wednesday to charges that he defrauded investors out of over $38 million, blaming his conduct on a gambling addiction he could not control. Caspersen, who worked at a unit of investment banker Paul Taubman's PJT Partners Inc (PJT.N) prior to his arrest in March, pleaded guilty in federal court in Manhattan to securities fraud and wire fraud.
jlne.ws/29RIKYs
Yuan Tumbling Again Leaves Investors Unperturbed in Win for PBOC
Bloomberg
Investors shrug off yuan slide that roiled markets in January
Options market sanguine as PBOC seen improving communication
The last time China's currency was sinking this fast, investors around the world responded by fleeing riskier assets. Now, they're taking the declines in stride.
jlne.ws/29zxP9L
****SD: WSJ - Yuan Shorts Are Back in the Game
| | | | | | Exchanges | | | Trading: What happened when the pit stopped
Gregory Meyer - Financial Times
The Nymex floor brought wealth for many without pedigree but electronic trading has blocked the path
Cindee Rifkin was a 19-year-old babysitter when her employer, a commodities trader, invited her to lower Manhattan's oil exchange. In the din of the floor a broker gave her a card scrawled with the arcane terms of a futures deal. "He said, 'Can you read this?'" Ms Rifkin recalls. "It was this jumble. I said, 'No.' He said, 'You're hired.'" She quit babysitting for the job as a clerk on the New York Mercantile Exchange, at the time the world's dominant oil bourse. Days later, Saddam Hussein's Iraq invaded Kuwait and crude prices shot up 90 per cent. She learnt to use hand signals to relay phone orders to traders screaming in Nymex's pits. By her twenties, Ms Rifkin, who did not finish high school, was earning six-figure pay.
jlne.ws/29RROwe
****SD: Sad, but a good read.
HKEx confirms Lee as new futures exchange CEO
Julie Aelbrecht - Futures & Options World
Kwok Keung Lee previously served as the Asian exchange's head of markets
Hong Kong Exchanges and Clearing (HKEx) has confirmed the appointment of Kwok Keung Lee as the new chief executive of the Hong Kong Futures Exchange and the Stock Exchange of Hong Kong.
jlne.ws/29zt7Zw
MIAX Options Reports June 2016 Trading Activity
Press Release
MIAX Options Exchange today announced that over 22.2 million contracts were executed on MIAX Options in June 2016, equating to an average daily volume (ADV) of over 1 million contracts. The June volume represents a 4.6% increase from the 20+ million contracts executed in May 2016 and a 4.6% increase from the 21+ million contracts executed in June 2015. MIAX Options' year-to-date total as of June 2016 of over 125 million contracts represents a 7.1% increase over the 116+ million contracts achieved during the same time period in 2015. MIAX Options' June equity options market share of 6.92% represents a 3.1% decrease from the 7.14% achieved in June 2015 and a 5.5% decrease from the 7.32% achieved in May 2016. For the entire U.S. equity options industry, June's ADV was over 14.6 million contracts, or an 8.0% increase from June 2015's ADV of over 13.5 million contracts.
goo.gl/VMb65R
ICE Coal Futures jump 66% on-month in June to record 311.6 mil mt - Coal
Platts News Article & Story
The volume of coal traded and cleared on the ICE Futures platform during June rose 66% month on month to a new record high of 311.6 million mt, primarily due to larger volumes of ICE Rotterdam futures, according to data from energy exchange ICE Futures Europe and electronic trading platform globalCOAL Thursday.
jlne.ws/29zpz9s
****SD: 149.1 million mt, or 48 percent, of that volume was options.
Germany's Finance Minister Relays Sentiments On LSE - Deutsche Borse Merger
Rosemary Barnes - Finance Magnates
German finance minister, Wolfgang Schäuble, has relayed his sentiments on the controversy surrounding Deutsche Borse's planned merger with the London Stock Exchange Group (LSE). Finance Magnates reported on Monday that the merger between the LSE and Deutsche Borse could hinge on Brexit negotiations. Schäuble has since stated that the location of its headquarters was "not the most important" question hanging over the deal.
jlne.ws/29RQx8v
LSE must be wary of regulatory creep - lawyer
Luke Jeffs - Futures & Options World
Ferdinand Mason of Jones Day said the LSE should be looking at this issue now
The LSE Group must ensure European regulatory reforms do not impact its clients after the British exchange merges with Deutsche Boerse and the UK leaves the European Union, a top deals lawyer has warned. Ferdinand Mason, partner at law firm Jones Day, said Brexit will likely mean the UK and Germany will be bound over time by different regulatory regimes, prompting fears over regulatory creep between the London and Frankfurt-based exchanges.
jlne.ws/29zvADd
****SD: What is the name of this regulatory creep? I need to know who to avoid at the next industry conference.
CME Group Appoints Young-Jin Chang as Global Head of Metals
Press Release
CME Group, the world's leading and most diverse derivatives marketplace, today announced the appointment of Young-Jin Chang to Global Head of Metals Products. Reporting to Derek Sammann, Senior Managing Director, Global Head of Commodities & Options Products, Chang will be responsible for the strategic development, management and profitability of the global product suite, including both precious and industrial metals. She will continue to be based in Chicago.
jlne.ws/29RNwVE
SGX reports market statistics for June 2016
Press Release
SGX reports market statistics for June 2016
jlne.ws/29ROscR
****SD: "Total Derivatives volume was 14.1 million, up 4% month on month and down 35% year on year."
BM&FBOVESPA Publishes June Market Performance
Press Release
Trading value in the equity market (BOVESPA segment) totaled BRL 143.65 billion in June compared with BRL 139.58 billion the previous month.
jlne.ws/29zvhbK
| | | | | | Regulation & Enforcement | | | FIA Analysis: Leverage ratio proposals will negatively impact client clearing
FIA
FIA submitted a response to the Basel Committee on Banking Supervision's consultative document on revisions to the Basel III leverage ratio framework. FIA's analysis shows that the current proposal's lack of offset for initial margin would substantially increase clearing members' total leverage exposure and, as a result, would significantly reduce clearing services to clients, increase concentration of client clearing services and negatively affect the portability of client accounts, especially in times of systemic stress.
jlne.ws/29RODoA
****SD: Full letter here
Mifid position limit rules unclear - lawyers
Alice Attwood - Futures & Options World
New EC finance commissioner said Tuesday position limit rules need re-write
London lawyers have raised concerns over the lack of progress in defining position limit regulatory technical standard (RTS) under Mifid II amid warnings some of the outstanding RTS are the most controversial aspects of the directive. RTS 21 - which covers position limits for commodity derivatives - was in March flagged by the European Commission as requiring some "fine-tuning" by the European Securities and Markets Authority (Esma) before it could be endorsed by the Commission.
jlne.ws/29zvICI
EU finance chief wants system to wind down troubled clearing houses
Francesco Guarascio - Reuters
The European Union should set up a mechanism to wind down troubled clearing houses, the new head of financial services at the European Commission said on Wednesday, setting out his priorities for the coming months.
jlne.ws/29zAkss
Analysis: Latest CySEC Circulars Likely Result from ESMA Pressure
Victor Golovtchenko - Finance Magnates
Yesterday's news about the celebration of the Cyprus Securities and Exchange Commission's (CySEC) 20th anniversary have come to demonstrate a particular closeness between the regulator and its European boss, the European Securities Markets Authority (ESMA). After the implementation of the first part of MiFID, CySEC has come under closer supervision by the organization comprised by its European counterparts, which are all members of ESMA. The Cypriot regulator has attracted unwanted attention from a number of its peers as well as from clients of some brokerages which are under the supervision authority of the watchdog.
jlne.ws/29RQREg
| | | | | | Technology | | | Legendary Hedge Fund Wants to Use Atomic Clocks to Beat High-Speed Traders
Bloomberg
Patent application no. 14/451,356 has one goal: to outrun the speed demons of Wall Street. The 16-page document was quietly published by the U.S. Patent and Trademark Office in February. Replete with schematic drawings, the filing describes a novel way for "executing synchronized trades in multiple exchanges." The invention consists of not only sophisticated algorithms and a host of computer servers, but atomic clocks -- precisely calibrated to vibrations of irradiated cesium atoms -- to sync orders to within a few billionths of a second.
jlne.ws/29zA0dj
****SD: Thinking of clocks and trading, I wonder if the addition of a "leap second" at the end of the year will prove problematic for anyone.
| | | | | | Strategy | | | In Today's Market with Lower Yields on "Traditional" Investments - Explore CBOE Benchmark Indexes
Matt Moran - CBOE Options Hub
As shown in the first two charts below, both the dividend yields on the S&P 500 Index and the interest rates on the Ten-Year US Treasury Notes are much lower than they were two and three decades ago.
jlne.ws/29zx1S4
Goldman Stock Picker's Case Run Over by S&P 500 Correlations
Oliver Renick - Bloomberg
It was less than a month ago that Goldman Sachs Group Inc. saw the U.S. equity market turning into a stock-picker's playground. Then came Brexit. The U.K.'s surprise vote to quit the European Union last month reawakened lockstep moves in stocks at a time when the market was just beginning to show signs of becoming more amenable to stock selection. One-month correlation among the 50 biggest companies in the S&P 500 Index is now near the highest since 2011, according to Citigroup Inc.
jlne.ws/29zureP
| | | | | | Education | | | Implied Volatility, Reverting to the Mean, and Standard Deviations
The Ticker Tape
You've probably heard that volatility is mean-reverting, which is trader-speak for "it goes back to where it usually is." But what does that really mean? And how can options traders potentially profit? Let's take a closer look.
jlne.ws/29RJahr
| | | | | | Miscellaneous | | | U.S. Loses Crown as World's Top Grain Shipper to Black Sea
Bloomberg
The Black Sea, a burgeoning source of grain exports, has probably overtaken the U.S. for the first time to become the largest shipper on the global market.
jlne.ws/29ztNho
| | | | | | | | | JLN Options is sponsored by: | | | | | | | | | | | | | | | | | | | |
|
|
| | | | |
Disclaimer: All John Lothian Newsletters, JohnLothianNews.com, MarketsWiki.com and MarketsReformWiki.com are products of John Lothian News, a division of John J. Lothian & Company, Inc. The opinions expressed in all John J. Lothian & Company, Inc. publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers. Futures and options trading involve risk. Past results are no indication of future performance. Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any website or newsletter content.
© 2016 John J. Lothian & Company, Inc. All Rights Reserved. |
|
|
