| March 15, 2016 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | Perhaps Too Quiet: Traders Fear Calm as Volatility Bets Jump
Joseph Ciolli - Bloomberg
Even as a gauge of investor anxiety hovers close to the lowest level of 2016, the calm washing over the U.S. stock market has a suspicious feel to some traders. The concern is visible in the record number of shares outstanding in an exchange-traded note betting on an increase in the Chicago Board Options Exchange Volatility Index. Share counts, which rise along with demand for ETFs, sit around the highest levels of the year for two other long-VIX securities, according to data compiled by Bloomberg. Meanwhile, the fear gauge has closed below 20 for 10 straight days, the longest such streak since December.
bloom.bg/1S1XzaD
****SD: Everybody is in wait and see mode as monetary policy meetings loom. On Monday U.S. Stock-Trading Volume Hits Lowest Level of Year
Nasdaq's $1.1 bln ISE buy comes with hidden gem
Thomson Reuters Eikon
Nasdaq's NDAQ.O $1.1 billion all-cash purchase of the International Securities Exchange comes with a potential hidden gem. Along with Deutsche Boerse's DB1Gn.DE options unit, the deal also doubles Nasdaq's stake in Options Clearing Corp to 40 percent. A revitalized OCC could turn the ISE deal into a real bargain. Bob Greifeld, the Nasdaq chief executive, doesn't need that for his acquisition of ISE to make financial sense. At 12.8 times his target's EBITDA, it looks pricey at first glance, even to become the largest U.S. options exchange. Factor in $40 million of expected annual cost cuts, though, and the multiple drops below nine times, putting it in the middle of reasonable valuation levels, according to analysts at KBW. Greifeld has built a reputation for cutting both costs and debt soon after consummating deals.
goo.gl/r73tk9
MKM: Volatility On The Verge?
Teresa Rivas - Barron's
Volatility looks like it's here to stay for a while, and in a world of structurally elevated volatility, periods of stability are likely to be brief, writes MKM Partners' Jim Strugger. Strugger writes that equity implied volatility has historically been under its long term mean just below 20 for a few months at most, but more often just for a few weeks "while term structure settles into a trough."
on.barrons.com/1S23nkg
No matter what, this business cycle is over
Bob Bryan - Business Insider
Having recently passed the seven-year anniversary of the post-crisis stock market bottom, a lot of investors, economists, and market watchers are asking: what's next? Recession fears, concerns about China, and the extreme bearishness of investors all seemed to be aimed at answering the question of what's on the horizon. But the thing is: even asking the question means that everyone knows the market is shifting and the current business cycle has come to an end.
read.bi/1S1Wy2g
Broadridge partners TTC on futures and options post-trade efficiencies
Finextra
Broadridge Financial Solutions, Inc. (NYSE:BR) and The Technancial Company Ltd. (TTC) today announced a strategic alliance to provide an enhanced post-trade offering for futures and options. The alliance will see the combination of Broadridge's global post-trade processing solution with the strengths of TTC's leading real-time JANUS Margin Engine. This collaboration will allow clients to leverage extended best-in-class capabilities for exchange traded derivatives processing, including client clearing, while enabling consolidation of their post-trade operations across assets.
/goo.gl/6KCFR7
| | | | | | Exchanges | | | Exchange leaders to size each other up in Boca Raton
Reuters
When top derivatives exchange executives gather in Boca Raton, Florida, this week for a major industry conference, the buzz will be around who is meeting whom in hotel rooms and lobbies as bourses scramble to find partners amid global consolidation.
reut.rs/1S22us7
****JB: I suggest Thunderdome.
SGX plans to list contracts on MSCI China Free Index
Philip Stafford - Financial Times
SGX, the Singapore exchange, is looking to capitalise on investors' concerns about direct exposure to Chinese markets by offering a series of equity derivatives based on the popular MSCI indices. The Southeast Asian bourse has teamed up with MSCI, one of the world's largest global equity index compilers, to tempt investors with what it argues will be a more representative and reliable benchmark for trading China markets. SGX received regulatory approval from the Singapore authorities to make the talks public only in recent days.
/goo.gl/rMjk99
'Foundation' laid for Deutsche Börse-LSE merger
MarketWatch
The holding company created for Deutsche Börse AG's planned merger with the London Stock Exchange Group comes in the form of a Dutch legal vehicle typically used to thwart rival takeovers.
on.mktw.net/1S22M25
****SD: Also see Crunch time for the LSE: Last gasp talks to hammer out GBP20bn 'merger of equals' with Deutsche Boerse
Bats Reports Strong U.S. Equities Market Share of 21.4% in February; Tops 70 ETFs Listed on Bats ETF Marketplace; Exchange Group Maintains Strength Across Asset Classes
BATS
Bats Global Markets (Bats) today reported February data. Highlights include the third-best month on record for its U.S. Equities business with 21.4% market share, as well as continued market share strength in its U.S. Options and European Equities businesses.
goo.gl/yZ3sfa
HKEX Publishes its Annual Fact Book
HKEx
Hong Kong Exchanges and Clearing Limited (HKEX) has published its annual fact book on the HKEX website. HKEX Fact Book 2015 presents a wide range of statistics from HKEX's securities and derivatives markets as well as the London Metal Exchange, which HKEX acquired in December 2012. It also includes market highlights in 2015 and a section on the history of Hong Kong's securities and derivatives markets since the late 1800s.
goo.gl/JOOS2f
MSEI chalks out five-year turnaround strategy
Business Standard News
Metropolitan Stock Exchange of India (MSEI), formerly known as MCX Stock Exchange (MCX-SX), has drawn a new turnaround strategy, under which it will position itself as an exchange for alternative financial asset class, like currency, interest rate future (IRF), bulk and block deals and Exchange Traded Funds (ETF). To start with, in the phase of turnaround strategy over five years starting FY17, MSEI will launch new contracts for currency derivatives, IRF spread, interest rate options and currency index soon, said Udai Kumar, managing director and CEO, MSEI.
goo.gl/oIP4NB
CBOE Holdings Announces Date of First-Quarter 2016 Earnings Release and Conference Call
Press Release
CBOE Holdings, Inc. (NASDAQ: CBOE) will announce its financial results for the first quarter of 2016 before the market opens on Friday, April 29, 2016. A conference call with remarks by CBOE Holdings, Inc. senior management will begin at 7:30 a.m. Central Time (CT).
goo.gl/LJAFRL
| | | | | | Regulation & Enforcement | | | ICE, Nasdaq, Targeted by Fake U.K. Filings
Tim Cave and Giles Turner - WSJ
Someone is pretending to make U.K. regulatory filings on behalf of Intercontinental Exchange Inc. and Nasdaq Inc, using the name of their chief executives and shareholders. A company called Bolsa de Valores Nova York Ltd - Spanish for New York Stock Exchange, which Intercontinental Exchange owns - was registered with the U.K.'s Companies House on March 2. This was done less than two weeks after a new company called Nasdaq Inc. Ltd was registered on February 23. Companies House is the U.K. business register.
on.wsj.com/1S1XK5P
****SD: Either there is something nefarious at work here or some troll has way too much time on their hands.
FASB Eases Derivatives Reporting on Contingent Calls, Puts
Steve Burkholder - Bloomberg BNA
New derivatives-related guidance on how to account for certain put and call options embedded in a host contract will ease reporting burdens of banks and other companies and remedy diversity in practice, leading bank, derivatives and other trade groups say. The American Bankers Association, the Clearing House Association and the International Swaps and Derivatives Association expressed support for the accounting standards update issued March 14 by the Financial Accounting Standards BoardÂASU No. 2016-06.
goo.gl/lNTlKY
Volcker Risk Mitigating Hedging: Straitjacket for Hedging Strategies
TABB Forum
While the Volcker Rule includes an exemption that allows banks to engage in proprietary trading for risk mitigating hedging, the exemption restricts a desk's ability to manage hedges. Specifically, a desk's risk situation either compels it to reduce existing hedges or bars the desk from removing them. The Volcker Rule, section §619 of the Dodd-Frank Act, prohibits banking entities from engaging in proprietary trading. The rule, however, excludes or exempts certain trading activities from the prohibition. Risk mitigating hedging is one of the exemptions.
goo.gl/wmhKOB
Seychelles and Mauritius Financial Regulators Start Cooperation
Finance Magnates
The Financial Services Commission of Mauritius (FSC Mauritius) and the Financial Services Authority of the Seychelles (FSA) have announced the signing of a Memorandum of Understanding (MoU) at the beginning of March.
bit.ly/1S21HYe
****SD: From the article: "In the foreign exchange and binary options industries, regulatory authorities located in exotic jurisdictions are becoming increasingly popular. They offer brokerages a simplified process for obtaining a license and require smaller authorization fees."
| | | | | | Technology | | | OptionsCity to Bring Futures and Options Execution Capabilities to Thomson Reuters' Eikon
Press Release
OptionsCity Software, a global provider of futures and options trading and analytics solutions, today announced that City Execution, built on its REST-based City API, will power execution functionality on Thomson Reuters Eikon. Eikon is one of the leading sources of news, data and analytics for financial firms. City Execution will enable Eikon commodity and energy customers to execute futures and options trades within the Eikon desktop eliminating the need for alternative execution platforms and associated market data fees.
goo.gl/BGuefK
| | | | | | Strategy | | | Bracketology - Strong Returns for BXMD and CMBO Indexes Since Mid-1986
Matt Moran - CBOE Options Hub
While much of this month's bracketology focus is on basketball tournaments, the chart below shows investment returns for eight benchmark indexes since mid-1986. The chart includes four benchmark indexes (introduced in 2015) that invest in S&P 500 (SPX) options. In the chart the top two indexes in terms of annualized returns were the CBOE S&P 500 30-Delta BuyWrite Index (BXMD) and the CBOE S&P 500 Covered Combo Index (CMBO).
goo.gl/vavp0X
****SD: I was pleased to see the NCAA bracket got leaked part way through the two-hour long selection show. (A show that used to be a half hour.) In related college basketball news, Warren Buffett tells us why he's going big on March Madness this year. He's offering $1 million every year for life to any employee who successfully predicts the Sweet Sixteen.
Trader explains how to make money in dead stocks
Amanda Diaz - CNBC
Could purgatory be the new paradise for Wall Street? For one group of investors, the answer is yes. While the Dow has surged more than 10 percent from its February low, a number of the index's components are trading at the midpoint between their 52-week low and 52-week high. Moreover, despite big moves up and down, the Dow is effectively flat for the past 16 months. But that sideways action has created a perfect environment for one strategy.
cnb.cx/1S1Xjbt
****SD: The answer is wringing an already dead stock's neck.
| | | | | | Events | | | CAIA Chicago: Accessing the Volatility Risk Premium with Cash-Secured Put Writing
CAIA Association
Please join the CAIA Association, CBOE and PRMIA for light refreshments, presentations and a panel discussion on the topic of Accessing the Volatility Risk Premium with Cash-Secured Put Writing. Tuesday March 22, 2016 from 5:00 PM to 6:45 PM CDT
/goo.gl/WYXr9h
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