| May 22, 2019 | | | | | Spencer Doar
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Addressing Concentration and Liquidity Risk - Alex Lamb, The Technancial Company
JohnLothianNews.com
In this video, Technancial Head of Business Development Americas and Head of Marketing Alex Lamb talks about how market participants look to stay one step ahead of their clearing member.
Watch the video »
| | | | | | Lead Stories | | | Rate Uncertainty Spurs Strong Options on Interest Rate Futures Activity in April
Tabb Options Liquidity Matrix
Through April 2019, industry-wide US options volumes year to date have been lower, totaling 1.55 billion contracts, a drop of 12.1% versus the same period in 2018 (see Exhibit 1, below). As a direct result of there being much less equity market volatility during the first four months of 2019 compared to early 2018, a period that included the "volmageddon" price action in February 2018, volumes for options on stocks, ETFs, and equity indexes in particular have been much lower through April than in the same time period in 2018. Volume for options on stocks and ETFs experienced a year-over-year drop of 10.5% (Exhibit 1); options on indexes fared even worse.
bit.ly/2Fn6C7t
SEC requires more information on exchange fee increases, starts fee pre-pilot
Hazel Bradford - Pensions and Investments
Stock exchanges will have to provide more details before being allowed to raise fees or offer discounts to some traders, the Securities and Exchange Commission said in new guidelines issued Tuesday.
bit.ly/2VHuWGi
****SD: WSJ has Exchanges Face Higher Hurdles in Boosting Data Fees. Also see the below story from Themis in Tabb Forum.
Don't Sue Your Regulator
Joe Saluzzi and Sal Arnuk, Themis Trading LLC
The SEC is pressing ahead with the Transaction Fee Pilot (TFP), even as the exchanges continue to try to slow them down through the courts. In addition, the regulator also issued guidance on exchange fee filings requiring the exchanges to justify proposed new fee increases. Maybe suing their regulator was not such a good idea after all, say Themis Trading's Joe Saluzzi and Sal Arnuk.
bit.ly/30DZz2L
Learning
Euan Sinclair - Talton Capital Management
"The only real mistake is the one from which we learn nothing." - Henry Ford
I recently wrote about how people can be fooled by selling strangles (equal amounts of out-of-the-money puts and calls). The fact that it is possible to make money trading strangles even if your forecast is wrong could be seen as a good thing. It emphatically is not. It leads people who should not be trading at all to think they have an edge.
bit.ly/30y0mCB
JPMorgan raises its Brexit no-deal probability forecast to 25 from 15%
Guy Faulconbridge - Reuters
U.S. investment bank JPMorgan raised its probability of a no-deal Brexit to 25 from 15%, saying its base case is that Boris Johnson becomes prime minister, followed by a general election and then another delay to Britain's exit to the end of the year.
/reut.rs/30DUjw8
| | | | | | Exchanges and Clearing | | | HKEX to introduce protection function for LPs of USD/CNH Options; The new protection function will be implemented on June 3, 2019.
Maria Nikolova - FinanceFeeds
Hong Kong Futures Exchange Limited (HKEX) today announces its plans for the introduction of the Liquidity Provider ("LP") Protection Function for LPs of the USD/CNH Options contracts. The new function is set to be implemented on June 3, 2019.
bit.ly/30E63yQ
Holding Margin for a Rainy Day
Tore Klevenberg, Baymarkets - Tabb Forum
Central counterparties need to be prepared for when markets turn sour. Clearing houses should use risk add-ons to ensure margin requirements will be sufficient during stressed market conditions.
bit.ly/30DZtrV
Meet the Man Supporting Cboe Women
Cboe Blog
Brian Schell was recently recognized by the Security Traders Association Women in Finance for his commitment to gender diversity and inclusivity with the Ken Heath Award. Brian joined his fellow award recipients to discuss the importance of gender diversity in the workplace. As Cboe's Executive Sponsor of Diversity Initiatives, Brian works to support women in finance as he strives to continue Ken's legacy.
bit.ly/30DZJan
Cboe FX Announces Launch of Cboe FX Point
Cboe
Cboe FX Markets, a Cboe Global Markets, Inc. (Cboe: CBOE) company and a leading platform for institutional foreign exchange (FX) trading globally, today announced the launch of Cboe FX Point, a new one-to-one execution solution that allows institutional clients to create custom, relationship-based connections with one or more of their preferred counterparties to meet their specific trading needs.
bit.ly/2VLgGwh
| | | | | | Regulation & Enforcement | | | U.S. to mirror EU moves in scrutinizing derivatives clearers
Huw Jones -Reuters
Foreign clearing houses for derivatives face tougher scrutiny for risks they would pose to the United States economy if they collapsed, a senior regulator said on Tuesday, mirroring recently-approved European Union reforms.
/reut.rs/2Wq986w
Sebi allows mutual funds in exchange traded commodity derivatives
Economic Times India
The Securities and Exchange Board of India (Sebi) on Tuesday allowed mutual funds to participate in exchange-traded commodity derivatives (ETCD). However, the regulator has decided to keep away MFs from trading in derivatives of sensitive commodities.
bit.ly/30CNoTZ
****SD: We'll know the results of India's big election tomorrow.
BSE stock options: Sebi fines 4 entities Rs 22 lakh for fraudulent trade
Press Trust of India via Business Standard
Markets regulator Sebi Wednesday imposed a total fine of over Rs 22 lakh on four entities for executing fraudulent and manipulative trades in the illiquid stock options segment of BSE.
bit.ly/30AOHTt
| | | | | | Strategy | | | Oil: Are Options Skews Reliable Price Indicators? (AUDIO)
Erik Norland - CME
Off The Charts! examines the pertinent economic issues of the day, providing a deeper dive into complex topics and framing the issues in a way that can lead to a better understanding of the financial and commodities markets.
bit.ly/2VDZWqA
Short Aussie, Long Yen Is the Hot New FX Bet for Trade War
Ruth Carson - Bloomberg (SUBSCRIPTION)
Citigroup, JPMorgan Asset expect Australia's dollar to weaken; Oanda's Halley says Aussie-yen can easily decline below 70
Short Australia's risk-sensitive currency against the haven yen. That is emerging as one popular currency trade as investors look to profit from the U.S.-China trade war.
/bloom.bg/30LM2Xg
| | | | | | Miscellaneous | | | Jet Stream Detour Leaves Midwest Farmers Drenched, Canada Dry
Brian Sullivan and Ashley Robinson - Bloomberg (SUBSCRIPTION)
North American farmers are stuck between a flood and a dry spot, and there is little immediate help ahead.
Two high-pressure ridges have trapped the jet stream between them, forcing it into an unusually stagnant S-path in which it gathers warm, very moist air from the Pacific, carries it across the Rockies and dumps it in the Great Plains and U.S. Midwest. The resulting storms have drenched the region, putting U.S. seeding at the slowest pace on record for this time of year.
/bloom.bg/2VUkYpV
****SD: What does this mean for the pollen count?
Purpose Investments Launches New Options Income Strategy, Purpose Enhanced Premium Yield Fund
Globe Newswire
Purpose Investments, Inc. ("Purpose" or "Purpose Investments") is pleased to announce the launch of Purpose Enhanced Premium Yield Fund (the "Fund") to give investors a new way to access an innovative alternative-income strategy. Purpose has completed the initial public offering of the Fund and it will commence trading on the Toronto Stock Exchange today under the ticker symbol "PAYF." The Fund is also available in mutual fund versions.
bit.ly/30E5NzS
Confusing signals cloud London nickel market
Andy Home - Reuters
The London Metal Exchange (LME) nickel market was last week gripped by the most acute tightness in a decade. Time-spreads flexed into backwardation as a long-running downtrend in exchange stocks squeezed short position holders. Falling inventory and tighter spreads are normally strong bull signals in a commodity market.
/reut.rs/30DI7M7
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