| October 24, 2018 | | | | | Spencer Doar
Editor
John Lothian News | |
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| | | | Lead Stories | | | OCC says new tech must be compatible with blockchain
Louisa Chender - Global Investor Group (SUBSCRIPTION)
"We want to make sure we have technology that is easily compatible with blockchain," John Davidson, president and chief operating officer of the OCC, told FOW.
Nevertheless blockchain is about an environment where participants do not know or trust each other, which is not the case in the clearing space.
"Clearing is a trusted counterparty environment and doesn't necessarily really need the overhead with regards to blockchain," Davidson said. He added: "However, there is a need with regards to securities lending which is bilateral. That is an area I think we will have the earliest connection to."
/goo.gl/fYoSJf
****SD: There has been some recent successes in equity transaction processing using the blockchain, too.
Trading Technologies Partners with TradeStation to Offer Its Options-on-Futures Technology to TradeStation Customers
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, today announced that the company has entered into a long-term agreement with TradeStation Securities, Inc. (TradeStation Securities) to provide TT's advanced options-on-futures trading functionality to TradeStation customers via the TT trading platform.
/goo.gl/Co6w8s
CME plans sweeping overhaul of ageing Span model
Dan DeFrancesco - Risk.net (SUBSCRIPTION)
CME Group, the world's largest derivatives exchange, is planning some big changes to its widely used margin calculator, Span, with the aim of rejuvenating an approach described as "archaic", and broadening its use across futures, options and swaps.
bit.ly/2O4cmEr
****SD: SPAN and I share a birth year. But I would not like to say I'm "ageing." I wonder how the $79 million in Q1 margin breaches plays into the thought process. One of the things that came up repeatedly at FIA Expo was how people are beginning to "rethink risk." So CME is not alone.
Why Python for quantitative trading?
Artur Sepp Research Blog
"Today a new language is overtaking French as the most popular language taught in primary school. Its name is Python... 6 out of 10 parents want their kids to learn Python", Joel Clark.
bit.ly/2O3mQ6Q
****SD: I'm more of a Cobra Kai kinda guy.
Rising U.S. Oil Output Forced GOL Airlines to Change Its Hedging Method; A price divergence led GOL to migrate its hedges from West Texas Intermediate to Brent oil contracts
Tatyana Shumsky - WSJ (SUBSCRIPTION)
A surge in U.S. crude oil production has helped cause an accounting headache for the finance chief of Brazil's largest airline, GOL Linhas Aereas Inteligentes SA. The São Paulo-based airline uses options on oil futures to protect itself from unexpected spikes in jet fuel prices. That's because crude oil is refined into jet fuel, and the prices of the two commodities tend to move in tandem.
/goo.gl/u1xz9v
****SD: This fuel (and FX hedging) worked for GOL. But as I recall, some oil producers said during last quarter's earnings that they were caught wrongfooted on the rise in oil prices and lost out on the upside.
Markets Moving in Lockstep Are Latest Warning Sign
Amrith Ramkumar - WSJ (SUBSCRIPTION)
A red flag for investors of all stripes? Markets like stocks and commodities are moving in unison.
Lockstep moves are a worrying sign because they signal excessive optimism or fear in markets. They mean investors are largely buying or selling holdings all at once rather than weighing fundamental information like earnings or supply and demand. Rising correlations also often presage more dramatic moves in either direction.
/on.wsj.com/2O1qT3z
China seeks framework for November deal with Trump
David Goldman - Asia Times
Ahead of a possible meeting next month between US President Donald Trump and his Chinese counterpart, Xi Jinping, the White House tempered any optimism that a trade truce with Beijing is imminent when top economic advisor Larry Kudlow accused China on Sunday of doing "nothing" to defuse trade tensions.
bit.ly/2O1kcPb
Interest rates: Trump directly attacks Fed Chairman Powell
Ted Kemp and Joanna Tan - CNBC
President Donald Trump directly accused Federal Reserve Chairman Jerome Powell of endangering the U.S. economy by raising interest rates, according to The Wall Street Journal.
/cnb.cx/2NZPtlu
****SD: Trump is hedging with these comments.
TD Ameritrade CEO Tim Hockey warns on weed stocks, shares market outlook
Akin Oyedele - Business Insider Prime (SUBSCRIPTION)
Where weed stocks are concerned, what goes up quickly must come down  and fast, according to TD Ameritrade CEO Tim Hockey.
The $1.3 trillion brokerage has warned its clients about investing in the red-hot industry, which picked up steam ahead of Canada's legalization of marijuana on October 17.
/read.bi/2O3f1hG
****SD: A Canadian warning about weed stocks?! How very unpatriotic.
| | | | | | Exchanges and Clearing | | | Nasdaq profits weighed down by Nordic trader default
Nicole Bullock - Financial Times (SUBSCRIPTION)
Nasdaq, the exchanges operator, reported a 4.1 per cent drop in net income for the third quarter, which included an $8m loss related to the default of Einar Aas, a private Norwegian trader whose bets in the European power market collapsed last month.
/on.ft.com/2q926kP
Nasdaq Reports Third Quarter 2018 Results; Delivers Solid Organic Revenue Growth
GlobeNewswire
Nasdaq, Inc. (Nasdaq:NDAQ) today reported financial results for the third quarter of 2018. Third quarter 2018 net revenues were $600 million, including 5% organic revenue growth.
bit.ly/2q60bNL
India stock exchange gets nod to launch copper futures contracts
Asia Asset Management
The National Stock Exchange of India Ltd (NSE) has received regulatory approval to launch 25 metric tonne copper futures contracts, just days after launching its commodity derivatives platform.
/goo.gl/EkMJE6
****SD: Just futures for now, but hey, more copper competition! Recall how the Shanghai Futures Exchange introduced copper options that immediately got traction and pose a direct threat to LME and CME dominance in copper markets. How will India fit into this picture?
Options Insider Radio Interviews: Talking All Things Data with Cboe (AUDIO)
Mark S. Longo - Options Insider
/goo.gl/x7gBRE
| | | | | | Regulation & Enforcement | | | Industry Groups Weigh In On Proposed Changes To Volcker Rule
Cadwalader, Wickersham & Taft LLP - Mondaq
SIFMA, ISDA, the Futures Industry Association, and other industry trade associations and a diverse group of banking organizations made recommendations on proposed changes to regulations implementing Section 13 of the Bank Holding Company Act, also known as the "Volcker Rule." The comment period ended on October 17, 2018.
/goo.gl/dPojj1
PREVIEW: SEC Roundtable on Market Data and Market Access Agenda
John D'Antona Jr. - Traders News
Tomorrow the Securities and Exchange Commission will hold a two-day roundtable event to discuss the ongoing conversation regarding the cost of market data and access. The event features several panels and discussions featuring some of the best and brightest. Traders Magazine presents the official agenda below:
bit.ly/2D3oO62
| | | | | | Technology | | | Barchart Launches First Ever Continuous Price Assessments for Physical Grain
cmdty
Barchart, a leading provider of financial market data and technology, is pleased to announce the launch of the first ever continuous price assessments for physical grain - with coverage of North American Corn, Soybeans, and Wheat. Sitting within Barchart's cmdty product line, these innovative patent pending indexes allow users to measure execution quality, mark their books to market, and use as a reference rate for physical contracts.
bit.ly/2D1ZNs5
****SD: One more example of alternative data helping inform derivatives market participants.
| | | | | | Strategy | | | What it means when the VIX and stocks both rise
Rocky White - Schaeffer's Research
The VIX has doubled off its lows from last month
/goo.gl/9uwEGD
Euro's Fate May Be In Italy's Hand
Erik Norland - CME Group
While the trials and tribulations of Brexit grab the headlines, the collapse in the Italian bond market may be of far greater consequence to the future of Europe than Britain's departure from the European Union. The most recent selloff, which began in May, isn't the first time that Italian debt has hit the skids. It's last major price decline, between 2009 and 2012, sent yields soaring (Figure 1) and threatened to take the Eurozone down with it. What is remarkable is how little currency options appear to be responding to the potential threat on the horizon.
bit.ly/2D1cMKx
Fed 'Has the Market's Back,' Says Tom Lee Who Urges Buy the Dip
Lu Wang - Bloomberg
Investors should take advantage of the worst equity selloff in three years to position for a year-end rally as fears over Federal Reserve hawkishness are likely overdone, says Tom Lee, head of research at Fundstrat Global Advisors.
/bloom.bg/2O4AHtx
****SD: He has also said it is possible for bitcoin to hit $25k by year end. Everybody has an opinion, especially as markets start to swoon. See CNBC's Stocks could fall another 10 percent before finding a bottom, Piper Jaffray technician says. More opinions on both sides are below.
Stocks 'Ripe for a Bounce' Says Strategist Who Foresaw October Sell-Off
Kriti Gupta - Bloomberg
A strategist who in mid-September saw stocks as "ripe for volatility" now says it's time for the market to recover. Canaccord Genuity's Tony Dwyer writes in a note that "the recent weakness sets the stage for a market ripe for a bounce." Dwyer estimates the S&P 500 will finish 2018 around 3,200, the most bullish estimate on the Street.
/goo.gl/FwAqjz
Jim Paulsen: Full-on panic the time to buy; market hasn't hit bottom
Michelle Fox - CNBC
Wall Street veteran Jim Paulsen doesn't think the market is necessarily done heading lower.
For one, he thinks valuations are high. Plus, there hasn't been any real fear in the recent sell-offs.
"It's always been really controlled and kind of calm throughout," the chief investment strategist at The Leuthold Group said Tuesday on "Closing Bell."
/cnb.cx/2D1thq5
| | | | | | Events | | | Webinar: How Do You Know When to Hedge? Thursday, 3:30 to 4:30 p.m. CST
OIC
Many investors continue to wonder how long the bull market will last. After all, it began almost a decade ago. So does it make sense to consider hedging? Join us Oct. 25 for a lively panel discussion, moderated by OIC Sr. Investor Services Specialist Mark Benzaquen, to learn how professional investors think about hedging. During this online webinar, you'll hear directly from the pros about the market signals they monitor, as well as which strategies they use depending on the situation.
bit.ly/2D2pt7N
****SD: Well, do it when it's cheap, right? Who wants to be forced to buy puts during a rout?
| | | | | | Miscellaneous | | | Why You Should Never Trade A Stock On An Empty Stomach
Simon Moore - Forbes
By understanding some of the latest behavioral investing research, you may improve your investment performance. However, it's not quite as simple as you may think. In his new book, aptly titled "The Behavioral Investor", Dr Daniel Crosby, reviews the field of behavioral investing, consolidating many studies to present a holistic view of an important area of investing research.
bit.ly/2D1bDTt
The Story of Markets Told Through Semiconductors; What appeared to be a selloff in cyclical stocks prompted by fears over the economy may actually be more benign.
John Authers - Bloomberg
Tuesday saw an alarming sell-off in the U.S. equities markets, followed by a plucky comeback. I think the story is best told through the Philadelphia Stock Exchange Semiconductor Index, known by its ticker symbol of SOX. Semiconductors are notoriously cyclical. If there are worries about the economy, they will surely show up in the performance of the SOX. But this was a day when the SOX fought back.
/bloom.bg/2q82AYj
****SD: White SOX or Red SOX?
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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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