| July 19, 2016 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | BGC Partners set to snap up UK's Sunrise Brokers
Philip Stafford - Financial Times
BGC Partners, the US interdealer broker, is making an aggressive push into specialist equity derivatives after agreeing to buy the UK's Sunrise Brokers for an undisclosed sum. The New York group has joined a host of overseas companies undeterred by the uncertainty caused by Britain's decision to leave the EU to snap up highly prized assets. In recent days, SoftBank has agreed to buy chip designer Arm Holdings for GBP24bn and Wells Fargo has bought a GBP300m office.
on.ft.com/2a80gvG
****SD: Bloomberg here
Options Market Single Biggest Influence On Last Week's Rally
Kevin Flynn - Investing.com
It's a good time to remind readers of an old stock market adage: the tape makes the news. The same events look different under a flight of rising prices than a streak of falling ones, and get presented accordingly. Most news reporters work on the assumption that daily market reactions are wrapped around significant news developments (even the ones who don't, by and large stick to reporting them that way), though the truth is that market moves often have little to do with what seems to be a high-profile piece of economic news. The moves still get explained that way, however, leaving a lot of investors and average joe's bewildered when things seem to suddenly go the other way.
goo.gl/9p9eiy
****SD: Neil Azous of advisory firm Rareview Macro agrees in this CNBC article.
DV Trading breaks away from Rosenthal Collins
Lynne Marek - Crain's Chicago Business
Chicago futures firm DV Trading is venturing out on its own, with its two top executives buying the enterprise from veterans at Rosenthal Collins Group who helped them get started. DV Trading CEO Jared Vegosen and President Dino Verbrugge will take ownership and split from RCG on Sept. 1, according to both firms. The traders are parting amicably from the long-time Chicago futures broker, which backed Vegosen in launching DV's Chicago office in March, 2007.
goo.gl/DG1RWY
****SD: DV plans to keep growing their futures options strategies.
The Importance of Compliance for OCC
Richard Wallace - OCC
Companies around the world recognize and value the importance of a strong compliance function as part of their value proposition for customers. This is particularly true for OCC. As the world's largest equity derivatives clearing organization, we must do everything we can to ensure confidence in the financial markets and the broader economy. It is our responsibility as a Systemically Important Financial Market Utility (SIFMU) to promote stability and market integrity through effective and efficient clearance, settlement and risk management services. And in my role as chief compliance officer, it is my job, along with my colleagues, to make sure OCC remains in compliance with all regulatory requirements in our role as a SIFMU, and has the right strategy in place to stay ahead of the regulatory curve.
bit.ly/2a80yCL
BofA Finds Something Odd: With The S&P At Record Highs, Traders Have Never Been More Nervous
Zero Hedge
A strange paradox emerges when flipping through the latest BofA Fund Managers' Survey: with the S&P trading at all time highs, it appears that nobody trusts this market. Two specific indicators point to this. The first one is that as BofA's Michael Harnett points out, July cash level are now at 5.8%, up from 5.7% in June and the highest since Nov'01.
goo.gl/d7DNrX
****SD: Do bull markets ever about-face when sentiment is so apprehensive? Or is unbound optimism the bearer of bad things?
Pimco Hires Credit Suisse's Luk for Interest Rate Derivatives
John Gittelsohn - Bloomberg
Pacific Investment Management Co. hired Danielle Luk from Credit Suisse Group AG as a portfolio manager and Tiffany Wilding from Tudor Investment Corp. as economist. Luk, who was an options trader at Credit Suisse, will focus on interest rate derivatives and report to Josh Thimons, Pimco said today in a statement. Wilding, who worked as director of global rate research at Tudor, will report to Joachim Fels, the firm's global economic advisor.
bloom.bg/2a8cPHc
| | | | | | Exchanges | | | SGX provides further details on market disruption
SGX
1. Singapore Exchange's (SGX) securities market experienced a market disruption on Thursday, 14 July 2016, when the exchange ceased trading at 1138 hours, and remained closed for the rest of the day. 2. Investigations found that Thursday's event was caused by a disk failure and an application that did not detect the problem. The disruption was prolonged due to challenges in the orders and trade reconciliation process.
goo.gl/ISha3K
Props to cut exchanges over data fees
Alice Attwood - Futures & Options World
Higher market data fees are forcing prop traders to re-assess the exchanges they use and could lead to traders cutting off some markets before the end of the year, experts have warned. "It is rather naïve of exchanges to think that such fees will just be accepted by clients; a storm is brewing as market data fees have become a pain point across market sectors," Mark Phelps, global head of sales and marketing at GH Financials, told FOW.
goo.gl/SqEJpv
****SD: I think the pushback on fees is going to grow as the twenty-something generation takes the reins. We don't like fees for anything and when we do shell out, we want a lot for it. Two examples jump to mind: Amazon Prime and the percentage of ETFs in young people's portfolios as compared to old.
| | | | | | Regulation & Enforcement | | | Republican Platform Calls for Revival of Glass-Steagall
Jeff Bater - Bloomberg BNA
Republicans and Democrats are calling for resurrection of a Depression-era wall between commercial and investment banking, but there is disagreement whether the political rhetoric will lead to passage of a new Glass-Steagall law. Paul Manafort, the campaign manager for presumptive Republican presidential nominee Donald Trump, said the party's convention platform calls for the reintroduction of Glass-Steagall "to create barriers between what the big banks can do  and try to avoid some of the crises that led to 2008."
goo.gl/rlrqGR
Broker-dealers to carry costs of US CAT NMS rules
Hayley McDowell - The Trade
The Securities Industry and Financial Markets Association (SIFMA) has objected to the funding structure of US regulators' proposed consolidated audit trail (CAT) on the National Market System (NMS) rules.
goo.gl/SXbIm8
****SD: It must sting even worse if the broker dealers in question consider themselves dog people.
Key Mifid RTS 6 on algos due "this week"
Alice Attwood - Futures & Options World
One of the key outstanding regulatory technical standards under sweeping European Mifid II, governing algorithmic trading, is set for release this week, drawing a line under concerns over definitions under the new rules. RTS 6, which covers the regulation specifying the organisational requirements of investment firms engaged in algorithmic trading, providing direct electronic access and acting as general clearing members, is set for release this week, according to market sources. The standard covers risks that may affect the core elements of a trading system - including hardware, software and communication lines that firms use to conduct their trading activities - as well as execution and order management systems operated by investment firms.
goo.gl/EgYYqy
Panama Papers link Japan's shady online brokers to tax havens
Scilla Alecci and Alessia Cerantola - The Japan Times
A paper trail that runs from Okinawa to Canada and from Israel to Italy and France links some unauthorized online traders on the blacklist of Japan's financial regulator to offshore companies in tax havens, an analysis of files leaked from a Panamanian law firm has revealed. The documents are part of the Panama Papers, a cache of 11.5 million files obtained by the German newspaper Suddeutsche Zeitung and shared with the International Consortium of Investigative Journalists and their media partners. At least four binary option trading operators that have received warnings from the Financial Services Agency for targeting Japanese users without proper authorization are connected to companies incorporated through a complex network of offshore shell firms and shareholders, according to the documents.
goo.gl/KQ3CrD
****SD: Feels like just yesterday the Panama Papers dominated the news cycle.
'The Forum' unveiled to bridge regulation between EU and US
Hayley McDowell - The Trade
The Financial Markets Regulatory Dialogue - a regulatory medium for the European Union and the US - is to be renamed amid improvements to regulatory cooperation on both side of the Atlantic.
goo.gl/ry3W2h
| | | | | | Technology | | | Latency Arbitrage and the Problem With the SIP
Larry Tabb - TABB Forum
Many market participants believe that if we can reduce SIP latency, it will reduce latency arbitrage and create a fairer and more efficient market. But eliminating direct feed/SIP latency arbitrage is more complicated than just speeding up the SIP. Larry Tabb examines the options.
goo.gl/tP6FPF
Thomson Reuters Adds Futures and Options Execution Application for Commodities Traders in Eikon
OptionsCity
Energy and commodities traders can now execute futures and options orders directly from Thomson Reuters Eikon, helping reduce the need to pay for expensive market data fees across multiple platforms without sacrificing functionality. The service is provided through City Execution, a third party app developed by OptionsCity Software and now available via App Studio on Thomson Reuters Eikon.
goo.gl/oMECrd
| | | | | | Strategy | | | Options Traders See Upside for Financial Stocks
Akane Otani - WSJ
Options traders haven't felt this good about financial stocks in months. In morning trading Tuesday, 42% of options traders were rated bullish on S&P 500 financial shares, based on the volume of contracts tracked by data provider Trade Alert. That's the highest share since April 18, when 43.5% were bullish, and higher than the average since January, 29.5%.
on.wsj.com/2a8400a
Long Straddle Around Earnings and Events: What Are the Risks?
The Ticker Tape
If a stock's going to make a moveÂperhaps because of an earnings announcement or other upcoming eventÂthen why not consider buying a call option in case it goes up and a put option in case it goes down? This option strategy is known as a long straddle, and the idea is to make a profit without picking a direction.
/goo.gl/FoFO5V
Smorgasbord of Earnings on Tap!
Steve Claussen - OptionsHouse
Last week kicked off the earnings season 'officially' with Alcoa (AA) and was dominated by financial giants Citigroup (C ) and JP Morgan Chase (JPM). This week as the Republicans gather in Cleveland to celebrate the Cavaliers NBA championship, (and officially nominate their "presumptive" candidate) we get a bit of variety in earnings announcements across multiple sectors for traders' palates... For traders, specific stock earnings will be the focus as the economic calendar slows down significantly.
/goo.gl/1HGzGI
Traders Profit Off Coup In Turkey; Did They Know?
Steven M. Sears - Barron's
Turkey's failed military coup seems to have been anticipated in the U.S. options market. Hours before anyone knew Turkey would be thrust into a short, violent uprising that would destabilize the nation, some investors bought bearish puts on the exchange-traded fund that tracks the Turkish stock market. The trading was small, but profitable.
goo.gl/xduJ7r
****SD: The attempted coup is great fodder for conspiracy theorists out there.
| | | | | | Miscellaneous | | | Angelo Gordon, Hines Interests save Citadel Center from debt bomb
Alby Gallun - Crain's Chicago Business
A New York investor has taken control of Citadel's headquarters building through a complicated recapitalization that will save the Loop high-rise from a $472 million loan default. Firm Angelo Gordon has teamed up with Hines Interests on the deal for Citadel Center, a 1.5 million-square-foot office tower at 131 S. Dearborn St., according to Commercial Mortgage Alert, a trade publication.
goo.gl/kD3i3b
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