| July 26, 2018 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | Mini-Manipulation Miscellany
Spencer Doar - JLN
Some of you are probably on the Security Traders Association mailing list. Tuesday's email discussed FINRA's surveillance priorities when multiple products are involved.
The note is of particular interest for options market participants as the two key areas of focus mentioned are mini-manipulation and anticipatory hedging. The former involves trading a stock in order to benefit its options' pricing and a common example of the latter is a broker front-running a customer order. (The note is worth a look just for the access to the archival PDF of the SEC's 1978 "Special Study of the Options Markets" - lots of typewritten pages.)
According to Trillium's Michael Friedman (who wrote the note), there has been a shift as FINRA used to look for suspicious equity trading only when there was an existing options position. Now, options positions entered after "aggressive trading" in the underlying are fair game, too. Mini-manipulation could also involve spoofing the underlying equity or the option.
The note references two cases in particular - the SEC's 2017 action against LEK Securities and Cboe's 2014 action against HAP Trading.
Those enforcement actions are particularly detailed and worth the read.
| | | | | | Lead Stories | | | Facebook braces for stock wipeout as lower margins loom
Vibhuti Sharma and Munsif Vengattil - Reuters
Facebook Inc Chief Executive Officer Mark Zuckerberg's fortune is set to take a $16 billion hit on Thursday, as the social media giant braces for the biggest one-day wipeout in U.S. stock market history, a day after its executives forecast years of lower profit margins.
/goo.gl/F9g67h
****SD: "Stop - sigma time!" *Does the Hammer Dance* We're not a price-focused organization, but holy crikey! Susquehanna is the DPM for FB at Cboe - fun times. For more on FB options action, see Schaeffer's Facebook Call Options Premiums Spike Amid Earnings Plunge. For a look at the FB picture BEFORE the record plunge, see Bloomberg's https://goo.gl/TrjDvv|As Facebook Soars to New Highs, Options Bulls Position for More. CNBC has Here's what every major Wall Street analyst had to say about Facebook's plummeting stock
FIA Releases Half-Year Data on Futures and Options Volume Trends
FIA
FIA today released its half-year 2018 report on trading activity in the global exchange-traded derivatives market.
The total number of futures and options traded worldwide in the first half of the year reached 14.9 billion contract, up 19.7% compared to the first half of 2017. Open interest, which measures the number of outstanding contracts, was 850.7 million contracts at the end of June, roughly unchanged from a year ago.
bit.ly/2Oko1An
Money managers see past Trump talk, expect trade war to blow over
Tommy Wilkes - Reuters
Global money managers believe U.S. President Donald Trump's threats to impose tariffs will not descend into a full-blown trade war, and even those particularly worried have done little to protect their portfolios.
/reut.rs/2uRchgD
****SD: "Three-month out-of-the-money equity volatility in European equities, which measures volatility expectations, has been lower than current levels less than one percent of the time over the past 13 years, two bank derivatives traders said."
How Fast Did The Economy Grow? GDP Forecasts Are All Over The Place
Jim Zarroli - NPR
President Trump is eager to tout a fast-growing economy, boosted by the tax cuts he pushed through Congress. That makes Friday morning's report on gross domestic product a highly anticipated news event.
Did GDP growth top 4 percent in the second quarter  more than double the first-quarter pace  as many economists project?
Forecasts are all over the board, with estimates even among Federal Reserve economists diverging widely.
The events of 10 years ago show why these forecasts are so important.
/n.pr/2JYlKr2
How Traders Have Changed Since the Massive Selloff Earlier This Year
Elena Popina and Lu Wang - Bloomberg (SUBSCRIPTION)
S&P 500 is less than 1% away from its all-time high in January; Concerns from slowing growth to trade war weigh on sentiment
One by one, the milestones are falling, as stocks claw back from their nightmare winter. One thing that isn't recovering as fast: the euphoria that foreshadowed the horrors of February and March.
/bloom.bg/2OfMsia
Major state-owned Chinese banks sell dollars in yuan forwards market
Winni Zhou and John Ruwitch - Reuters
Large state-run Chinese banks sold dollars in the yuan forwards market on Thursday, with their operations causing the future value of the yuan against the dollar to rise sharply, traders said.
There was little evidence of these banks, which are widely believed to often act on behalf of the People's Bank of China, having intervened in the spot market, traders said, even though spot yuan extended its slow gains during the day, rising as far as 6.7778 per dollar compared to this week's 13-month low of 6.8295.
/reut.rs/2LQmaS8
****SD: Some more context from Bloomberg last week - Yuan's Fallout for Markets Means No Summer Lull for Traders
| | | | | | Exchanges and Clearing | | | CME Group Inc. Reports Second-Quarter 2018 Financial Results
CME
CME Group Inc. (NASDAQ: CME) today reported revenue of $1.06 billion and operating income of $667 million for the second quarter of 2018. Net income was $566 million and diluted earnings per share were $1.66. On an adjusted basis, net income was $591 million and diluted earnings per share were $1.74. Financial results presented on an adjusted basis for the second quarters of 2018 and 2017 exclude certain items, which are detailed in the reconciliation of non-GAAP results.1
bit.ly/2OmsuSO
Call for derivatives trade till midnight
The Telegraph India
The National Stock Exchange (NSE) is understood to have sought the approval of the Securities and Exchange Board of India (Sebi) to extend the timing of derivatives trading till almost midnight.
bit.ly/2uTquJP
Bitcoin Futures Trading Volume Reaches $572M on Wall Street By Cryptovest
Investing.com
Bitcoin (BTC) futures trading volumes on Wall Street reached $572 million this Tuesday during the cryptocurrency's bull run. During the price surge, the most popular crypto-coin exceeded $8,000 in value - a barrier not broached since late May 2018.
bit.ly/2OiCwEE
****SD: You know what I'm going to say: waiting on the OOFs...
Transform magazine: Rebranding risk management - 2018
Transform Magazine
For many companies in the current market, risk managers are primarily concerned with potential financial loss to a company, often resulting in pulling back if the loss is seen as excessive. However, to embrace a true risk management mindset, all aspects of the company's risk portfolio need to be taken into consideration.
bit.ly/2uQDWhA
| | | | | | Regulation & Enforcement | | | US, EU at standstill on clearinghouse oversight due to almost 'ludicrous' EU plan, Giancarlo says
MLex Market Insight (SUBSCRIPTION)
US-EU talks on a post-Brexit European proposal for overseeing foreign clearinghouses are yielding minimal progress because the plan would subject American facilities to laws of both jurisdictions, said Christopher Giancarlo, head of the Commodity Futures Trading Commission.
bit.ly/2uSNCrV
Sebi, Singapore's MAS discuss amicable resolution of NSE-SGX issue
Times of India
New Delhi, Jul 25 () Markets watchdog Sebi and Singapore's integrated financial regulator MAS have discussed amicable resolution of the NSE and SGX issue, among various issues of cooperation.
bit.ly/2uU4b6G
| | | | | | Technology | | | Rival Systems further expands into equities market with CTA and UTP feed handlers
Rival Systems
Rival Systems (Rival), an award-winning provider of trading and risk management software, today announced the rollout of CTA and UTP feed handlers within its Rival Trader platform. Native support for these equity feeds will provide Rival clients with easy access to equity data.
The addition of these equity feeds complements Rival's existing capabilities in the futures market with feed handlers for CME, ICE, CBOE CFE, NFX and Eurex. Rival offers users a fully-hosted solution for receiving equity data within their Rival Trader application through a partnership with Pico Quantitative Trading (Pico). Clients also have the option to run the Rival Trader infrastructure on premise, and can easily integrate the Rival feed handlers into their proprietary trading systems.
bit.ly/2Oj7Tiw
| | | | | | Strategy | | | Wall Street's sleepy summer could be setting up the next stage of stocks' bull run
Ryan Vlastelica - MarketWatch
Boring doesn't have to be bad on Wall Street.
Recent activity in the U.S. stock market has been extremely muted, with low trading volumes and slight day-to-day price moves. However, the dog days of summer may just be paving the way for the next stage of the bull market's advance.
/on.mktw.net/2LRA2eQ
| | | | | | Miscellaneous | | | Elon Musk May Call Your Boss If You Write About Shorting Tesla Stock
Glenn Fleishman - Fortune
Some Tesla critics believe the automaker could be on a path to failure, but its CEO and founder, Elon Musk, still finds time for the personal touch. In recent months the executiveÂwho is also CEO of SpaceX and heavily involved in the Boring Co.Âaccused an American in Thailand who assisted in the rescue of a lost soccer team of being a "pedo." (Musk apologized.) He led followers, inadvertently or otherwise, to harass a female journalist who commented on his tweets. Most recently, Musk reportedly called the employer of a writer who had penned negative pieces about Tesla to threaten suit if the employee continued to write them.
/for.tn/2JUQKrP
"Data analytics may change the perspective on risk scenarios"
Eurex Exchange
From the return of volatility and non-financial risks to the influence of artificial intelligence and data analytics: we spoke to Thomas Laux, Member of the Executive Board and Chief Risk Officer at Eurex Clearing, about current and future topics in risk management.
bit.ly/2JXIxmN
Nobody Understands What Economics Graduates Are Trying to Say
Lucy Meakin - Bloomberg
Getting an economics degree might not teach you to efficiently use your resources.
Graduates in the subject are lacking key skills, according to campaign group Rethinking Economics, whose research published Thursday analyzed interviews with key employers including the Bank of England and the Government Economics Service. These include the ability to think critically, apply economic reasoning to real-word issues and communicate in language comprehensible to those outside the profession.
/goo.gl/gbwF5Z
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