| January 22, 2019 | | | | | Jeff Bergstrom
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John Lothian News | |
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| | | | Observations & Insight | | |
The Spread - Closing Props - 1/18
JohnLothianNews.com
Give 'em their props - they gave it a go. (Plus, the OCC's big decision was revealed.)
Watch the video and see the stories referenced here »
| | | | | | Lead Stories | | | MIAX Options: Notice Of Schedule Change For The Launch Of SPIKES Options And Previously Announced Interface Specification Changes
Mondovisione
The launch of trading on SPIKES options and activation of interface specification changes previously announced for January 22, 2019 have been temporarily placed on hold due to the government shutdown and its impact on pending SEC approvals.
/goo.gl/o8JdMV
****SD: At last week's STAC Midwinter Meeting the SEC's furloughed staff came up again and again. Everybody I spoke with was of the opinion that not only does the shutdown have immediate regulatory impact, it's really going to keep things jammed up through the rest of the year  this is a non-linear effect. This was supposed to be a bit of a bounce-back year in terms of IPOs  the shutdown puts that in question. Cboe's proposed alternative closing auctions, the above MIAX development, ICE's planned launch of nat gas options and marine fuel contracts on Feb. 4, any other exchange rule filing  all are delayed. Multiple people said something similar to, "It's hard enough to get things done when everybody's there."
The Latest Trend in Mobile Gaming: Stock-Trading Apps; Apps such as Robinhood and Webull are drawing in young and often inexperienced investors; 'bringing the ability to make foolish decisions to an ever-broader swath of people'
Lisa Beilfuss - WSJ (SUBSCRIPTION)
Morgan Snipes downloaded the Robinhood Markets Inc. app on his phone nine months ago with a plan to leave his day job behind. The stock market has turned into a game for inexperienced investors like 35-year-old Mr. Snipes, a small-business owner from Oklahoma City, thanks to commission-free trading apps. With simple designs, alerts and the ability to win free shares for recruiting friends, apps such as Robinhood, Webull, M1 Finance and JPMorgan Chase & Co.'s You Invest have drawn millions of users who are typically young, new to the markets and experiencing volatility for the first time. Users say they check their app as often as their social-media accounts, trading to kill time with the hope of easy riches.
/goo.gl/JXkoVM
****SD: This is such a perfectly timed story after the drama on Reddit's r/wallstreetbets thread this weekend surrounding 1R0NYMAN - an options trader using Robinhood who entered a large box options position ($250,000 with only $5,000 of his own money in his account) while continuing to lever up, thinking they were in for "risk-free" profits. Whaddya know - this person hadn't considered that the counterparty would exercise their deep in-the-money options and wham: big trouble in little Robinhood. The real notable part about this is that after 1R0NYMAN's "arbitrage" attempt, Robinhood actually changed its terms of service to ban the strategy. Needless to say, the platform's risk management department has been the subject of some recent ribbing. For a summary of the r/wallstreetbets drama and what happened to 1R0NYMAN see this lovely Iron Man gif somebody with way too much time on their hands made (note: there is loud audio in that link).
LJM Partners sues unnamed 'manipulators' it blames for volatility losses
Trevor Hunnicutt - Reuters
LJM Partners Ltd on Friday filed a lawsuit against unnamed parties it holds responsible for hundreds of millions of dollars it lost after last year's jump in stock market volatility that effectively put the fund manager out of business. LJM invested in complex derivatives that lost most of their value over two days in early February 2018 following the biggest-ever single-day jump in the VIX volatility index . LJM later returned what remained of clients' money.
/goo.gl/1MaLSM
Algorithms are an easy scapegoat for volatile markets; Computer-driven trading draws suspicion that obscures the advantages of algos
David Siegel, Two Sigma co-founder - Financial Times (SUBSCRIPTION)
Growing up in the science fiction-infused 1960s and '70s, nothing excited me more than computers' potential to do things that humans could and to improve the world. Today, they help aircraft to stay aloft, doctors to treat patients and investors to manage portfolios, all the while relieving humans of stressful tasks. For many, though, mystery still shrouds how computers and the algorithms running on them work  and why understanding them even matters.
/goo.gl/NCjWd8
Hedge funds buy oil amid greater optimism on economy
John Kemp - Reuters
Hedge funds have started to accumulate bullish positions in crude oil and diesel once more, amid rising optimism about the outlook for the global economy in 2019.
/goo.gl/fh4nWG
Brexit Delays Entice Sterling Investors to Rejoin the Market Buoyed by the British prime minister surviving a no-confidence vote, some investors have become more positive and started buying U.K. assets again
Olga Cotaga and Avantika Chilkoti - WSJ (SUBSCRIPTION)
The British pound has become more appealing to some investors as they bet that the probability of extending the Brexit negotiating period, or a second referendum on the U.K.'s divorce from the European Union, is becoming more likely. Some are also betting on a lower chance of a so-called hard Brexit, where the U.K. leaves the European Union without an agreement in place, hurting the pound. Sterling is up 2.1% so far this year against the euro and 1.2% versus the dollar, having risen on Monday after Theresa May laid out a "Plan B" for leaving the EU, a week after British lawmakers rejected her withdrawal deal by a historic margin.
/goo.gl/mpe9P2
Trade worries sour CEOs' mood as leaders converge on Davos
Silvia Aloisi - Reuters
Chief executives across the world have grown a lot more pessimistic about the global economic outlook due to trade disputes and tense relations between major powers, a survey showed on the eve of the World Economic Forum in Davos.
The PwC survey of nearly 1,400 CEOs found that 29 percent believe global economic growth will decline over the next 12 months, six times the level of last year and the highest percentage since 2012.
/reut.rs/2FS9VEj
Marex Spectron buys London-based trader CSC Commodities
Reuters
Commodities broker Marex Spectron has bought London-based trading firm CSC Commodities from BGC European Holdings, Marex said on Monday without disclosing how much it paid.
/goo.gl/7R3QFT
****SD: First RCG, now this - Marex is really moving fast in 2019.
Why the Quants Aren't Adding Up Black-box investing strategies supposedly based on rocket science are vulnerable to a host of inherent biases, which are now being exposed.
Satyajit Das - Bloomberg (SUBSCRIPTION)
Like alchemists seeking to transform base metals into gold, asset managers are constantly seeking the perfect formula for investment success. In recent years, the search has focused on proprietary quantitative strategies, involving rule-based investments. The genre is ill-defined and marketed under different names, including factor investing, risk parity, smart beta and so forth.
/goo.gl/L26sGP
| | | | | | Exchanges and Clearing | | | Duffy reigns as CME rises
Lynne Marek - Crain's Chicago Business
CME Group Chairman and CEO Terry Duffy has what traders call a "hot hand" as he approaches his next high-stakes challenge: integrating the company's biggest acquisition in more than a decade. CME closed the $5.5 billion purchase of London-based NEX in November, capping a strong year for the world's biggest operator of futures exchanges. Trading volume jumped 18 percent over 2017, as resurgent volatility in financial markets spurred demand for futures. Rising revenue and profit lifted CME stock 20 percent over the past 12 months, while the S&P 500 dropped 6 percent.
/goo.gl/tfC4Pg
The Future Is Now for LNG as Derivatives Trading Takes Off
Stephen Stapczynski and Dan Murtaugh - Bloomberg via Yahoo
With natural gas demand growing faster than for any other fossil fuel, LNG futures may be finally taking off. Derivatives represented about 2 percent of global LNG production at the beginning of 2017 as an array of contracts around the world struggled to gain traction. But by the end of last year, volumes had grown to almost 23 percent, led by a burgeoning Intercontinental Exchange Inc. contract based on S&P Global Platts' Japan-Korea Marker spot price assessments.
/goo.gl/91KM7U
Announcement On The Release Of Natural Rubber Option Contract Of The Shanghai Futures Exchange And Related Implementing Rules
Mondovisione
Natural Rubber Option Contract of the Shanghai Futures Exchange and related Implementing Rules, which have been accepted by the Shanghai Futures Exchange Board of Directors and reported to the China Securities Regulatory Commission, are hereby released and effective .
/goo.gl/6Sg99x
London Stock Exchange set to trigger bidding war for Norway's Oslo Bors
Mark Shapland - The Evening Standard
The London Stock Exchange Group is poised to enter a bidding war to buy Norway's main trading bourse, the Standard can reveal.
/goo.gl/9E16RK
****SD: And awaaaayy we go!
HDFC Securities launches commodity derivatives trading on MCX
Sutanuka Ghosal, ET Bureau
HDFC Securities on Monday announced the launch of commodity derivatives trading on MCX. Though India is quite under-penetrated as compared to other global markets, this trading space is transforming at a rapid speed with the introduction of new products and participants. HDFC Securities believes that commodity derivatives trading will scale new highs in the near future with professional service-oriented platforms and much needed awareness among investors.
/goo.gl/7x3FRN
Brexit Forces Equity, Foreign-Exchange Markets to Leave London
Viren Vaghela and Will Hadfield - Bloomberg
Two key markets are moving out of the U.K. as Brexit forces finance firms to put more of the region's trading infrastructure on the continent.
CME Group Inc. will move its foreign-exchange forwards and swaps venue, which has trading volumes of about $15 billion a day, from London to Amsterdam, while Cboe Global Markets Inc. will shift most European equities trading to its market in the Dutch capital after Brexit.
/bloom.bg/2FORi4m
| | | | | | Moves | | | Hyper-educated quant trader leaves Citi for UBS
Beecher Tuttle - efinancialcareers
A director-level quant trader that specializes in equities has joined UBS after a seven-year stint at Citi. Kai Zeng started with UBS in New York last month. A vice president at Citi, Zeng helped manage systematic trading and equity derivatives analytics, according to LinkedIn.
/goo.gl/oUQ55x
Women in Listed Derivatives Announces 2019 Officers and Committee Chairs
Press Release via email
Women in Listed Derivatives (WILD), an organization which promotes career advancement and professional relationship-building among women in the OTC & Listed Derivatives Industry, today announced its 2019 officers and committee chairs.
Cathey Curley, Lead Business Analyst at Nuveen Investments, will serve as President; Katie Cleland, Global Head of Data, Analytics, and Client Reporting IT at Societe Generale will serve as Vice President; Mary Mapes, Manager of Global Operations at CME will serve as Treasurer; and Denise Knabjian, First Vice President of Process Innovation at OCC will serve as Secretary.
| | | | | | Regulation & Enforcement | | | Brexit Forces Equity, Foreign-Exchange Markets to Leave London
Viren Vaghela and Will Hadfield - Bloomberg via Yahoo
Two key markets are moving out of the U.K. as Brexit forces finance firms to put more of the region's trading infrastructure on the continent. CME Group Inc. will move its foreign-exchange forwards and swaps venue, which has trading volumes of about $15 billion a day, from London to Amsterdam, while Cboe Global Markets Inc. will shift most European equities trading to its market in the Dutch capital after Brexit.
/goo.gl/ZgnajG
****SD: Not options but just another indicator of how Brexit is forcing the market to shift in ways it ideally wouldn't. Let's say Brexit never happens and this all goes down as some surreal nightmare; will those firms that left the City or spread their operations around Europe all return or re-concentrate? Doubtful.
Brokers want SEBI to roll back new risk management framework for F&O
Ashish Rukhaiyar - The Hindu
The Securities and Exchange Board of India's (SEBI) recent move to revise the risk management framework by tweaking the margin requirements for equity derivatives segment is facing resistance with broker associations demanding a roll back or at least an indefinite postponement of the new norms that will come into effect from Monday.
/goo.gl/YUfGZi
| | | | | | Strategy | | | Examining Evidence Of A Volatility Regime Shift
Ariel Santos-Alborna - Seeking Alpha
Volatility is not a direct measure of fear or risk, but a measure of how strongly price action deviates around the mean. Low volatility indicates that the price of a security should not swing wildly around the mean and vice versa. Therefore, being long volatility is a bet on change. This can be negative change such as a recession or flash crash, or positive change such as the pre-2000s melt up. As the chart below shows, the market oscillates between regimes of high and low volatility as measured by time spent above or below the VIX average. This article examines the causes of the current regime of low volatility, why we may be transitioning into a period of higher volatility, and who stands to gain if we are indeed in the midst of a transition.
bit.ly/2FOViSa
| | | | | | Events | | | Barchart Launches cmdtyExchange - An Event Highlighting Innovation and Technology in Commodity Markets
Press Release
Barchart, a leading provider of commodity data and workflow solutions has announced the launch of cmdtyExchange, a new event to highlight the data, tools and technology driving innovation in commodity markets. The event, taking place May 8-10, 2019, will feature commodity market experts providing insights on the changing landscape of today's agricultural industry.
/goo.gl/n35g9k
| | | | | | Miscellaneous | | | China's 2018 economic growth sinks to 3-decade low
Joe McDonald - AP News
China's 2018 economic growth fell to a three-decade low, adding to pressure on Beijing to settle a tariff war with Washington. The world's second-largest economy expanded by 6.6 percent over a year earlier, down from 2017's 6.9 percent, official data showed Monday. Growth in the three months ending in December dipped to 6.4 percent  the lowest quarterly level since the 2008 global crisis  from the previous quarter's 6.5 percent.
/goo.gl/pP6i6S
Billionaire founder of hedge fund Citadel buys GBP95m London home; Deal comes amid a slump in the market for high-end London homes
Judith Evans, David Bond and Lindsay Fortado - Financial Times (SUBSCRIPTION)
Ken Griffin, the billionaire founder of the $28bn hedge fund Citadel, has bought a Georgian house near Buckingham Palace in a commitment of about GBP95m to central London's real estate as Brexit approaches.
/goo.gl/gZihkG
****SD: Buy high, sell higher also works as a trading mantra.
A Major Market's Major Headache: Stocks That Crash Without Warning; Some stock-price collapses have made Hong Kong seem more like an untamed emerging market
Mike Bird- WSJ (SUBSCRIPTION)
Hong Kong is home to a developed, $3.8 trillion stock market. A series of stock-price collapses has made it seem, of late, more like an untamed emerging market. On Thursday, shares in property developer Jiayuan International Group Ltd. fell 80.6%, erasing $3.35 billion of value. It wasn't alone: four smaller companies dropped sharply, too, seemingly without major news.
/goo.gl/cQvf7e
Inside Millennium Management: The portfolio managers' hedge fund
Sarah Butcher- efinancialcareers
It's probably telling that while technology companies fall over themselves to woo staff with free food and impressive office interiors and banks are following suite, one of the world's largest hedge funds has a reputation for low-key, low maintenance office space. Portfolio managers, it seems, are not interested in aesthetics. There are plenty of portfolio managers at Millennium Management, and their numbers are rising. The $35bn hedge fund, founded in 1989 by Israel ("Izzy) Englander is divided into 200 teams, each comprising portfolio managers, analysts and support staff. In the past two years, it's added 650 people globally, including 20 new portfolio managers. Last year alone it hired 300 people, of whom 180 were classified broadly as "investment staff."
/goo.gl/3Cds9X
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