| March 19, 2018 | | | |  | Jeff Bergstrom
Editor
John Lothian News | |
|
| | | | Observations & Insight | | | Potential CME-NEX Deal Is Full of History, Dilemma, Risk and Reward
John J. Lothian - JLN
For many years, the Chicago Board of Trade had cash treasuries envy, wanting to add the trading of cash treasury bonds and notes to its offerings. For many years, the CME has had cash currency trading envy.
Both exchanges, now part of the CME Group, have tried to compete in cash Treasury and FX through various collaborations and initiatives. None of them succeeded.
Chicago Board Brokerage and FXMarketSpace are long gone, but the desire to add treasuries and cash FX trading has never disappeared.
For the rest of the commentary, click HERE
++++++
Transatlantic divide spills over at derivatives summit; Regulators air differences over central counterparties as crypto pioneers make a mark
Joe Rennison - Financial Times
Regulators from both sides of the Atlantic clashed, cryptocurrency pioneers drummed up enthusiasm and the hubbub of merger conversations filled the corridors at the main US calendar event for the derivatives industry this week. Key players in the industry gathered at the Boca Raton resort in Florida  and here are three big themes from the conference.
/goo.gl/CUfPGZ
****SD: Truly a weird moment at FIA. I didn't get a chance to catch the awkwardness - we shot some 25+ interviews at the conference - but it was certainly the subject of much talk after the fact.
| | | | | | Lead Stories | | | Options investors accuse brokers of fueling sell-offs
Taipei Times
A group representing traders who were hit by market panic on Feb. 6 said Optiver Taiwan Futures posted profits equal to the amount traders lost
A self-help group formed by TAIEX options investors yesterday continued to point at futures brokerages for heavy losses sustained in a bout of frenzied market sell-offs early last month. At the end of the Feb. 6 session, TAIEX options investors reported an estimated loss of NT$4 billion (US$136.84 million at the current exchange rate), as well as racking up NT$1.44 billion in defaults as affected traders failed to perform clearing and settlement transactions.
/goo.gl/WCp2Z5
****SD: Bring in the PR department!
US bank derivatives books larger since rescue of Bear Stearns; Total value of exposures at 5 of the biggest lenders up 12% over past decade
Ben McLannahan - FT
At the end of January 2008, in what would turn out to be its final annual report, Bear Stearns went into some detail about its big book of derivatives. The book had a notional value of $13.4tn at the end of November, Bear said, up more than 50 per cent from a year earlier. A two-notch downgrade in the firm's credit ratings, it added, would require it to come up with an extra $353m in collateral.
goo.gl/nxuLg4
Hot Hedge Fund Loses 21% After Bet on Volatility Goes Wrong
Alastair Marsh, Nishant Kumar, and Sridhar Natarajan - Bloomberg
In December, Shahraab Ahmad shared with his hedge fund clients the principle that helped him trounce peers for two turbulent decades: steer clear of the crowd.
He'd turned $50 million into an operation with more than $700 million over three years and delivered market-beating returns, earning a reputation as one of the hottest hands in the business. Until last month.
jlne.ws/2GHxOwM
****SD: Troubles not limited to any one hedge fund though - see Bloomberg's Hedge Funds Suffer Worst Month in Two Years.
Credit Suisse VIX ETN lawsuits: Tidjane Thiam says bank not at fault
Weizhen Tan - CNBC
Credit Suisse Chief Executive Officer Tidjane Thiam on Monday said that it's "hard to understand" why investors are suing the bank over a complex financial product that yielded steep losses for some.
Known as the VelocityShares Daily Inverse VIX Short-Term Exchange-Traded Note (ETN), the instrument is designed to go up when stock market volatility goes down. Last month, it sank by more than 90 percent in just hours in the wake of a market selloff.
jlne.ws/2GH1QRm
****JB: If someone thinks there is a chance they can make money doing this it is not hard to understand.
Signs of stress in global markets
Ritvik Carvalho - Reuters
Financial markets have been shaken this quarter by a raft of worries: the prospect of a global trade war, turmoil in the Trump Administration, signals by central banks of a shift towards monetary tightening and tensions between world powers.
These factors have weighed on sentiment following a burst of market volatility in February that wiped trillions of dollars from world stocks from which investors are yet to recover fully.
jlne.ws/2GGTauh
Market volatility prompts calls for clear labelling of risky ETFs
Clare O'Hara - The Globe and Mail
Wild stock market swings last month have sparked fresh calls for change in the way some exchange-traded funds are marketed to retail investors.
Several ETFs in the United States and Canada tied to the CBOE Volatility Index, known under the ticker VIX and referred to as Wall Street's fear gauge, saw most of their assets wiped out in less than a day when the Dow Jones industrial average fell 1,175 points, or 4.6 per cent, on Feb. 5.
jlne.ws/2GIxr55
****JB: Considering the knock-down, drag-out fights over food labeling - I shudder to think about disputes over financial labeling.
Weekend Review of VIX Options and Futures March 16th 2018
Russell Rhoads - Cboe
VIX gained a bit (about 8%) last week as the S&P 500 was under pressure. The curve shifted in a pretty uniform manner with March adding just over 3% as contango was fairly steep on Friday the 9th. As a friendly reminder, March contracts settle on the open this coming week.
jlne.ws/2GM9KsQ
****SD: Also see Weekend Review of Russell 2000 Options and Volatility
How Does Robinhood Make Money?
The Motley Fool
Can you make money by offering something for free? Some investors think so.
Robinhood, an online discount broker that burst on the scene by offering commission-free stock trades, is reportedly raising $350 million of capital in an investment that will value the company at $5.6 billion. Whereas TD Ameritrade (NASDAQ:AMTD) and E*Trade (NASDAQ:ETFC) generate millions of dollars in commissions by charging $6.95 per trade, Robinhood believes it can offer stock and options trades for free, making money from its users in other ways.
jlne.ws/2GHcqI5
****SD: Relevant review of the operation now that its free options trading operation is off the ground.
| | | | | | Exchanges and Clearing | | | Broker Tycoon Knows How to Start an Auction; CME needs to move quickly if it's to avoid a rival bid for Nex.
Chris Hughes - Bloomberg
Michael Spencer has achieved many things during his career in the City of London. But he won't go on forever, and at some point he needs to arrange an exit from Nex Group Plc, part of his old ICAP empire. CME Group Inc.'s interest in the electronic trading platform could offer the chance for an elegant farewell this year.
/goo.gl/zpcHA1
Fixed income ETF options - 4 video interview series with BlackRock
Eurex Exchange
jlne.ws/2GIuuSd
CME gets foothold in Black Sea with new-look grain futures
Gus Trompiz - Reuters
Active trading in CME Group's new cash-settled futures for Black Sea grain suggests the exchange may have found a way to tap into booming Black Sea export trade after an unsuccessful earlier foray in the region.
jlne.ws/2GIwbPk
| | | | | | Regulation & Enforcement | | | Brexit: Commons committee split over transition call
BBC
A call to extend the period for the UK leaving the EU if more time is needed to agree a UK-EU trade deal has split a key Commons committee. Its report says it is "difficult to see" how trade and other agreements can be negotiated in time.
/goo.gl/5Pfpg5
| | | | | | Strategy | | | Ripple Effect: Volatility Spread Opportunity VIX vs. RVX Index Futures
Rick Rosenthal - Cboe
The Cboe Volatility Index (VIX Index) is widely considered the proxy for market sentiment in the U.S. equity market. VIX measures the 30 day expected volatility on the S&P 500 Index (SPX).
Cboe's Russell 2000 Volatility Index (RVX) applies the same methodology for calculating 30 day anticipated volatility, but it uses Russell 2000 Index options. (RUT). As such, RVX is considered the benchmark proxy for 30 day expected volatility of U.S. Small-caps.
jlne.ws/2GHPloK
Ten years after crash, Americans still have not fallen back in love with stocks
David Randall, April Joyner - Reuters
Luke Thomas, 44, an information technology field manager who lives in Miami, began investing in the U.S. stock market in his early 20s, attracted by the prospect of learning "how to grow a little bit of money into a lot," he said.
jlne.ws/2GHcmIl
| | | | | | Events | | | Citi Was Top Conference Sponsor in Q4 2017
Sanford Bragg - Integrity Research Associates
Citigroup was the leading sponsor of investment conferences in the fourth quarter of 2017, hosting over thirty conferences, according to investor relations platform provider Virtua. New York was by far the most favored venue.
/goo.gl/wc6TMo
****SD: I do not believe Citi was a sponsor of FIA Boca - it is a confirmed sponsor of the Options Industry Conference in May, though.
| | | | | | Miscellaneous | | | The Stockpicker's Burden, and Other Lessons
Leslie P. Norton and Dan Lam - Barron's
In 1962, the young writer Tom Wolfe wrote a sympathetic profile in the Washington Post about a 30-year-old mathematician who had learned how to beat the house in blackjack. The mathematician, Edward Thorp, described how to figure out the sequence of the cards and how to bet accordingly.
The story went viral. And Thorp, who taught math at the Massachusetts Institute of Technology and then at the University of California, Los Angeles, became an instant celebrity who wrote best-selling books about his techniques. (In fact, Fischer Black and Myron Scholes used a key idea from one of those books for their formula to price options; they subsequently won the Nobel Prize.)
jlne.ws/2GJdYRU
Apple Asset Management? It probably will happen
Robin Powell - Kurtosys Blog
I'm not an Apple obsessive. I don't queue outside the Apple Store at 5am to buy the latest iPhone, and I'm sorry, but GBP160 for a pair of ear plugs is daylight robbery. But I love my phone, my MacBook and how everything magically syncs with iCloud. It's simple, intuitive and familiar. So if Apple entered the asset management space and provided a digital investment solution, would I be interested? Yes, I would.
/goo.gl/cT45XF
****SD: Imagine the hedging operation Apple would have to operate/develop given the inevitable giant inflows it would get.
Oil Hedge Fund BBL Looks to Launch $1 Billion Macro Fund
Alison Sider - WSJ
Commodities LP, one of the biggest energy focused hedge funds, is looking to raise $1 billion for a new fund that will wager on macroeconomic trends via bonds, stocks, currencies and commodities. BBL currently runs a $535 million commodity fund. Founder Jonathan Goldberg said its work on oil and other commodities gives it a unique view into global trends, which it will be able to express in the new macro fund and vice versa.
/goo.gl/LWUfDN
Cryptocurrency Doesn't Pose A Risk To The Financial System ... Yet, G20 Told
Ted Knutson - Forbes
Cryptocurrency doesn't pose a risk to the global financial system; finance ministers of the world's largest economies were told over the weekend.
But cryptocurrency could threaten international financial stability with greater use and interconnections with the rest of the financial sectors, the ministers and central bank governors were warned in a prelude to the two-day G20 summit starting today.
jlne.ws/2GMGSkh
| | | | |  | | | | JLN Options is sponsored by: | | | | | |  |  |  | | | | | |  |  |  | | |
|
|
| | | |
| | | | 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
Publisher | | | Sarah Rudolph
Managing Editor
| | | Jeff Bergstrom
Editor
| | | Spencer Doar
Editor
| | |
|
|
 | |
Disclaimer: All John Lothian Newsletters, JohnLothianNews.com, MarketsWiki.com and MarketsReformWiki.com are products of John Lothian News, a division of John J. Lothian & Company, Inc. The opinions expressed in all John J. Lothian & Company, Inc. publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers. Futures and options trading involve risk. Past results are no indication of future performance. Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any website or newsletter content.
© 2017 John J. Lothian & Company, Inc. All Rights Reserved. |
|
|
