Observations & Insight

The Next Big Thing; Seismic Foundry Aims To Find The Next Disruptors And Leaders In Fintech
By Jim Kharouf, JLN

Who will be the next big thing in our industry? A new London-based firm is aiming to find it.

Seismic Foundry, co-founded by Bill Templer, Brendan Bradley, Cathryn Lyall, Dave Feltes and Jeff Gale, is looking for the next fintech start-up that could become the next superstar in the financial industry. Of course, they are not alone and there are many firms from Chicago to New York to London and beyond that are looking to invest in those firms aiming to solve industry problems and disrupt inefficient sectors. But they are aiming at a slightly different market sector in the fintech space.

John Lothian News sat down with Cathy Lyall in London last month to talk about Seismic and find out what the landscape looks like out there. Read the rest of the column HERE and watch the interview below.

Read the rest here


Seismic Change: Developing Fintech in the Early Stages

Fintech, in all its varying forms, is hot. Whether in pre-trade risk assessment, collateral management, best execution or clearing, companies are stepping in to solve problems created by the evolution of markets as spurred by regulation. But this creates an issue — how do companies with tangible problems link up with small firms working on the solutions? The growing size of the space and enthusiasm surrounding it further muddies the waters. Enter Seismic Foundry.

Derivatives veterans Dave Feltes, Bill Templer, Cathy Lyall, Brendan Bradley and Jeff Gale are behind the endeavor which aims to provide guidance and investment access to fintech startups earlier than is common practice. Frequently early ventures only get attention when they already have some clients and are raising larger amounts of money. The Seismic crew wants to get in at the ground floor with their venture capital when these companies are looking for smaller sums of seed money (think in the $100k range).
Read the rest and watch the video »

Lead Stories

BlackRock Takes Options to Calm Brexit Nerves Despite Pound Positivity
BlackRock, the world’s biggest asset manager, is taking some exposure to the pound through options markets for fear of what months of messy Brexit talks may bring, although it maintains the currency is fairly valued.
Scott Thiel, BlackRock’s Deputy Chief Investment Officer for global fundamental fixed income, said the money manager was buying option “calls”, which entitle it to buy at around current levels rather than through spot purchases.

Markets are entering the ‘frothy territory’ reached before the last 2 financial crises
Joe Ciolli – Business Insider
Stocks look expensive by multiple measures, and they have for a while now. But that hasn’t stopped major indices from achieving new highs as market fundamentals have looked more than capable of withstanding higher prices.
That all could change as the stock market swells to a size rarely seen outside of 2000 and 2008, just before the two most recent stock market crashes, says Deutsche Bank.

****JB: “Moist” is usually touted as the most hated word in the English language but I think “frothy” should at least get an honorable mention.

It Took the Market 30 Minutes to Digest Trump Jr. Email Drama
Elena Popina and Oliver Renick – Bloomberg
It wasn’t a big move, and nor did it last long, but it was enough to remind bulls that the market hasn’t gone completely deaf to politics.
The Dow Jones Industrial Average erased about 160 points in 20 minutes and volume in the most widely traded S&P 500 futures tripled as a gut check landed on traders just after 11 a.m. in New York Tuesday. The catalyst was the release of emails by Donald Trump Jr. that said the Russian government backed his father’s presidential campaign and was trying to damage Hillary Clinton.

Second-quarter earnings have Wall Street on edge
Anthony Mirhaydari – CBS News
While Wall Street’s first half have may been solid, U.S. equities haven’t really gone anywhere over the past month.
Lingering post-election confidence, strong job gains and positive investor sentiment have been offset by increasing hawkishness from the Federal Reserve, renewed energy price weakness and collapsing measures of market breadth. In addition, weakness in tech stocks has been offset by strength in banks. You get the idea.

Fed has put markets in institutional survival mode
Dean Curnutt – The Globe and Mail
There’s a big debate in markets about the appropriate Federal Reserve policy amid conflicting signals. With the jobless rate at 4.4 per cent, the trade-off between growth and inflation known as the Phillips Curve would seem to matter.

Winklevoss Bitcoin Trust ETF (NASDAQ:COIN): BTC Now Has Options
ETF Daily News
This week, the CFTC took a bold step forward in terms of granting institutional investors access to the bitcoin market, approving the creation of the first SEF or Swap Execution Facility. Previously, traders who wished to place bets in bitcoin derivatives markets were forced to operate in markets that were strictly OTC. But now the agency has issued a registration order to LedgerX, granting it status with the CFTC as a Swap Execution Facility, in the process approving bitcoin options trading.

What is LedgerX?
The Merkle
There are many interesting projects in the world of Bitcoin and cryptocurrency. One of those projects is LedgerX, which is an institutional trading and clearing platform. The company has been seeking regulatory approval for some time now and officially received it from the SEC last week. Let’s take a look at what the company has to offer and how their approval will affect the global appeal of Bitcoin.

Exchanges and Clearing

CME Group Announces First Trades After the Return of the Russell 2000 Index Suite of Products
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the successful launch of futures and options based on the Russell 2000 Index. The total volume through the first trading day was 2,918 contracts across futures, options and BTIC from 76 market participants. Open interest reached 712 as of July 10.

Exchange data made up a third of revenues in 2016
Joe Parsons – The Trade
Global exchange revenues totalled a record $28.3 billion in 2016, with exchange data fees making up almost a third of global revenues, according to new research.
A report from Burton-Taylor, an international consultancy, highlighted industry revenues were driven by a 29.2% increase in exchange market data businesses, with the segment reporting record revenues of $5.4 billion last year.

NYSE Revamp Steps Up Threat to Speed-Fighting IEX Exchange
Annie Massa – Bloomberg
IEX Group Inc., which has struggled to gain market share with its U.S. stock market, is facing another challenge as the New York Stock Exchange opens a copycat market.
NYSE American starts July 24 with a 350-microsecond speed bump, mimicking the delay IEX uses on its Investors Exchange, which it says protects investors from predatory kinds of speed-based trading. On Monday, NYSE announced it’ll be 78 percent cheaper to place some kinds of trades on its market versus IEX’s.

Euronext Can Spend Up to $2.3 Billion on Acquisitions, CEO Says
Alexandre Boksenbaum-Granier and Caroline Connan – Bloomberg
Euronext NV can invest as much as 2 billion euros ($2.3b) on acquisitions as the pan-European stock exchange seeks to double its size and diversify its revenue sources, Chief Executive Officer Stephane Boujnah said in an interview Saturday.


ETF Flopper: What Volatility?
Crystal Kim – Barron’s
The markets were flat on Monday, so it should be no big surprise that volatility-tracking exchange-traded products were among the biggest flops of the day The Dow Jones Industrial Average fell 0.03% to 21,408.52 and the S&P 500 gained 0.09% to 2427.43. Meanwhile the CBOE Volatility Index or the VIX settled just below 11.

Strong Volume for SPXW Options with Monday, Wednesday, Friday and Month-end Expirations
Matt Moran – CBOE
The large-sized SPXW S&P 500 options with p.m.-settlement generated another strong figure of around 600,000 contracts for average daily volume in in June.

Five unloved – but interesting – financial spread betting markets
The Armchair Trader
When I worked for one of the largers CFD and financial spread betting brokers, we could see where most of the client trading activity was taking place. Over 85% of the volume was flowing through 10 markets, the usual suspects, like the FTSE 100, USD/EUR, oil, gold, S&P 500, you know the drill. Most traders do not spend time researching new markets. Partly this is because they really do want to trade the big, headline-grabbing markets, partly they worry about spreads and liquidity. Here, however, are a few markets that are available on financial spread betting platforms that might bear a second glance when you have the time.


Goldman’s Fix for Trading Desk’s Dysfunction: ‘Just Add Butter’
Dakin Campbell – Bloomberg
Restaurants give their favorite customers free add-ons, and so should Goldman Sachs Group Inc.
That’s the message Pablo Salame, the firm’s co-head of trading, had for his troops in April at a town hall meeting after the division posted the worst first-quarter results in more than a decade, according to people who attended the event or watched a taped version distributed internally.

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