Tampa investment firm clients owe millions to broker-dealer that executed single-day trade, firm says
Crystal Owens – Tampa Bay Business Journal (SUBSCRIPTION)
Clients of the Tampa investment firm OptionSellers.com who lost millions earlier this month in a short call position on natural gas owe at least $35 million to the broker-dealer firm that executed the single trade.
INTL FCStone, an international firm with offices in Winter Haven, is likely to seek more money from OptionSellers’ clients, according to Joseph Peiffer, a New Orleans-based attorney and managing partner at Peiffer Wolf Carr & Kane. The firm, the second to come forward to represent OptionSellers’ clients, said INTL FCStone claimed in a Nov. 28 statement of financial condition that each of OptionSellers’ clients owe the brokerage firm as much as $1.4 million.
****SD: I can’t believe some folks had retirement money parked with this outfit… Quote from an attorney representing former OptionSellers clients: “‘All the investors were promised safeguards would be in place to protect their savings from large losses,’ Albin said. ‘They were blindsided by the news that their savings were wiped out, and then crushed by INTL FCStone’s margin call.'”
Biggest Worry for Traders? They Don’t Know Why Stocks Are Moving
Vildana Hajric and Sarah Ponczek – BloombergQuint
Trade, rates, tariffs — no one reason explains wild swings; Geopolitical risks difficult to fit into trading analysis
It would be nice to write the market’s convulsions off to liquidity failures, or tariffs, the Federal Reserve or tech valuations.
But for the people living through these swings on trading desks, none of those explanations does the trick — and that’s what really worries them.
****SD: And meanwhile the masters of the universe had a terrible month.
Markets Have No Time for Good Economic News
Robert Burgess – BloombergQuint
Stocks were on their way to their second consecutive big decline on Thursday, with the S&P 500 Index dropping as much as 2.91 percent after Tuesday’s 3.24 percent tumble. (Markets were closed Wednesday to mourn the death of former President George H.W. Bush.) But then a rebound in tech shares helped cut the losses to a mere 0.15 percent. Still, questions remain about why equities are so volatile. There are three primary reasons: 1) A trade war between the U.S. and China that drags on with no real path to resolution; 2) Bond market yield curves becoming inverted; and 3) Slower corporate profit growth. If the focus were solely on the actual economy, the mood on Wall Street might be markedly better.
Volatility: Caught in the storm
Fiona Rintoul – Funds Europe
Strong downside protection and reduced volatility are key selling points for multi asset-funds. Fiona Rintoul finds out what happened to key multi-asset portfolios when volatility hit in early 2018.
U.S. Adds Below-Forecast 155,000 Jobs as Wage Gain Misses
Katia Dmitrieva – BloombergQuint
U.S. jobs and wages rose by less than forecast in November while the unemployment rate held at the lowest in almost five decades, indicating some moderation in a still-healthy labor market.
****SD: Reuters has Dollar weak as jobs report disappoints
Exchanges and Clearing
Cboe Global Markets Reports November 2018 Trading Volume
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world’s largest exchange holding companies, today reported November monthly trading volume and average revenue per contract (RPC)/net revenue capture data at www.cboe.com/monthlyvolrpc.
SGX reports market statistics for November 2018
…Total Derivatives volume was 19.6 million, down 11% month-on-month (m-o-m) and up 9% year-on-year (y-o-y).
B3 Launches New Products In December – New Derivatives Begin To Be Traded On The 10th
B3 announced today new products coming to market this month: FX Futures, Options on DI Futures + VTF (Forward Rate Volatility), Single Stock and Units Futures, Micro S&P 500 Futures, and Mini U.S. Dollar Options. The new derivatives will be available for trading as of December 10 and are part of the series of launches that B3 plans to release to the market by year end 2019.
CME Group Awards
CME Group has been recognized as an industry leader by a variety of organizations and publications, as voted on by our customer and partners. We are proud of our team’s customer-first approach and dedication to innovating new products, services and technology to meet our clients’ trading, risk management and investment needs.
OCC Names Two New Senior Leaders
OCC, the world’s largest equity derivatives clearing organization, today announced two new senior leaders who will play key roles as the company transitions to its future risk management and clearing systems.
Vishal Thakkar, formerly First Vice President of Financial Risk Management and Risk Advisory Services, was promoted to Senior Vice President and Head of Enterprise Risk Management. Timothy Dwyer was appointed Senior Vice President of Strategic Systems, a new position at OCC.
Regulation & Enforcement
FIA and FIA Tech Release Guidelines for the Simplified Execution Source Code
Today, FIA together with affiliate FIA Tech, announced new technical guidelines for firms to properly identify the correct brokerage when executing and clearing exchange traded derivatives.
With the proliferation of execution services, platforms and providers there is increased need for clarity in how to communicate a trade’s execution method through industry standard codes. Brokerage discrepancies are one of the largest causes of operational friction in the reconciliation of exchange traded derivatives, and lack of standardization has created significant costs for clearing firms and their clients. By working with FIA’s membership as well as FIA Tech’s global customer base, the industry has devised standard codes for commonly used execution methods (view summary and full guidelines).
Permanent measures to put hole in CFD bucket shops
Dan McCrum – Financial Times (SUBSCRIPTION)
An announcement from the Financial Conduct Authority has landed. The UK regulator is to make temporary Europe-wide restrictions on contract for difference companies permanent. Best understood as bucket shops – the US term for companies offering punters the chance to bet inside a closed system – CFD providers had found a highly profitable way to seperate the unwary from their money in recent years, by letting them play with complex financial derivatives.
Software Reliability at Optiver: People
Optiver Tech Blog
A “perfect” process and pithy principles only go so far. The pursuit of software reliability must be lived and breathed by the entire organization- especially in the pursuit of a complex endeavor like software engineering in a dynamic environment like financial technology. It cannot be encoded in a strict process or delegated to a single team.
Goldman Sachs: Options traders are signaling that these areas of the market will surge in 2019
Joe Ciolli – Business Insider Prime (SUBSCRIPTION)
Goldman Sachs looked at the options market and pinpointed the areas of the market that seemed most likely to surge higher in 2019. The firm also looked into which market segments would be the most volatile next year. As we head into the grand finale of 2018, experts across Wall Street are making all sorts of recommendations for the year ahead. Their prognostications factor in everything from expected macroeconomic developments to geopolitical headwinds. The most diligent forecasters even build complex models to pick out the best possible opportunities. But the derivatives team at Goldman Sachs has gone through the unique step of looking at options trading, which offers a direct reflection of investor positioning.
****SD: Another take from Bloomberg was in yesterday’s newsletter – Goldman Sees This Year’s Volatility Spike Carrying Over to 2019
Here’s what the Dow coming close to a ‘death cross’ really means for stocks
Mark Hulbert – MarketWatch
Think the “Death Cross” is the kiss of death for the stock market? Think again.
The Death Cross is a technical market pattern that occurs whenever the Dow Jones Industrial Average’s 50-day moving average drops below the 200-day moving average. Such an event was on the verge of being triggered at Thursday’s intra-day low.
****JB: Another story from Nasdaq on the same subject can be read here and another from CNBC here
CNBC Exclusive: CNBC Transcript: IMF Managing Director Christine Lagarde Speaks with CNBC’s Sara Eisen Today
The following is the unofficial transcript of a CNBC EXCLUSIVE interview with IMF Managing Director Christine Lagarde and CNBC’s Sara Eisen on CNBC’s “Squawk Alley” (M-F 11AM – 12PM) today, Thursday, December 6th.
Here are the S&P 500’s best and worst stock performers of 2018
Philip van Doorn – MarketWatch
Considering how much coverage there has been of the strengthening U.S. economy, demand for workers and a massive tax cut that has boosted corporate earnings, 2018 has been a disappointing year for the stock market overall. Investors seem to be disappointed as they look ahead.
The Dow Jones Industrial Average DJIA, -1.60% has returned 3.5% with dividends reinvested through Dec. 4, while the S&P 500 index SPX, -1.49% has returned 2.8%.
As the year nears its close, it’s time to look at what stocks have fared best — and worst.
Lessons From the Bernie Madoff Fraud
Erin E. Arvedlund – Barron’s
That’s the lesson for investors from Bernie Madoff’s $64.8 billion Ponzi scheme, which exploded into the headlines 10 years ago this week.
Crime pays for the perpetrators, their families, and their friends. Madoff ended up in prison, but a lot of people got rich during his long-running scam.
That’s why Ponzi schemes survive today, duping even “smart money” professionals on Wall Street.