Spread betting group CMC faces 90% plunge in annual profits
Myles McCormick – Financial Times
CMC Markets posted a nearly 90 per cent drop in profits in its last financial year, as a combination of regulatory changes and tepid market conditions took their toll on the spread betting group.
The London-listed company on Thursday reported an 89 per cent fall in pre-tax profit to GBP6.3m for the year to March 31. Net operating income was down 30 per cent at GBP130.8m. Shares in the group fell 10 per cent in early trading.
****JB: Reuters article on the same subject – CMC Markets chief says worst is over after profit plunges 90%
How Korea’s yield-seeking pensioners are shaking world markets
Robin Wigglesworth, June Yoon and Song Jung-a – Financial Times
Complex savings products with names such as Super Lizard, Cobra or Boosters are flying off the shelves in South Korea, as retail investors try to juice returns while interest rates are low. But analysts warn they are causing market anomalies, and potentially fuelling wider turbulence at times of stress.
So-called auto-callables are structured notes that offer fixed returns like a bond while selling options on equity indices, delivering a higher yield than can be earned from more conventional savings products.
Crude oil news: WTI falls into bear market on trade war, growth fears
Rebecca Ungarino – Business Insider
President Donald Trump’s trade disputes with key international trade partners has claimed another victim.
West Texas Intermediate ( WTI) crude oil slid Thursday after slumping into a bear market the day prior, plunging by more than 20% since its late-April high. The commodity was trading near $51.70 per barrel.
Dow Jones Industrial Average Gains on Interest Rate Cut Hopes
Evie Liu – Barron’s
Stocks rose for the second day on Wednesday as all three major indexes made gains. Markets had been primed by Tuesday’s surge as Federal Reserve Chairman Jerome Powell suggested that rate cuts could be on the way if trade disputes with China and Mexico seriously hurt the U.S. economy. News that U.S. Treasury Secretary Steven Mnuchin is scheduled to meet with People’s Bank of China Governor Yi Gang at the G-20 this weekend in Japan also helped lift stocks.
****JB: From The Wall Street Journal – Fed Begins Debate on Whether to Cut Rate as Soon as June
Exchanges and Clearing
New Volume and Open Interest Records for Mini-SPX Index (XSP) Options at Cboe and EDGX
As May came to close, some trends in Cboe’s Mini-SPX Index (XSP) options emerged, including higher volumes and record open interest. For background, Mini-SPX options are just as their name implies, a smaller contract, 1/10th the value of S&P 500 Index (SPX) options. This smaller size provides added flexibility, which may help an investor hedge a specific desired exposure or facilitate accurate allocations of index trades among many customer accounts – among other uses.
Euronext announces volumes for May 2019
In May 2019, the overall average daily volume on derivatives reached 573,284 contracts, down -11.1% compared to May 2018 and down -2.1% compared to the previous month.
Singapore Exchange to boost derivatives, target Southeast Asia unicorns
Anshuman Daga and Joe Brock – Reuters
Singapore Exchange Ltd (SGX) aims to add products to its lucrative derivatives business and offer Southeast Asian unicorns a platform to list shares and bonds, in a multi-asset strategy aimed at sustaining growth, its chief executive said.
Marcus Addison on default management auctions
A default management process is initiated if a clearing member defaults. As part of this default management process, clearing houses can conduct auctions to manage the risks associated with a default, such as the recent Nasdaq default. What makes a successful auction and how is it conducted? Marcus Addison, Head of Default Management at Eurex Clearing, explains the important details.
Regulation & Enforcement
Senate confirms Treasury official to lead derivatives regulator
Pete Schroeder – Reuters
The U.S. Senate voted Wednesday to confirm Heath Tarbert to serve as the next chairman of the Commodity Futures Trading Commission.
The Silver Lining in 5% Corrections
Sage Anderson – tastytrade
For traditional “buy and hold” investors that generally sit on their hands for most of the year, corrections in equity markets can be filled with angst and plenty of nail-biting.
When your risk profile is dominated by 50-50 directional bets, that’s simply the Yin phase, when Yang decides to take a break.
While active traders can also feel pain during corrections, they generally view these periods as an opportunity, instead of a threat. And according to previous tastytrade research, this may be a productive mindset when an index like the Dow Jones Industrial Average (DIA) corrects by at least 5% in less than a month – as seen in May of 2019.
The Physics of Market Structure – Part 1
These are the primary goals of market structure mechanisms. A place to gather – whether that place be a Buttonwood tree or a bank of caged servers – and a playing field framed with enough freedom for participants to discover and set asset prices based on publicly available information.
IDX 2019 wrap-up: Making markets fairer, safer and more stable
From market structures to central clearing to ESG: the agenda of FIA’s International Derivatives Expo (IDX) 2019, which took place from 4 to 5 June at The Brewery in London, was packed with topics catching the attention of the industry.
The CFO Of The Future
Anita Hawser – Global Finance Magazine
For a role that didn’t really exist until the late 1970s, chief financial officers, or CFOs, have assumed greater strategic importance in a relatively short time. These crucial executives have gone from being thought of as “number crunchers,” armed with spreadsheets and calculators to being key architects of growth and performance targets.
****JB: Not an options story but Amy Shelly, CFO at The Options Clearing Corporation, shares some of her wisdom on the challenges facing CFOs.