Bets on pound volatility climb after Johnson’s no-deal gambit; Investors brace for unsettling ride in forex markets as Brexit deadline nears
Philip Georgiadis – Financial Times (SUBSCRIPTION)
Investors are braced for an unnerving ride in foreign exchange markets in the run-up to the Halloween deadline for the UK’s exit from the EU. Shifts in the options market, where bets are made on exchange rates, show expectations for sterling volatility have hit their highest level since the start of the year. Bets shot up on Wednesday after Boris Johnson’s government took the unusual step of signalling its intention to suspend parliament in a bid to stop MPs blocking a no-deal Brexit.
****Also see Reuters’ Pound plunges as Johnson restricts parliament’s time before Brexit. For more on Johnson’s move, see Bloomberg.
There Are Few Places to Hide When Markets All Move Together
Amrith Ramkumar – WSJ (SUBSCRIPTION)
Seemingly unrelated areas of the market are trading in the same direction more frequently than normal, a trend that some investors say is contributing to recent volatility and could drive more gyrations in the future.
****SD: Peekaboo! Risk sees you.
US 30-year bond yield falls to record low under 2% as global recession fears grow
Thomas Franck – CNBC
The rate on the benchmark 30-year Treasury bond sank to an all-time low on Wednesday while the U.S. yield curve inverted even further as fixed-income traders grew more confident in forecasts of tepid inflation and slower economic growth.
Liquidity Fears Stalk the $4 Trillion ETF Market. Here’s One Fix
Ksenia Galouchko – Bloomberg (SUBSCRIPTION)
Market mayhem this month has re-ignited fears about how the $4 trillion U.S. ETF industry will react in a liquidity crunch. Europe may have an answer for averting disaster.
The nightmare scenario: volatility prompts market-makers to withdraw when they’re needed most, blowing out transaction costs and freezing trading. It’s an outcome that’s been raised by the likes of Moody’s Investors Service Inc. and T. Rowe Price Group Inc. this year as late-cycle swings convulse markets.
****SD: ETF investor being followed by a water monster – I’d watch that movie.
S&P 500 gains near ceiling as risks gnaw at investors: Reuters poll
Sinead Carew – Reuters
The S&P 500 stock index will see limited gains in the remaining months of 2019 as anxiety over slowing global growth and the U.S.-China trade war weigh against expectations of monetary policy easing, according to a Reuters poll of strategists.
Large Investors Demanding Option Hedges: QVR’s Benn Eifert
In this edition of “Options Insight,” QVR Advisors Principal Benn Eifert discusses the volatility in U.S. markets with Bloomberg’s Luke Kawa on “Bloomberg Markets: The Close.”
South Korea Unusual Options Activity in EWY
Hey, there’s been no missiles flying over South Korea for 3 days, and they ended their intel-sharing pact with Japan, let’s sell some vol!
Exchanges and Clearing
Dalian Commodity Exchange to launch trading of new futures products
The Dalian Commodity Exchange (DCE) announced Tuesday that they are working to speed up the listing of styrene, liquefied petroleum gas, live pig and dry chili futures as well as iron ore options.
The World Federation Of Exchanges Publishes Letter Regarding Market Fragmentation Arising From EMIR 2.2
In today’s letter, the WFE sets out its concerns that ESMA proposals on the implementation of EMIR 2.2 risk unduly fragmenting global markets, increasing costs for end users, and exacerbating tensions in international relations
Prosecutors raid Deutsche Boerse offices over share-trading scam
Public prosecutors on Tuesday raided offices of German exchange operator Deutsche Boerse (DB1Gn.DE) as part of a broader investigation into a fraudulent share-trading scheme, Cologne public prosecutor’s office said.
Regulation & Enforcement
Volcker 2.0 Explained
Scott Cammarn, Cadwalader – Tabb Forum
Regulators recently adopted an amended Volcker Rule designed to simplify compliance, with emphasis on the compliance program requirements and proprietary trading provisions. But the agencies indicated that they are intending to issue separate rulemaking proposals regarding other aspects of the Volcker Rule.
China Industrial Securities adopts buy-side tools from Bloomberg; CISI has implemented Bloomberg’s OMS, TCA, liquidity assessment and trade surveillance technology to manage ongoing regulatory developments.
Hayley McDowell – The Trade
China Industrial Securities International Financial Group (CISI) has adopted a range of buy-side solutions from Bloomberg as it tackles ongoing regulatory developments in Hong Kong.
Stock market investing strategies for all trade war outcomes: JPMorgan
Akin Oyedele – Business Insider Prime (SUBSCRIPTION)
If you’re an investor who is suffering whiplash induced by the trade war, you are not alone.
The wild roller coaster of statements, tweets, and TV hits from politicians representing the world’s largest economies has taken its toll on global markets in recent weeks.
Navigating the trade war: How to invest during turmoil
David Randall – Reuters
The start-and-stop progress of negotiations between the United States and China aimed at ending the trade war between the world’s two largest economies is souring Wall Street playbooks and increasing market volatility as investors seek to profit during the uncertainty.
Hedge fund CEO arrested at her Rittenhouse Square condo, charged in $63 million Ponzi scheme
Sam Wood – The Philadelphia Enquirer
Federal agents on Tuesday morning arrested a hedge fund CEO at her Rittenhouse Square condo, charging her in a massive fraud that rooked investors out of at least $63 million.
Brenda A. Smith, 59, ran a Conshohocken-based network of investment companies that included Broad Reach Capital, Broad Reach Partners, and Bristol Advisors. Smith was the only employee of each company. The funds “were essentially her alter-egos,” according to court papers.
****SD: I like seeing the term “rooked” pop up in the wild. Good verbiage.