Derivatives Industry Joins Forces to Launch Futuresfundamentals.org Education Resource
Today at FIA Expo, the largest gathering of futures market participants in the world, futuresfundamentals.org was launched to provide information and curriculum for learners of all levels to understand the role that derivatives markets play in the global economy and our everyday lives.
With initial support from the FIA, CME Group, NFA, the Institute for Financial Markets (IFM) and CME Group Foundation, futuresfundamentals.org will be a leading online resource for derivatives education, providing interactive tools, a trading simulator and curriculum for a wide variety of audiences.
Bond Market’s ‘Taylor Put’ Signals Traders on Edge Over Fed Pick
Brian Chappatta and Edward Bolingbroke – Bloomberg
Look no further than the flurry of activity in interest-rate options this week, particularly in one-year eurodollar mid-December puts, which in the last few days have colloquially been referred to as the “Taylor put.” The contracts earned that moniker because traders are buying them either outright or to cover short positions following reports that Trump gushed about John Taylor, a candidate for Fed chair. The Stanford University economist, who visited the White House for an hour-long interview last week, is seen as the most hawkish of the five candidates on the president’s short-list.
MiFID II To Boost Lit Volumes
Shanny Basar – MarketsMedia
Mark Hemsley, president of Cboe Europe Equities, formerly known as Bats Europe, said new regulations next year could boost volumes on lit venues in the European Union.
CBOE Holdings, the US options exchange, acquired equities and foreign exchange marketplace Bats Global Markets this year, and the merged company has now been renamed Cboe Global Markets.
Why Wall Street’s fear index remains calm
Dambisa Moyo – Financial Times
For the past several weeks the Chicago Board Options Exchange volatility index has hovered at notable lows. The Vix measures the turbulence of a wide range S&P 500 index options, and reflects the market’s expectation of a 30-day period. It is often used as a proxy for the level of “fear” in the financial markets and influences asset prices.
Look Past Record-Low Volatility and See Investors Aren’t Really Asleep
Cecile Vannucci – Bloomberg
The gauge tracking volatility in European shares may have just hit its lowest level ever, but that doesn’t mean investors are placid.
While the VStoxx Index — which measures swings in the Euro Stoxx 50 gauge — has slumped almost 40 percent this year, the region’s Volatility-of-Volatility Index has surged more than 25 percent. It now trades near a record high relative to the VStoxx, signaling that investors are paying up to hedge against turbulence in the market.
European Stock Volatility Hits a Record Low
Cormac Mullen – Bloomberg
Tranquility ruled the bourses of Europe on Wednesday as the VStoxx Index of euro-area volatility dropped to an all-time low.
Equity Volatility is at All Time Lows
Highly Evolved Vol
There is no doubt that equity implied volatility is very low. As of October 13th, 2017, the VIX has closed below 10 on 41 occasions. 32 of those days have been this year. As the VIX is popularly known as a “fear index” this situation been labelled a “bubble of complacency” (which sounds like it should be located close to the sea of tranquility). This can be read as putting the blame for low volatility squarely on the shoulders of options’ traders, who actions create the VIX. But this is exactly backward. Implied volatility is low because of realized volatility being a lot lower.
Exchanges and Clearing
Ten Charts Show Strong Growth for Cboe Index Products in 2017
When I am discussing the Cboe’s BXM and PUT indexes with institutional investors, common questions I hear include – What about the capacity of the options markets? Can the options markets handle an influx of billions of dollars of new allocations by pension and endowment funds? In my answer to these questions, I usually present a chart on the notional value of average daily volume for the S&P 500 (SPX) options, which has more than doubled over the past five years. The notional value of the SPX index options volume has been much higher than that of options on single stocks. www.cboe.com/SPX.
Societe Generale Contracts with Trading Technologies for Global Distribution of the TT Platform
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, today announced it has entered an agreement with Societe Generale Corporate & Investment Banking to make the TT trading platform globally available to Societe Generale’s institutional trading client base. This move provides professional derivatives trading customers of Societe Generale’s electronic execution business with access to TT’s advanced trading technology, including Autospreader, ADL, charting and analytics, options trading and connectivity through the Financial Information eXchange (FIX) protocol.
Mercury Derivatives Trading Contracts with Trading Technologies to use the TT Platform
Hertshten Group portfolio company, Mercury Derivatives Trading (Mercury), and Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, today announced Mercury have contracted with Trading Technologies to use the TT futures trading platform. In doing so, Mercury will further scale its business and infrastructure technology. Mercury will now be provided with access to all TT features including but not limited to Autospreader, ADL, charting, TT Mobile, and functionality for options trading and analytics. Users also will gain access to TT-connected markets globally.
Gator Trading Leverages Rival Systems for Options Trading Strategies
Rival Systems (Rival), an award-winning provider of trading and risk management software, announced that Gator Trading is leveraging its Rival Trader front-end for the firm’s options trading strategies. Gator, an operator of trading groups specializing primarily in futures and options, migrated last year to the firm’s Rival Risk platform for all of its risk management needs.
Thomson Reuters drives lower total cost of ownership with launch of Elektron Direct Feed for OPRA
Thomson Reuters has launched Elektron Direct Feed (EDF) for the Options Price Reporting Authority (OPRA), reducing client costs by providing seamless access to the largest securities information services provider without the need for additional server capacity. EDF replaces our current direct feed offering, TRDFD.
Swaptions begin electronic shift
Helen Bartholomew – Times of India
Interest rate options have started a voluntary shift onto electronic platforms as Garda Capital Partners completed the first fully electronic swaption trade on Tradeweb’s swap execution facility.
New ETF has robots pick investments
Trevor Hunnicutt – Nasdaq
A new fund will let robots pick stocks.
The AI Powered Equity Exchange-Traded Fund, which launched in the United States on Wednesday, will use IBM Corp’sWatson artificial intelligence technology to pick several dozen stocks with potential to beat the market, the fund’s backers say.
Fears over crowded ‘long Nasdaq’ trade grow
Adam Samson – Financial Times
Investors have once again pointed to bullish bets on the Nasdaq Composite as the most crowded trade on Wall Street, according to a new survey that underscores the rapid gains posted this year by US technology stocks. Almost 30 per cent of asset managers in a monthly Bank of America Merrill Lynch poll said “long” trades on the Nasdaq were the most saturated, the fifth time this year the tech index has topped the list.
Waiting on a Correction? Add Trailing Stops
Kerry Given – MoneyShow
It is difficult to tune in any financial program without hearing someone warning of an imminent market correction. Does that mean conservative investors should be moving to the sidelines and going largely to cash? Let’s apply to solid analysis to this question rather than falling for the emotional plea of the doomsday gurus.
Don’t Forget The VIX’s Siblings: SKEW And Implied Correlations
We hear a lot about the VIX and how volatility is low, but we rarely hear about the VIX’s siblings: the CBOE SKEW Index and the CBOE Implied Correlation Index. This is a shame because they are certainly worth listening and paying attention to. All three are based on options on the S&P 500 and its constituents.
Three reasons the next crash may be worse than 1987’s
Howard Gold – MarketWatch
Thirty years ago Thursday, the U.S. stock market had its worst day ever. On Oct. 19, 1987, the Dow Jones Industrial Average lost 508 points, 22.6% of its value.
It was early in my journalism career and I remember the fears that, like Oct. 29, 1929, it would lead to a second Great Depression.
CFTC Issues A Primer On Virtual Currencies
On October 17, 2017, the Commodity Futures Trading Commission issued guidance for virtual currencies via LabCFTC in the form of a document titled, “A CFTC Primer on Virtual Currencies.”
In broad terms, the primer identifies itself as “an educational tool regarding emerging FinTech Innovations.” The primer goes on to say that “it is not intended to describe the official policy or position of the CFTC, or to limit the CFTC’s current or future positions or actions,” and, indeed, “the CFTC does not endorse the use or effectiveness of any of the financial products” listed in the document. Furthermore, a piece of fine print on the face of the report imparts to the reader that “LabCFTC has no independent authority or decision-making power, and cannot independently provide, or create an expectation for, legal or regulatory relief.”
The Bitcoin Conundrum: What the Heck Is it Anyway?
Crystal Kim – Barron’s
As governments, central banks, and CEOs continue to debate the viability of Bitcoin as an investment, the investment community is moving on.