Observations & Insight
The Case for More Clearing of Treasury Securities
In this video, DTCC Managing Director and Head of Global Public Policy Mark Wetjen reflects on the Treasury flash crash of 2014 and lays out why more Treasury trading activity should involve a central counterparty.
Watch the video »
Gatsby Raises Another $1.5M for its Commission-Free Options Trading Platform
In a recent survey of those with trading accounts, E-Trade discovered that 40% of millennials that were surveyed traded options at least once a month, making them 60% more likely to trade options than their Generation X counterparts. However, there’s still untapped market potential to attract more activity to the options market as presently option activity among the bulk of retail investors is still not widespread. Gatsby has answered the call and puts options into the spotlight.
****SD: Keep an eye on Gatsby. As I understand it, the platform will only allow for the purchase of options, not the sale, which drastically simplifies all things having to do with margin.
TNS Expands its Managed Financial Services Portfolio with the Acquisition of NetXpress
Transaction Network Services (TNS) today announced the acquisition of Chicago-based trading technology provider NetXpress, in a strategic move that augments its financial services portfolio with ultra-low latency exchange connectivity at 11 key global locations across North America, Europe, and Asia.
Credit Suisse profits rise 45% as traders outperform peers; Results are likely to ease pressure on CEO Tidjane Thiam to make further cutbacks to the bank’s sales and trading division
Nell Mackenzie – Financial News
Net profits at Credit Suisse rose 45% in the second quarter, as robust wealth management performance and a standout three months for its traders countered a slump in traditional investment banking. The bank said on Wednesday that net profits for the period were 937m Swiss francs. Group revenues of CHF5.5bn were flat compared with a year ago, but the absence of restructuring costs helped lift the profit figure.
****SD: Other sources with the story are the FT, CNBC, the WSJ and Bloomberg.
New ETF With $100 Million Feeds Craze for Steepening Curve
Justina Lee – Bloomberg (SUBSCRIPTION)
The passive boom is weaponizing risky bets on the gap between short- and long-term interest rates as central banks kickstart a fresh era of stimulus.
Lyxor Asset Management, the third-largest issuer of exchange-traded funds in Europe, is launching an ETF on Thursday that gains when the two- to 10-year portion of the Treasury curve steepens.
****SD: “Offering a derivatives strategy to amplify gains seven times, it’s set to be the first of its kind in the region – and the largest riding gyrations in global yield curves, as tracked by Bloomberg.”
Hedge funds and currency traders see no-deal Brexit as a ‘free lunch’
Adam Bienkov – Business Insider
Boris Johnson’s push towards a no-deal Brexit is a “free lunch” for hedge funds and currency traders trading off the collapse of the pound, the former chairman of Goldman Sachs’ Asset Management Sir Jim O’Neill has said.
The UK government’s official spending watchdog has previously warned that a no-deal Brexit would shrink the UK economy by 2% in 2020 and trigger a recession.
****SD: What type of lunch though? Hot dog cart or sit down restaurant?
What the Options Markets Are Saying About the Fed
On this edition of “Options Insight,” Headwaters Volatility’s Matt Rowe discusses what options markets are pricing in about the prospects for Federal Reserve monetary policy with Bloomberg’s Abigail Doolittle on “Bloomberg Markets: The Close.”
Exchanges and Clearing
Nasdaq Deploys AI to Detect Stock-Market Abuse; Exchange operator is testing new technology that could detect novel forms of U.S. market manipulation
James Rundle – WSJ (SUBSCRIPTION)
Nasdaq Inc. is testing an artificial-intelligence surveillance system this summer to monitor its U.S. stock market and spot previously unknown methods of illegal equities trading.
HKEX: Trading In Securities And Derivatives Markets Terminated Due To Issuance Of Typhoon Signal No. 8
Hong Kong Exchanges and Clearing Limited (HKEX) announced that trading in the securities market, including Stock Connect trading, and derivatives markets will be terminated at 1:55pm, due to the issuance of Typhoon Signal No. 8.
Refinitiv – What Other Choice Does the London Stock Exchange Really Have?
Steve Grob via Tabb Forum
Harvesting and monetizing data is fast becoming the primary business goal of large technology firms. That is exactly what the LSEG, and its competitors, have become.
****SD: This week’s episode of “The Spread” covered the potential tie-up.
CME Group Inc. Reports Second-Quarter 2019 Financial Results
CME Group Inc. (CME) today reported financial results for the second quarter of 2019.
The company reported revenue of $1.3 billion and operating income of $699 million for the second quarter of 2019. Net income was $514 million and diluted earnings per share were $1.43. On an adjusted basis, net income was $632 million and diluted earnings per share were $1.76. Financial results presented on an adjusted basis for the second quarter of 2019 and 2018 exclude certain items, which are detailed in the reconciliation of non-GAAP results.
SGX Reports FY2019 Net Profit Of S$391 Million
Singapore Exchange (SGX) today reported FY2019 net profit of S$391.1 million (S$363.2 million), its highest net profit in 11 years. Revenues were also the highest since listing at S$909.8 million (S$844.7 million).
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend The Nasdaq Options Market LLC Pricing at Options 7, Section 3 Titled “Nasdaq Options Market – Ports and Other Services.”
Nasdaq SEC filing
In connection with this migration, Participants will request new FIX Ports, CTI Ports and FIX DROP Ports during the month of August, which are duplicative of the type and quantity of their current ports, at no additional cost to allow for testing of the new ports and allow for continuous connection to the match engine during the transition period. 6 For example, a NOM Participant with 3 FIX Ports, 1 CTI Port and 1 FIX DR OP Port on August 1, 2019 could request 3 new FIX Ports, 1 CTI Port and 1 FIX DROP Port for the month of August 2019 at no additional cost.
Half Year 2019 Results: EEX Group On Track For Continued Global Growth -Significant Volume Increases In Power, Natural Gas And Freight
In the first half of 2019, EEX Group increased trading volumes across the majority of its markets, thereby continuing its global growth story. In the power, gas and freight markets, volumes grew significantly. Trading volumes in the Agricultural market also developed positively while the Group posted a decline in the market for emission allowances.
Australian market could look to cash-settled derivs – panel
James Thursfield – Global Investor Group (SUBSCRIPTION)
Panellists at FOW Trading Sydney discussed the benefits of cash-settled derivs in commodity markets
Cboe chases late-day trading with alternative to closing auctions
Samuel Agini – Financial News
Cboe Global Markets is making a play for the billions of euros of shares bought and sold after markets close — a move that will extend the European trading day.
The Chicago-based exchange has plans to launch a platform called 3C as an alternative to trading in so-called closing auctions, a five-minute period after markets close in which official prices of stocks are set.
****SD: Press release on the auction here.
Regulation & Enforcement
SEC Seeks to Muffle a Mystery Troll With Crackdown on Fake News
Matt Robinson – Bloomberg (SUBSCRIPTION)
Regulator hiring reputation expert to suppress ‘false’ content; Move comes after SEC enforcers were targeted by online attacks
Elon Musk mocked it as the “Shortseller Enrichment Commission.” Billionaire Mark Cuban said it’s “useless.” Hedge fund legend Leon Cooperman called it “abusive.”
Chairman Tarbert Announces Key Executive Leadership Appointment; Clark Hutchison to Serve as Director of the Division of Clearing and Risk
U.S. Commodity Futures Trading Commission Chairman Heath P. Tarbert today announced the appointment of Malcolm Clark “Clark” Hutchison III to serve as Director of the Division of Clearing and Risk. In his role, Mr. Hutchison will be responsible for the CFTC’s supervision of derivatives clearinghouses and their members, including oversight of clearing processes through risk assessment and surveillance.
Options Announces New Global Managed Colocation Facilities in Canada with Equinix TR1, TR2, and TMX Markham (MCC)
Business Wire via Yahoo
Options, the leading provider of market data and colocation services for trading firms, today announced additional colocation coverage in Equinix Toronto (TR1 & TR2) and TMX Markham (MCC). Options’ clients colocated within these top tier exchanges can now avail of low-latency exchange feeds, order entry access and managed hosting directly at source.
Pre-Fed, UBS Prefers Downside Bets as Goldman Warns of Noise
Joanna Ossinger, Bloomberg via Yahoo
In case anyone hasn’t heard, the Federal Reserve has a rate decision at 2 p.m. New York time Wednesday. Markets are pricing in a quarter-point cut with a small chance of a half-point move, while President Donald Trump is seeking a “large” cut. Read about how if Fed Chair Powell gives an inch, bond traders may ask for a mile.
Quedex becomes first regulated crypto-centric futures and options exchange
Quedex, a crypto-centric futures and options exchange based out of Gibraltar, today announced that it was granted a Distributed Ledger Technology (DLT) Providers licence for trading of cryptocurrency derivatives and for custody of cryptocurrencies by the Gibraltar Financial Services Commission (GFSC) making it the first regulated entity of its kind globally. The DLT licence follows a 15-month-long process in which Quedex, advised by PRT Lawyers, worked together with the Gibraltar authorities in order to meet all the conditions required.
Why billionaires lost more money than millionaires in 2018: Report
Taylor Nicole Rogers – Business Insider
Last year’s stock market slump was hard on many investors’ portfolios, but it hit one group particularly hard: billionaires.
Billionaires across the globe lost 7% of their collective net worth in 2018 due to market instability at the end of the year, Wealth-X found in its 2019 Billionaire Census. Slowing economic growth across the globe and trade tensions also contributed to the wealth drop, according to Wealth-X.
MSCI chief looks beyond traditional indices for growth
Robin Wigglesworth – Financial Times (SUBSCRIPTION)
When in 1996 Henry Fernandez asked Morgan Stanley’s investment bankers to estimate the value of its modest indexing joint venture with Capital Group, he was told that the division he ran was probably worth no more than $20m.
He believed this was far too pessimistic. The Mexico-born, Nicaragua-raised and US-educated financier had become enamoured with the technology world after doing an MBA at Stanford in the early 1980s, and thought the joint venture had the potential to become not just a provider of emerging market indices — its original purpose — but the Microsoft of the investment industry, supplying asset managers with tools and services they might need.
Russell US Equity Indices Reconstitution Results
The Russell US Indices were reconstituted at close of trading on Friday, June 28, concluding an annual seven-week process during which FTSE International Ltd, the index administrator, made rule-based changes to their composition to ensure they remain accurately reflective of market conditions. The newly rebalanced Russell US Indices took effect on Monday, July 1, 2019, and will remain in place for 12 months.