Hedge funds shun risk-taking practice, as do their investors
David Walker, Investment Europe
The stereotype of a hedge fund manager is of a gambler on markets, a high risk taker. At the moment, however, the reality is flying in the face of that archetype.
Then you read industry biographies of years past, the picture is of managers betting big, all on ‘Black 27’ -or whatever number they chose at the time.
But there is ample evidence this ‘bet-and-bet-big’ picture is very, very far from the truth.
http://jlne.ws/QCwmJi VIX ETN Hits All-Time Low, In Single Digits As Contango Deepens
Richard Bloch, Seeking Alpha
For the first time ever, the Short-Term Volatility ETN (VXX) closed in the single digits, at an all-time low of $9.41 based on Friday’s close. That’s down 20% in the last month alone and down more than 50% in the last three months. The reason? A persistent contango in the market for volatility futures as the stock market has moved higher and higher.
http://jlne.ws/NkALnR Market corrections follow volatility
Brian Milner, The Globe and Mail
The European Central Bank proved last week that the right promises, coupled with some effective marketing, can accomplish as much as deeds when it comes to managing market expectations.
When ECB chief Mario Draghi finally unveiled his save-the-euro plan after weeks of hints and a widely leaked report to the European parliament, markets reacted with near-euphoria. Stocks and commodities climbed, Spanish and Italian bond yields fell to their lowest levels in five months and already low market volatility declined to levels typically associated with healthier economies and stable market conditions.
ExchangesMontréal Exchange launches virtual trading platform
Montréal Exchange Inc. (MX), a wholly-owned subsidiary of TMX Group Ltd. and Canada’s derivatives exchange, today announced the launch of its options trading simulator.
The virtual trading platform is an online and smartphone-compatible tool that enables individual investors to execute options trading strategies, enhancing their knowledge of both options and market dynamics. A tutorial for first-time users is available.
http://jlne.ws/QCFu0v Scrap-Steel Futures Debut on CME as Global Demand Gains
Joe Richter, Bloomberg
CME Group Inc. (CME), the owner of the world’s biggest futures exchange, is betting that a surge in demand for recycled steel and price swings will drive trading in its new scrap futures.
The contract will be the first ferrous-scrap futures available to the U.S. steel industry, according to Chicago-based CME Group. The market opened yesterday on the company’s Globex electronic platform…
Trading in iron-ore swaps and options rose to a record 17.8 million tons in August as prices dropped to a two-year low, The Steel Index, a publisher, said Sept. 4.
http://jlne.ws/P7s92t SGX debuts OTC Iron Ore and FFA Options
Louis Law, The Business Times
The Singapore Exchange (SGX) said on Monday that it had sucessfully launched its new OTC Options suite for SGX Iron Ore and SGX Forward Freight Agreements (FFA).
http://jlne.ws/NkzEEB HKEx defends timing of LME acquisition
Jeremy Grant, Financial Times
The Hong Kong exchange has dismissed investor concerns over the timing of its £1.4bn acquisition of the London Metal Exchange, indicating that the end of the commodity “supercycle” will have little impact on future returns from the deal.
Shareholders in the LME agreed to sell to Hong Kong Exchanges & Clearing in July, setting it on a course to attract more customers from China where demand for commodity hedging was predicted to grow rapidly because of the country’s appetite for metals and other commodities.
RegulationFSA ramps up technology to spot market abuse
Philip Stafford, Financial Times
The UK financial regulator is to upgrade the technology it uses to monitor trading on its markets as it looks to crackdown on market abuse conducted by computer algorithms.
The Financial Services Authority is planning to introduce software from Nasdaq OMX, the transatlantic bourse operator, that will review trades in equities, options, foreign exchange, over-the-counter products and options from early next year.
http://jlne.ws/Qzp10E Financial regulation isn’t fixed, it’s just more complicated
Kenneth Rogoff, The Guardian
Little has fundamentally changed since the 2008 financial crisis: legislation and regulation produced since have mostly served as a patch to preserve the status quo.
People often ask if regulators and legislators have fixed the flaws in the financial system that took the world to the brink of a second Great Depression. The short answer is no.
http://jlne.ws/NVJoab Fed policies, lack of confidence hurts economy
Bluford Putnam, CME Group
The Federal Reserve is feeling tremendous pressure to do more to stimulate a lackluster economy and encourage job growth, but unfortunately, there is little it can do now. In fact, the Fed’s quantitative easing efforts carry higher costs than are generally appreciated, CME Group Chief Economist Blu Putnam said.
TechnologySearching for a Speed Limit in High-Frequency Trading
Nathaniel Popper, The New York Times
TICKER tape: it’s an enduring image of Wall Street. The paper is gone but the digital tape runs on, across computer and television screens. Those stock quotations scurrying by on CNBC are, for many, the pulse of American capitalism.
But Sal L. Arnuk doesn’t really believe in the tape anymore — at least not in the one most of us see. That tape, he says, doesn’t tell the whole truth.