Hints of Fear in Bank Stock Options Ahead of Earnings
Gunjan Banerji – WSJ
As earnings season kicks off this week, the options market is signaling that a pause may be looming for the euphoric rally in bank stocks. Since mid-December, investors have boosted the number of bearish options on financial shares at a faster pace than for bullish contracts—a reversal from the weeks immediately after the U.S. election.
****SD: Well, there are higher expectations to beat, right? Successes already baked in, etc.
Chicago’s vast exchanges have got their eyes on retail FX customers
Andrew Saks-McLeod – FinanceFeeds
As CBOE’s $3.2 billion acquisition of BATS Global Markets draws nearer, it is clear to see an interest in massive mergers between firms that have an aligned interest in taking the retail trading sector by storm and placing it on exchange
****SD: “The same thing we do every night, Pinky – try to take over the world [of retail forex trading].”
Maker-Taker Needs To Go
Themis Trading Blog
Congratulations to our friends at IEX for reaching the 2% market share milestone yesterday. As you all know by now, we are big fans (and participants) of IEX and continue to root for their success. While their speed bump is usually what folks talk about when they mention IEX, we think that their pricing structure is one of their most important features. IEX has no membership, connectivity or market data fees. But more importantly, they have an unconflicted, flat rate fee schedule. For non-displayed liquidity, the transaction fee for brokers is $0.0009/share regardless if you make or take liquidity. For displayed liquidity, it is currently FREE to make or take liquidity.
Binary options firm Banc De Binary says winding down operations
Tova Cohen – Reuters
Banc De Binary, one of the biggest and best-known providers of online trading in binary options, which allow investors to bet on short-term moves in financial assets, said it is winding down its business, citing regulatory pressures.
How Trump’s presser threatened to wreck his own stock-market rally
On Wednesday, President-elect Donald Trump’s first news conference since July didn’t deliver fresh insights into the billionaire’s policies, but it did manage to whipsaw Wall Street stocks.
****SD: Every single time he opens his mouth markets will move. Regardless of politics, salivate at the trading opportunities. The Financial Times has more on the presser here.
Yen Hedging Cost Jumps to Three-Year High on Fragmented Forecast
Vassilis Karamanis – Bloomberg
As analysts spar over the yen’s direction this year, investors are paying the price. The cost to hedge against fluctuations in the Japanese currency over a year using options has surged to the highest level in more than three years amid a lack of consensus on where it’s headed. Global banks’ predictions for the yen in a Bloomberg survey range from a call for a 14 percent rally from now through 2017 to that for a 9 percent slump.
Perils of the Icarus Trade as the world runs short of dollars
Ambrose Evans-Pritchard – The Telegraph
Bank of America calls it the Icarus Trade. Global stock markets will surge by another 10pc in a parabolic ‘melt-up’ this quarter, akin to the final stage of the dotcom boom. This will be followed by a mirror ‘melt-down’ later in 2017 as the US Federal Reserves squeezes global liquidity, and rising bond yields puncture the Trump reflation trade.
CBOE Vest Launches CBOE Vest S&P 500 Enhanced Growth Strategy Fund (ENGIX)
CBOE Vest, an investment manager focused on Target Outcome Investment strategies, today announced it has launched the CBOE Vest S&P 500 Enhanced Growth Strategy Fund (ENGIX). The fund is designed to track the CBOE S&P 500 Enhanced Growth Index Balanced Series (SPEN).
ICE Endex Receives CFTC Authorisation as Foreign Board of Trade
Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced that the CFTC has issued an Order of Registration to ICE Endex giving it approval as an authorised Foreign Board of Trade.
Moscow eyes US liquidity with CFTC application
Julie Aelbrecht – Futures & Options World
Russian exchange group has applied to be a US Foreign Board of Trade
The Moscow Exchange has applied to the US derivatives regulator to be recognised as an equivalent foreign exchange, part of the Russian market’s plan to attract more overseas liquidity. The Russian exchange giant has applied for regulatory approval of the US Commodity Futures Trading Commission (CFTC) for its RTS 50 index contract and the USD-Ruble contract.
Nasdaq December 2016 Volumes, 4Q16 Est. Revenue Capture
Nasdaq (Nasdaq:NDAQ) today reported monthly volumes for December 2016, as well as quarterly volumes and estimated revenue capture for the quarter ending December 30, 2016, on its investor relations website.
Regulation & Enforcement
J.P Morgan unit fined for overcharging CME traders
Global Investor Magazine
US watchdog CFTC has fined a unit of J.P. Morgan $900,000 for overcharging customers trading on derivatives exchange CME.
What Wall Street wants from Trump
Ben McLannahan and Barney Jopson – Financial Times
When President George W Bush embarked on a drive to loosen financial rules in 2003, two of the top US bank regulators posed for a photo with industry lobbyists. They stood behind a stack of papers tied with red ribbons, four of them holding garden shears. Another held a chainsaw.
FIA supports House bill reauthorizing CFTC
FIA president and CEO Walt Lukken sent a letter to Congressional leaders today in support of H.R. 238, the Commodity End User Relief Act.
Buy-side faces tough year of collateral reforms
Ted Leveroni, chief commercial officer at DTCC-Euroclear Global Collateral – Futures & Options World
If you’re in the over-the-counter (OTC) derivatives market the chances are that early 2017 is going to present some considerable challenges for you, especially if you’re on the buy-side. Some of the tasks will be new, some more familiar, but in all cases they will be tackled most effectively with one eye on the long-term outcome.By now of course, the OTC derivatives market is no stranger to the tactical and strategic challenges of meeting regulatory compliance deadlines whilst getting on with business. Since the US was first out of the blocks in responding to the G20 reform mandate via the 2010 Dodd-Frank Act, new rules on reporting, clearing and related processes have become a constant presence.
Jury Verdict In “Spread Bet” Insider Trading Case: A Reminder Of U.S. Long-Arm Regulatory Risk
Daninel Hawke, Arnold & Porter Kaye Scholer LLP – Mondaq
Trading firms in the United Kingdom and elsewhere outside the United States should continue to monitor ongoing efforts by U.S. regulators to assert long-arm jurisdiction over their trading activities. That’s the implication of a jury verdict recently obtained by the U.S. Securities and Exchange Commission (SEC) in SEC v. Sabrdaran et al. against a U.K.-based trader who used spread bets to engage in insider trading in violation of the U.S. securities laws.
Getting the 2017 Party Started
Meredith Kelley Zidek – CBOE Options Hub
The cliffhanger last time involved the $6.50 put for UVXY expiring this Friday, January 13th. I had sold twenty contracts on January 4th for premium received of $0.18 each. It turns out that I got nervous about this put when UVXY touched 6.57 later that day. I knew I had time, but I also believed that the nature of UVXY was not on my side, and I began plotting to trade out of these options and eventually replace them with more advantageous ones.
Outlook for 2017: Paradigm Shift
We view Donald Trump’s ascendancy to the Presidency of the U.S. as confirmation of a political and economic paradigm shift that started with Brexit but is likely to continue for the foreseeable future, including elections across Europe in 2017. Consistent with this view, we believe that there are four major potentially secular changes that all investment professionals must consider: fiscal stimulus over monetary, domestic agendas over global ones, deregulation over reregulation, and a broadening of outsized volatility from the currency markets to include global interest rate markets.
33rd Annual CBOE RMC Set for March 8 – 10
CBOE Options Hub
As we turn to a New Year, we all look forward to certain things. For me, near the top of that list is the spring edition of CBOE’s Risk Management Conference (CBOE RMC). We now have three versions of RMC with the US version taking place in a warm weather venue each spring for the past 32 years. The 33rd Annual CBOE RMC will be held in Dana Point, California at the Monarch Beach Resort from March 8th to March 10th.
****SD: In case you missed it.