Historic Risk Management Rules and Practices Go Live on March 1, 2017 in Leading Markets
Seyfarth Shaw LLP – JDSupra
For the first time in the history of derivatives, regulators in leading markets will require assets to collateralize many derivatives which are not settled in a regulated clearinghouse.
It is not possible to overstate the significance of this global regulatory development, which began to take effect in the United States on September 1, 2016, and will continue to apply in 2017 in several industries domestically and across national borders.
Clearing houses not “too big to fail” – CFTC
Julie Aelbrecht – Futures & Options World
CFTC chairman argued against any effort to move euro clearing into Europe
US Commodity Futures Trading Commission chair Timothy Massad has said the events following the surprise outcome of the UK’s referendum on Brexit earlier this year show clearing houses are not the new “too big to fail” institutions. “With respect specifically to the derivatives reforms, some argue we have simply moved risk from banks to clearing houses, and created new systemic points of failure. I do not believe this is true. In fact, I believe there is clear evidence the reforms are working, and the swaps market and financial system are stronger and more resilient as a result. There are many ways to see that. One is to consider Brexit as the most stressful event in the derivatives markets since implementation of these reforms,” Massad said in a speech before the Economic Club of New York on Tuesday.
Goldman Tells Stock Pickers to Rejoice as Correlations Decline
Adam Haigh – Bloomberg
For the world’s underperforming stock pickers, Donald Trump’s election win offers a chance at redemption.
ICAP-Tullett Prebon Deal Nears Completion
The integration of ICAP Group’s voice dealing business into inter-dealer broker Tullett Prebon and the spinoff of ICAP’s remaining technology business as the NEX Group are almost at a close as ICAP expects to delist ICAP and list Newco shares on the London Stock Exchange beginning December 15.
easyMarkets Launches CBOE Volatility Index as Tradable CFD
Markets move on volatility, which is a key factor and measurable attribute utilized by many traders and brokers. As a central feature of many trading strategies, many brokers and individuals orient volatility to the Chicago Board Options Exchange (CBOE) Volatility Index (VIX), for a better snapshot on how dynamic market conditions are at a given interval.
FIS Group Market Insights Alert Paper on Investment Implications of Trump’s Current Proposed Policy Intentions
FIS Group, a manager of U.S. and global developed, emerging and frontier markets equity portfolio strategies, today issued its latest Market Insights Alert which looks at how surging populism led to the unexpected victory of President-Elect Trump and the investment implications that will follow.
****SD: Bloomberg had a piece this week about how research notes, in an effort to hook readers, are more amusing than in the past. This one from FIS is titled “I’m Mad as Hell and I’m Not Going to Take This Anymore – The Revenge of the Precariat Part Two.”
Election Results after One Month
Steve Claussen – OptionsHouse
This week marks one month since the surprising/shocking victory by Donald Trump. Not only did the election result surprise many political prognosticators, but more importantly for self-directed active investors, the stock market’s rally which has occurred post-election, has also shocked and surprised many market talking heads. The overall market as measured by the futures on the S&P 500 is now higher by 178 points from the depths of the election night lows of 2028.50!
One Historic Lens Says Trump Stock Market Lovefest Just Starting
Lu Wang – Bloomberg
The post-election advance in U.S. stocks fits into a pattern at the beginning of presidential cycles, and if history is any guide the rally greeting Donald Trump is only halfway done. The S&P 500 Index has climbed about 3 percent since the Republican’s victory. The gain is in line with what Renaissance Macro Research LLC calls the “honeymoon period” for new parties, during which the market usually rises in the first few months following an election.
****SD: Bang, zoom! Straight to the moon!
Bats Reports Solid Volume Across Asset Classes in November
Bats Global Markets, Inc. (Bats: BATS) today reported November data and highlights, including $30.4 billion average daily notional value traded on the Hotspot FX platform, one of the strongest months of 2016 for the segment. During the month, Bats also announced the successful completion of its acquisition of Javelin SEF, a deal which further broadens the FX instruments available to trade on Hotspot.
Nasdaq/ISE Announces Regulation SCI BC/DR Testing
In an effort to bring consistency for Regulation SCI DR Participation for ISE and Nasdaq participants, ISE, ISE Gemini and ISE Mercury will adopt rules similar to PHLX Rule 926, Nasdaq Rule 1170 and BX Rule 1170 in place of the existing Rule 803, Supplementary Material .02. A rule change has been filed with the Securities and Exchange Commission.
CME Group Executive Joins Chamber Of Digital Commerce Board Of Advisors
The Chamber of Digital Commerce has appointed Rumi Morales to its distinguished Board of Advisors.
NCDEX live with new trading and surveillance software, NextGen
India-based National Commodity and Derivatives Exchange (NCDEX) has launched NextGen – a new trading and surveillance system developed by MillenniumIT (a trading tech subsidiary of London Stock Exchange).
Regulation & Enforcement
Special Report: CFTC Calls for Another Round of Comment on Position Limits
On Dec. 5, the Commodity Futures Trading Commission voted unanimously to reissue rules establishing federal position limits on speculative trading in commodity futures and swaps for another round of public comment. The reproposal will be open for public comment for 60 days after publication in the Federal Register.
Ex-U.S. Attorney Yang being considered for SEC chair: source
Steve Holland and Sarah N. Lynch – Reuters
Former U.S. Attorney Debra Wong Yang is being considered to chair the Securities and Exchange Commission in the Trump administration, a source familiar with the situation said on Tuesday. Yang is a partner at Gibson Dunn & Crutcher in Los Angeles where she represents corporate defendants in white-collar crime investigations and compliance matters.
Exclusive: Deutsche Bank suspends rates trader for using WhatsApp
A Deutsche Bank rates trader has been suspended after asking a trading counterparty to join a WhatsApp group, according to a source familiar with the matter. The incident happened two weeks ago, and the bank’s internal investigation is yet to close, the source told Business Insider. The WhatsApp group was formed to discuss views on interest rates, the person said.
****SD: Kindergarten for blossoming rates traders should not include “sharing is caring” in the curriculum.
A hot investing startup wrote an open letter to Donald Trump, and is setting the stage for a battle on Wall Street
Rachael Levy – Business Insider
Betterment, a startup that provides automated investing in index funds, is asking President-elect Donald Trump to leave in place a rule that’s meant to protect Americans’ retirement money from conflicted financial advisors.
Investors Are Starting To Hedge Their Bets On Financials
ETF Daily News
Analyst Paul Weisbruch in his daily fund flows update notes some unusual options activity surrounding a popular financial ETF, along with some very bullish bets taking place in the wider markets.
Use the MACD, And Moving Average Indicators To Perfection!
Michael Batnick – The Irrelevant Investor
This was the subject line of an email that came into my inbox tonight and it’s something I’ve been thinking about for a while. No, not how to use MACD to perfection, but how investors think about signals and indicators.
Your Guide to Option Pricing
The options market is complicated, and even figuring out what an appropriate premium for options contracts should be can be tough. The most obvious factor in option pricing is how the strike price relates to the stock price, because that determines the intrinsic value of the option. However, time value and volatility also play a role in establishing option pricing, with the time left until the expiration date and the amount of price fluctuation in the underlying stock also playing key roles. Below, we’ll go into some of the basics of option pricing.
Conquering Chaos: Trump’s Longer Term Effect on Interest Rates and Trading in Swap Futures
Trading Technologies Blog
The following is a guest post by Christopher Rodriguez, chief marketing and relationship management officer of Eris Exchange, and Geoffrey Sharp, Eris’ managing director and head of sales. Eris is a U.S. futures exchange that offers listed interest rate swap futures.
Some traders were more prepared than others for the results of the U.S. presidential election in November. Higher implied volatility, changes in risk premium and increases in interest rates resulted from Donald Trump’s surprise victory. Equity markets plunged then rallied. All told, the month of November was remarkable for traders. Heading into Thanksgiving, 10-year Treasury Note Yields reached highs not seen since the middle of 2015. The bond sell-off tapered toward month-end, but the forwards predicted a more aggressively rising rate environment.
****SD: Conquering Chaos would be a good name for a medieval triptych.