Observations & Insight
CME Group Statement on Vanity Fair Article
CME Group regularly monitors its markets for suspicious activity. As it relates to the Vanity Fair article published on October 17, 2019, regarding activities in the E-mini S&P 500 futures contract, the allegations about the trading activity are patently false. These transactions were entered into by a significant number of diverse market participants.
*****Click HERE to read Bloomberg’s take on the story.~MR
IMF Growth Forecasts: World Economy Is Stumbling Toward Disaster
The Editorial Board – Bloomberg
The world’s finance ministers and central-bank governors gathered this past weekend in Washington and looked out at a global economy badly in need of treatment. Most say they understand the dangers, but that seems open to question. With the facts in plain sight and the need for policy changes all too apparent, they’ve shown little sense of urgency, and even less sign of action. Prodded by an unhinged U.S. administration, the world could be stumbling into the next global recession.
****”Should we lie down or put a paper bag over our head or something?” ~Douglas Adams, “The Hitchhiker’s Guide to the Galaxy”
Forget CDS: equity-default swaps return
Christopher Whittall – Reuters
A rare and risky form of derivative insuring against stock market crashes is staging a comeback, as banks dust off the pre-crisis playbook in search of ideas to present to yield-hungry investors.
JP Morgan is at the forefront of banks building products using equity-default swaps this year, according to people familiar with the matter, with investors earning money by selling protection against a sharp decline in the share prices of a broad range of companies.
Currency risks? U.S. corporates yawn
Saqib Iqbal Ahmed and Joshua Franklin – Reuters
Muted gyrations in foreign exchange markets has turned companies complacent about hedging currency risks, and as the third-quarter earnings season gets underway investors should brace for U.S. companies to report sizeable negative impacts due to the stronger U.S. dollar, analysts warned.
Violent protests in Chile hammer its markets, other Latam FX weaken
Susan Mathew – Reuters
Latin American currencies slipped against a steady dollar on Monday, while Chile markets tumbled after a state of emergency was declared in the capital city of Santiago following violent protests over the weekend.
With Opec powerless, the market dictates the price of oil
Nick Butler – Financial Times
Just four weeks ago, a drone attack was launched against the key Saudi oil facilities at Abqaiq on the Gulf coast. The attack was widely but inconclusively blamed on Iran or its allies, the Houthi rebels in Yemen. Several plants were damaged, taking some 5m barrels a day of oil supply off the world market.
Hedge funds hold fire after two weeks of heavy selling in oil: Kemp – Agricultural Commodities
John Kemp – Reuters
Hedge funds stuck with their existing bearish view on oil prices last week – leaving positions in petroleum broadly unchanged after two weeks of heavy selling at the end of September and the start of October.
Made in Taiwan: Seeds of Future Bond-Market Volatility
Mike Bird – The Wall Street Journal
Asia’s insurance behemoths, particularly in Taiwan, pose a growing risk to the U.S. corporate-bond market after a multiyear binge on greenback debt. Insurers in Asia’s more developed economies have promised returns far greater than their government-bond markets can provide, and they need to hold far more assets than their domestic bond markets can satisfy.
Exchanges and Clearing
Nasdaq BX Options Announces Re-Platform
We are excited to announce the start of the Nasdaq BX Options (BX) Re-platform. The Nasdaq Options team realizes that technology migrations are a big commitment for your organization and we thank you and your team for your commitment and future effort. Nasdaq believes that the enhanced suite of functionality BX will offer on the new platform will position participants for future success and growth while taking a first step toward conformity of APIs, Data Feeds, and functionality across Nasdaq equity derivative markets.
Bank of America says Merrill Edge platform will offer commission-free online stock, ETF and options trading
Ciara Linnane – MarketWatch
Bank of America BAC, said Monday its Merrill Edge Self-Directed platform will expands its offer of zero-dollar online trading, offering unlimited commission-free stock, exchange-traded fund and options trading. About 87% of trades on the platform were already commission-free through benefits offered to members of the company’s Preferred Rewards program, the company said in a statement. The news comes after Charles Schwab Corp. announced that it would offer fully commission-free trades to its clients, prompting other online discount brokerages to follow suit.
Regulation & Enforcement
Restricted Contract Markets for CME Rule 522 (Dual Trading Restrictions)
Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) has approved the following list of restricted markets for the implementation of CME Rule 552 (“Dual Trading Restrictions”). Effective immediately, the dual trading restriction has been removed from the 8th and 9th contract month position quarterly Eurodollar options.
Notice of Disciplinary Action: Capstone Investment Advisors, LLC
The related position component of an EFRP must be the cash commodity underlying the Exchange contract or a by-product, a related product or an OTC derivative instrument of such commodity that has a reasonable degree of price correlation to the commodity underlying the Exchange contract. The related position component of an EFRP may not be a futures contract or an option on a futures contract.
Deutsche Bank Weighs Job Cuts of at Least 10% in Rates Unit
Steven Arons and Nicholas Comfort – Bloomberg
Deutsche Bank AG is considering substantial cuts to the unit that trades interest-rate securities, a division that survived a large-scale pullback as part of the lender’s sweeping revamp in July. Chief Executive Officer Christian Sewing has concluded that it’s possible to reduce enough of the associated technology costs to outweigh the loss in revenue, according to people briefed on the matter. The bank will likely cut a low double-digit percentage of jobs at the business, which employs several hundred staff, said one of the people, adding no final decision has been made. A cut of 10% would translate into fewer than 100 jobs at risk.