Guessing games have added to volatility
Martin Sandbu – Financial Times
The Federal Reserve’s decision to keep interest rates on hold brings some much-needed release to the pent-up uncertainty in financial markets. It is also the right choice: the US economy is still far from building up sustained growth momentum, and inflationary pressures are more remote than in June. But if the past few months have shown anything, it is that the uncertainty around the Fed’s decision matters in its own right, beyond the exact rate the policymakers plump for.
Bitcoin Is Officially a Commodity, According to U.S. Regulator
Luke Kawa- Bloomberg Business
Virtual money is officially a commodity, just like crude oil or wheat.
So says the Commodity Futures Trading Commission (CFTC), which on Thursday announced it had filed and settled charges against a Bitcoin exchange for facilitating the trading of option contracts on its platform.
VIX Goes in Circles as Selling Volatility Hits Wall After Fed
Joseph Ciolli – Bloomberg Business
Traders trying to revive a favorite options trade were stopped in their tracks Thursday as Janet Yellen’s cautious words on emerging markets whipped up another round of volatility in U.S. stocks.
Optiver Hires Former Goldman Partner Boomaars as Europe CEO
John Detrixhe – Bloomberg Business
High-speed trading firm Optiver has hired former Goldman Sachs Group Inc. partner Jan Boomaars to run its European business.
Boomaars, who worked at Goldman for 21 years, will become Optiver’s European chief executive officer on Oct. 1, according to a statement on Friday. The role was previously handled by global CEO Paul Hilgers, who took over from Edwin van der Kruk.
JP Morgan cuts Chicago clearers including Flagler
Luke Jeffs – Futures & Options World
JP Morgan has parted ways with at least two clearing experts in Chicago including its former executive director of derivatives clearing sales Gary Flagler, marking the latest clearing departures from the US investment bank.
India’s VIX Posts Biggest Weekly Decline in 15 Months After Fed
Rajhkumar K Shaaw – Bloomberg Business
Indian equity-option prices slumped, sending their benchmark gauge to its steepest weekly loss in 15 months, as stocks advanced after the Federal Reserve left interest rates near zero.
Are VIX Bets Too One-Sided?
Adam Warner – Schaeffer’s Investment Research
Unless you first showed up a couple weeks ago, it’s been a somewhat ugly year. We sat in a seemingly endless range that ultimately ended with a thud.
So, it’s not that surprising that traders and investors have gotten a bit bearish and defensive lately. But the numbers have gotten a bit tilted recently.
NYSE responds to Rule 48 concerns
Matt Turner – Business Insider
The New York Stock Exchange is about to make a change to how it shares information with investors, after coming under fire from clients for how it handled stock market swings in August.
Exchanges Face Pressure to Disclose High-Speed Trader Perks
Silla Brush – Bloomberg Business
A top U.S. derivatives regulator is calling for the world’s biggest exchanges to explain publicly how they encourage high-speed trading.
Exchanges such as CME Group Inc. and Intercontinental Exchange Inc. should release more information about incentives and other financial perks they offer to lure certain traders to use interest rate, energy and other contracts on their markets, Sharon Y. Bowen, a member of the Commodity Futures Trading Commission, said in remarks prepared for a speech on Thursday.
Number of Foreign Trades on Tokyo Commodities Exchange Hits New Peak
Andy Traveller – Finance Magnates
The Tokyo Commodity Exchange (TOCOM), the largest and most diverse commodity derivatives trading venue in Japan, reported that it has hit an all-time high in the amount of foreign customer trades.
London Stock Exchange Investigates ‘Fat Finger’ Trade
Tommy Stubbington – WSJ
It’s a bad day for stocks, with markets across Europe jittery and in the red, prompted by uncertainty over the U.S. rate path and worries over the health of the global economy. But one trader may be having a worse time than most.
Regulation & Enforcement
“Deflategate” Judge Urges SEC to Investigate In-House Tribunal
Jean Eaglesham – WSJ
The “Deflategate” judge took some air out of the Securities and Exchange Commission’s defense of its in-house judges.
In a ruling Thursday, U.S. District Judge Richard Berman called on the SEC “fully to investigate” allegations of bias related to its in-house judges.
Brussels set to recognise another five overseas clearing regimes
Philip Stafford – Financial Times
Europe is set to recognise five more countries as having “equivalent” rules to oversee clearing houses as Brussels steps up efforts to smooth cross-border activity in derivatives. The European Commission is set to vote in the coming week on applications by Switzerland, Mexico, Korea, Canada and South Africa to have their rules for clearing houses deemed being of the same standards as those for clearing houses in the EU.
CFTC Official Calls for Greater Algo Controls
Sarah Krouse – WSJ
The U.S. Commodity Futures Trading Commission should consider further controls on algorithmic trading, including regulations concerning self-trading, Commissioner Sharon Bowen said Thursday.
U.S. Looking at Chicago Trader as Probe Over Fake Orders Widens
Keri Geiger and Matthew Leising – Bloomberg Business
Federal prosecutors are investigating whether a Chicago trader placed fake orders in an attempt to manipulate prices, said two people familiar with the matter, as the Justice Department broadens its effort to police the $30 trillion U.S. futures market.
CFTC Orders Bitcoin Options Trading Platform Operator And Its CEO To Cease Illegally Offering Bitcoin Options And To Cease Operating A Facility For Trading Or Processing Of Swaps Without Registering – In First Action Against An Unregistered Bitcoin Options Trading Platform, CFTC Holds That Bitcoin And Other Virtual Currencies Are A Commodity Covered By The Commodity Exchange Act
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Coinflip, Inc. d/b/a Derivabit (Coinflip) and its chief executive officer Francisco Riordan for conducting activity related to commodity options transactions without complying with the Commodity Exchange Act (CEA) and CFTC Regulations, specifically, by operating a facility for the trading or processing of commodity options without complying with the CEA or CFTC Regulations otherwise applicable to swaps or conducting the activity pursuant to the CFTC’s exemption for trade options. Coinflip is based in San Francisco, California, and Riordan resides in San Francisco.
Big fines for China stock cheats
China’s stock market regulator is preparing to slap heavy fines on 18 companies for “illegal market activities”, as it struggles to restore confidence after a months-long share price rout.
How to Use Options as Sentiment Indicators
Mark Fightmaster – Schaeffer’s Investment Research
When you’re trying to measure sentiment toward a particular stock or sector, options activity can offer valuable clues. Generally speaking, call-buying activity is viewed as bullish, while put buying is considered bearish in nature. In order to learn how options players are positioning themselves, it’s important to use the right tools. Here are a few key indicators that can offer guidance as you attempt to uncover contrarian trading opportunities.
Don’t fear Quadruple Witching Day
Deirdre Bosa – CNBC
Between the turmoil in China, oil price swings and more uncertainty from the Fed – volatility in the markets is soaring.
And to cap off the week – an occurrence that happens but four times a year – today is known as quadruple witching day.
When the VIX Breaks 20, Watch Out
Josh Selway – Schaeffer’s Investment Research
With the CBOE Volatility Index (VIX), it’s hard to say what constitutes a “normal” reading. Is studying the mean preferential, or should we look at the median instead? While that, among other VIX questions, is up for debate, one thing is for sure — as of Wednesday’s close, the VIX had finished above the highly watched 20 mark for 18 consecutive days. This is the longest stretch since 2012.