Observations and Insight

Spelling It Out: Esther Goodman’s Tips For Emerging Managers

When Esther and Mark Goodman took time off after departing Kenmar Group, the couple decided they wanted to help funds and managers grow their businesses.

The Goodman’s started Conyers Group, and now serve as directors for some funds, work with emerging managers and are also seeking to add their expertise to 40-act funds.

Esther Goodman, who spoke with John Lothian News editor-in-chief Jim Kharouf, said the potential for emerging managers is very positive – discretionary or technical – as long as they can differentiate themselves from the pack.

“I think the future is very bright for small managers, niche players, who are doing something very different than what’s out there today,” she said. “Anything except a technical trend following system. I just don’t think there is a lot of room today for building a big business as a long-term trend trader.”

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Lead Stories

Oplink options unusually active days before Koch deal
Saqib Iqbal Ahmed – Reuters
Optical networking device maker Oplink Communications Inc attracted well-timed bets in the options market days before the company said it was being acquired by a Koch Industries unit for $445 million in cash.
Oplink’s shares were up about 14 percent at $24.18 on Wednesday after it said that Koch Optics Inc would buy it for $24.25 per share.

Trading the Markets, Part 1: Feeling the Pressure
Bob Lang – CBOE Options Hub
There are many traders who do it for a living because they have a formula for success.  Each one has their own concoction of methods and a particular style that works for them, but I will tell you that most winning traders have a good plan but are flexible to change if needed.  Further, the most successful traders do not let outside factors influence their daily actions or routine, as they will add to the already difficult challenge of trading.  Success to me is not necessarily gaining a big stack, rather it’s about longevity and persistence.

Why No One Ever Forecasts Lower Volatility
Adam Warner – Schaeffer’s Investment Research
So I saw this rhetorical question go by on Twitter yesterday morning: “Has anyone ever forecast ‘less volatility’?”
Generally speaking, the answer is a resounding “no.” Anecdotally, nearly any time the topic comes up on TV, it’s always in the context of what could cause some sort of future market unrest. No one ever predicts the current calm will persist.

Swiss Franc Set to Turn Brazen From Boring Under Options Pricing
Lucy Meakin – Bloomberg
The Swiss franc’s price swings against the euro have diminished to a three-month low as it creeps toward the cap defended by Switzerland’s central bank since 2011. The options market indicates that’s about to change.
One-month implied volatility on the euro-franc, derived from options prices, climbed to 4.87 percent today, the most since September 2013. That’s about 3.20 percentage points higher than the currency pair’s volatility over the past month, and the biggest difference in almost 2 1/2 years.


Stock Exchange Technology Rules Get First SEC Upgrade Since 1990
Dave Michaels – Bloomberg
U.S. regulators required stock exchanges to show they can prevent technology disruptions under new rules intended to limit the frequency of malfunctions that have undermined investor confidence.
The Securities and Exchange Commission voted unanimously today to approve rules that will cover the Nasdaq Stock Market, the New York Stock Exchange and venues operated by Bats Global Markets Inc., as well as dark pools including those owned by Credit Suisse Group AG (CSGN) and UBS AG. (UBSN) The SEC will separately consider expanding the rules to brokers, including firms such as Citigroup Global Markets Inc. and Citadel Securities LLC that internally fill orders away from exchanges.

FIA Europe appoints new Head of Commodities
Press Release – FIA Europe
FIA Europe is pleased to announce the appointment of Christiane Leuthier as Head of Commodities.
Christiane joins today from Barclays investment bank, where she was Vice President in the bank’s legal department. She supported the EMEA commodities business in that role, with a particular focus on physical and financial commodities trading (in oil, gas, metals and emissions), regulatory change and documentation.

CBOE, C2 and CFE Trading Schedule for the Thanksgiving Holiday
Press Release – CBOE
CBOE Holdings, Inc. (NASDAQ: CBOE) announced the following trading schedule for Chicago Board Options Exchange (CBOE), C2 Options Exchange (C2) and CBOE Futures Exchange (CFE) in observance of the Thanksgiving holiday:

Regulation and Enforcement

SEC to approve new rules to tackle market glitches
Financial Times
Trading firms and exchanges are set to face heavier scrutiny from US regulators under fresh rules aimed at preventing market glitches that have triggered market chaos and seen investors lose hundreds of millions of dollars in a matter of minutes.
The Securities and Exchange Commission is expected on Wednesday to pass rules requiring certain market participants, including the Nasdaq and New York stock exchanges, to ensure their technology meets specific criteria, conduct routine testing of their systems and notify authorities in the event of market disruptions, Alice Ross and Gina Chon report in Washington.

Europe eyes longer respite for U.S. swaps clearers: source
Douwe Miedema – Reuters
The European Union will soon push back a deadline by which U.S. clearing houses need to comply with its rules, a source familiar with the matter said, taking the sting out of a dispute with America over how to regulate swaps.
The deadline will be postponed until June 15, 2015, from Dec. 15, said the source, asking not to be named. Reuters first reported in September that Brussels was considering a delay, but such a move was not a foregone conclusion.

Market Manipulation Probe Entangles Chicago Trading Firm
Matthew Leising – Bloomberg
Chicago proprietary trading firm 3Red Trading LLC and co-founders Igor Oystacher and Edwin Johnson were subpoenaed in a market manipulation probe by the Commodity Futures Trading Commission, as U.S. regulators intensify investigations of the practice of “spoofing.”
Spoofing occurs when traders place and immediately cancel orders as a way to illegally move prices in their favor. Regulators and exchanges have been enforcing rules against the practice since passage of the 2010 Dodd-Frank Act. The head of Panther Energy Trading LLC last month became the first person indicted under the law.


Fingerprints Of A Short-Term Market Top
Dwaine van Vuuren – Investing.com
The S&P 500 has rallied sharply since the 15th October bottom, recovering all her losses in a shorter time than it took to incur them. It was a very rare display of the opposite behavior to the norm where “the bull climbs the staircase and the bear comes down the elevator”, since in this case, the bear came down the elevator but the bull climbed up on a rocket. The question that now naturally arises is if this rally has gone too far too fast. In this technique note, we wish to point out the reliable signs of intermediate term market-tops to look out for to manage trading risk or a hedge strategy.


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