Observations & Insight
Community Building: CME Europe’s Cees Vermaas Looks To Grow Asset Classes and Customer Base
Jim Kharouf – John Lothian News
Cees Vermaas, who took the reins as managing director and CEO of CME Europe in January, is in building mode. On his plate is a plan to expand the exchange’s product line-up and customer base to become a broad-based European derivatives market.
“One of the mandates or objectives we set with the team was to build a community and build the only multi-asset class derivatives exchange in Europe.”
Today, the exchange lists energies ranging from natural gas to power to ethanol and agricultural products that include a euro-denominated cocoa futures contract and fertilizer futures. Vermaas, who spoke with JLN at the IDX Conference in London, said the goal is to have five or six asset classes by mid-2016.
S&P 500 Keeps Getting Stuffed at the Goal Line of a New Record High
Callie Bost – Bloomberg
The U.S. stock market can’t close the deal.
Gone are days when equities powered to records with ease — now, they’re breeding anxiety. For two months the Standard & Poor’s 500 Index has been stuck in a pattern of rising to the brink and then failing to break through, leaving investors without a fresh high for the longest stretch since 2013.
***SD: Go for it on fourth down!
U.S. jobless claims lowest since 1973 — leading index rises
Lucia Mutikani – Reuters
The number of Americans filing new applications for unemployment benefits last week dropped to its lowest level in more than 41-1/2 years, suggesting the labor market maintained a sturdy pace of job growth in July.
Other data on Thursday also offered an upbeat assessment of the economy. A gauge of future economic activity increased solidly in June and another measure suggested growth picked up slightly last month.
***SD: I’m always leery of these numbers. Are these cool jobs with opportunities for growth? Or just placeholders with little security that make the stats look nice? Last time job numbers were this “good,” you could graduate high school, get your foot in the door, work one place for 35 years, get your pension, white picket fence, two-and-a-half kids, golden retriever and that’s that.
Treasuries Track Yellen as Yield Curve Narrows for Seventh Day
Alexandra Scaggs – Bloomberg
The bond market is making adjustments toward Federal Reserve Chair Janet Yellen’s forecasts for interest rates.
Short-term Treasuries, which are closely tied to central bank policy moves, are underperforming longer-term debt for a seventh straight day. That would be the longest streak since early 2014, when the Fed was debating when to wind down its bond-buying program. Yellen said she expects to lift borrowing costs this year, with a gradual pace for subsequent increases, helping keep bond-market volatility low.
The markets have moved on from Greece, but investors are missing the big picture
Lee Smales – The Conversation
Investors may be forgiven for believing that all is currently well with the world. Access to cheap credit, a result of near zero interest rates and quantitative easing, has led to large increases in asset prices. House prices in major cities such as London, Hong Kong, and Sydney have reached levels that are unaffordable for many. Stock markets across the world are at, or near, all-time highs, despite the recent Greek-driven slumps. Even recent falls in the Chinese stock market have not wiped out all of the gains for 2015.
As a result, the Chicago Board Options Exchange Implied Volatility Index (VIX), commonly referred to as the “investor fear gauge”, is close to its lows. This indicates investors see a tranquil period ahead with low levels of market volatility and risk. As a result they are more likely to invest in risky assets such as stocks.
India’s VIX Index Caps Longest Stretch of Gains in Three Months
Santanu Chakraborty – Bloomberg
The benchmark gauge of India’s option costs climbed for a fifth day on increased demand for protection as investors awaited earnings from some of the nation’s largest companies.
Eurex Exchange’s equity index derivatives newsletter – July 2015
Welcome to our new equity index derivatives newsletter designed to keep you up-to-date with everything relevant for our equity index portfolio. It will, every quarter, provide you with important data and facts on volumes, open interest and more, covering the developments of the derivatives available on the most liquid global, European and national indexes. This issue gives you the latest information about equity index and volatility derivatives.
Market holds breath on Nasdaq NFX
Alice Attwood – Futures & Options World
Nasdaq hopes to capture 10% of the energy market in the next two years with its new energy exchange Nasdaq Futures (NFX) but is there space in the market for a new player?
The exchange group will on Friday unveil its long-awaited push into the energy market, launching with 26 products as it goes up against incumbents The Intercontinental Exchange and CME Group which dominate the US and European oil markets respectively.
The new designated contract market (DCM) will offer 26 products across futures and options on key energy benchmarks, including oil, natural gas and US power.
***DA: I would advise you to exhale, at least for now. If NFX is to succeed, it will not be overnight.
OptionsCity Expects Strong Interest for Nasdaq Energy Futures on First Day of Trading
Press Release – OptionsCity
OptionsCity Software announced that its clients will begin trading and market making in Nasdaq Futures (NFX) today, the first day products are available.
Nasdaq Reports Record Second Quarter 2015 Non-GAAP Results
Press Release – Nasdaq
The NASDAQ OMX Group, Inc. today reported results for the second quarter of 2015. Second quarter net revenues were $518 million, down 1% from $523 million in the prior year period, driven primarily by a $29 million negative impact from foreign exchange rates. On an organic basis, excluding the impact of foreign exchange rates and acquisitions, second quarter net revenues were up 3%, while across the non-trading segments, organic revenue growth was also 3%.
Nasdaq energy futures face liquidity challenge
Alexander Osipovich – Risk.net
As Nasdaq prepares to launch its new US energy futures exchange on July 24, traders say it may struggle to attract liquidity away from the two dominant incumbents, CME Group and Ice.
Data – Keeping the Financial Market Airborne
Martijn Groot – Futures & Options World
In this new era of stress testing, how many financial institutions risk being grounded by the financial equivalent of air traffic control for failing to meet the new, challenging risk requirements? The production of risk and stress data is no longer a one-off risk management exercise – it has to be anchored in core operations – but few financial institutions have amended their data management strategies accordingly. The truth is that new data reporting requirements are the final push for organisations that have resisted the need to radically overhaul strategies. From stress testing to meeting evolving client demands, institutions must attain control over the huge volumes of data – from historical to real time – now required both operationally within the back office and within the mid-office risk team.
Convergex Launches Buy-Write Algo For Equities, Options
Timothy Bourgaize Murray – WatersTechnology
Agency brokerage Convergex is offering a new ‘buy-write’ algorithm that will combine its existing advanced VWAP equity algorithm and Pulse options algorithms, allowing clients to electronically deploy a buy-write trading strategy.
Blockchain Trading Technology Is Coming to the Capital Markets, Greenwich Says
John D’Antona – Traders Magazine
Bitcoin is coming to the marketplace and now the financial trading industry is looking at ways to integrate the leading cyber-currency trading technology into their systems.
That’s according to market consultancy Greenwich Associates, who in their recent report, “Bitcoin, the Blockchain and Their Impact on Institutional Capital Markets,” examined the effect of integrating the new technology and how such integration might take place.
Can fixed income still serve as a defensive asset class?
Amanda White – Investment Magazine
Fixed income is a very busy asset class, says Andrew Morgan, portfolio manager at QSuper, and investors are asking a lot of it.
This was confirmed by a survey conducted by Investment Magazine, where fixed income was identified by investors as having seven roles: defensive, diversifier, income, liquidity, capital stability, return seeking and objective aware.
New IndexIQ ETFs Reduce Foreign Currency Exposure
Greg Greenberg – TheStreet
Investors confused as to whether or not they should hedge the currency exposure on their foreign stocks now have a solution. IndexIQ is launching a trio of ETFs that split the difference, said the fund provider’s CEO Adam Patti.
“We’ve found that the 50% hedged solution is the optimal solution because it provides 80% of your volatility reduction of the fully hedged solution and more consistent returns over time,” Patti said.
Options Update: How to Play SPDR S&P Homebuilders ETF (VIDEO)
BGC Partners’ Jared Woodard discusses his options play for the SPDR S&P Homebuilders ETF. He speaks on “Bloomberg Markets.”
Sol Palha – Investing.com
Over the course of the years, we have repeatedly stated (though probably not as much as many would like us to do) that companies use share buybacks to manipulate earnings. In the past, this gambit was not as prevalent as it is today. Currently, companies borrow money in contrast to using the cash they already have to repurchase their shares and use this modern form of alchemy to turn losses into profits or make moderate profits appear to be spectacular in nature. This bull has yet another bullock’s reason to run higher. We are now in the paradigm of lies and deceit. What thrives in such conditions? The truth; come on you know better than that. The answer is BS, with a capital B. The main thing driving this market higher is pure BS and BS is based on alternate reality. This is something the masses do not want to fathom or refuse to fathom. Given that, individuals have an innate capacity to conjure incredible amounts of BS, the driving force behind this market is not going to run out anytime soon.
The Financial Times was just sold to Japan’s Nikkei
Jason Karaian – Quartz
One of the business-media world’s most-persistent rumors has finally come true: the Financial Times has been sold. The business newspaper’s owner, Pearson, confirmed the sale to Japan’s Nikkei Inc., for GBP844 million ($1.3 billion) in cash.
FOW International Awards open for entries
William Mitting – Futures & Options World
The FOW International Awards 2015 are now open for entry.
The awards recognise the best and brightest in a range of industry categories from across the globe.
All details on the awards as well as hints and tips of entry can be found below.