Observations & Insight

MWE Chicago 2016

MarketsWiki Education World of Opportunity Series 2016 Schedule Announced
4th Annual Education series will stop in four cities in 2016; CME Group returns as Global Premier sponsor

Do you want to help the next generation?

The 4th Annual MarketsWiki Education World of Opportunity series is coming to five cities in 2016, including Chicago on July 12th, 14th and 15th, New York on July 19th and London, Paris and Frankfurt in late October. Interns, new employees and anyone interested in learning more about the past, as well as present opportunities and careers in the capital and derivatives markets should attend. Registration for the Chicago and New York events is now open.

The goal of the series is very simple. We bring together industry professionals to share information, stories and ideas about our financial markets with the next generation – students and young professionals. With short, personal and insightful presentations, we educate, inspire and aim to attract these students to the financial markets.

Got a summer intern or young professional who would benefit from learning more about our industry? Send them our way.

The Chicago 3-session series will be held on July 12th and 14th at the CME Auditorium, 20 S. Wacker Drive, and July 15th at Trading Technologies, 222 S. Riverside. This year’s speakers include: Walt Lukken (FIA), Gerry Corcoran (RJO), Karen Wuertz (NFA), Peter Nabicht, Julie Holzritcher (CME Group), Kate Maehr (Greater Chicago Food Depository), Rumi Morales (CME Group), JJ Kinahan (TD Ameritrade), Drew Shields (Trading Technologies) and Jeff Levoff (DRW) among others.

New York
The New York 2-session series will be held on July 19th at the Nasdaq Marketsite at 4 Times Square, and will feature: Adena Friedman (Nasdaq), Kristin Boggiano (WIND), Jenny Knott (ICAP), Steve Gibson (Euclid Opportunities), Gary DeWaal (Katten Muchin Rosenman LLP), Bill Harts (Modern Markets Initiative), Neal Brady (Eris Exchange) and Kenny Polcari (O’Neil Securities) with more speakers to be named shortly.

We will continue this global series with events in Paris on October 25th, Frankfurt on October 27th and London on October 31st. Venues and speakers will be named soon.

The MarketsWiki Education World of Opportunity series was launched in Chicago in 2013. To date, we have had more than 100 speakers from the financial industry deliver presentations to almost 1,000 attendees. Send us your interns and young professionals – who will build the next generation financial industry.

You can find videos from all our events on the MarketsWiki Education YouTube channel

We thank the CME Group for being the Global Premier Sponsor of the series. We also thank the CBOE, OCC, Nasdaq, Barchart, Trading Technologies and The IFM for being event sponsors for the series.

Lead Stories

U.S. Lawmakers Add Fuel to Old Spat Between Brokers, Exchanges
New legislation is intensifying an old fight between two powerful forces on Wall Street: stock exchanges and brokers. So far, the brokers seem to be winning this battle. A bipartisan bill under development in Washington would weaken stock exchanges’ grip on a key part of trading: the data feeds that provide the backbone of the market. Brokers complain exchanges have abused their control of the services to pad their revenues. If passed, the legislation would give brokers a greater voice in overseeing those information sources and other critical features of the stock market.

A Computerized Trader Just Beat Banks in Top Currency Ranks
Computerized trading firm XTX Markets Ltd. has come from nowhere to dethrone major banks including Deutsche Bank AG in the rankings of the world’s biggest spot currency traders. The London-based proprietary trader is now the fourth biggest, accounting for 7.6 percent of spot foreign exchange — a subset of the overall currency market. It’s the first time an electronic specialist has displaced a bank in Euromoney Institutional Investor Plc’s annual survey.

****SD: However, Deutsche Bank is still top ranked in FX options.

Pete Najarian forecasts a pickup in volatility
CNBC “Halftime Report” trader Pete Najarian believes it’s time for investors to get defensive. During Tuesday’s session, the options guru added the ProShares Ultra VIX Short-Term Futures ETF to his model portfolio, a leveraged instrument used by traders to get exposure to volatility. In the past three months, as the market trended higher and volatility decreased, shares of ticker UVXY plunged nearly 70 percent.

High-speed traders: Don’t take our code
Futures & Options World
The clearest message from respondents to the consultation on Regulation Automated Trading (Reg AT), which closed on March 16 2016, is “hands off our computer code”, writes Dan Barnes. “For the most part what they put out in Reg AT are best practice rules that most high-frequency trading (HFT) firms already follow,” said Bill Hart, CEO for the Modern Markets Initiative, a lobby group that supports HFT and proprietary trading firms. “The one exception that we really take issue with is the idea that the source code that we use to run our trading systems should be available to regulators without a subpoena.”


Hong Kong’s Stock Exchange Aims to Launch First Yuan Benchmark Index
Hong Kong’s stock exchange wants to create a benchmark index for the yuan to try to spur offshore trading of the Chinese currency, which has suffered setbacks as China slowly liberalizes the flow of money in and out of the mainland.

****SD: In case you missed this news yesterday, this is a new article on the subject. The index is step one, next comes futures and options on the index.

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

SGX enters into exclusive discussions with the Baltic Exchange
Singapore Exchange Limited (SGX) wishes to announce that it has entered into an agreement with The Baltic Exchange Limited (Baltic Exchange) through which SGX will enter into exclusive discussions with the Baltic Exchange regarding a cash offer for 100% of the share capital of the Baltic Exchange (Transaction). This follows SGX’s announcement on 26 February 2016 that it had submitted a non-binding bid for the acquisition of the Baltic Exchange. The period of exclusivity will commence on 25 May 2016 and expire on 30 June 2016.

NYSE Governance Services and FTI Consulting Announce 16th Annual Corporate Law Firms Rankings
Press Release
Given the volatility that can occur during an election year, coupled with the current concerns on global economies and an ever-evolving regulatory climate, trusted outside legal counsel is of utmost importance to today’s CEOs, boards and general counsel. From industry-shaking technology advancements to the continued presence of activist investors, the need for expert legal advice and consulting has never been greater.

****SD: Sure, it’s not an options story, but everybody needs representation, right?

Regulation & Enforcement

Stock bourses will have to wait for commodity platforms: Sebi Chief
Business Standard News
Stock exchanges will have to “wait for some time” to start their own commodity derivatives trading platforms, Sebi (Securities and Exchange Board of India) Chairman UK Sinha said on Wednesday, as he stressed on the need to first strengthen the risk management framework for this entire marketplace.

SEC charges Pakistani man over bogus Integrated Device bid
A Pakistani man has been charged with fraud by the U.S. Securities and Exchange Commission for illegally trading Integrated Device Technology Inc stock options after submitting a bogus takeover bid for the chipmaker.

****SD: He made $425k in 30 minutes. Not too shabby, except for the whole legality thing. Press release here

Retail investors in India may get access to high-frequency trading
DNA India
In order to provide a level-playing field to retail investors vis-a-vis the large players, the Securities and Exchange Board of India (Sebi) is planning to bring in a high-frequency trade (HFT)-like feature for retail investors. The market regulator wants to create a level-playing field in the equity and commodity market for all types of investors. A senior Sebi official, who attended a recent meeting to discuss these issues, told dna, “Sebi would like to reduce the undesirable impact of high-frequency trade on the overall market. It may like to provide an HFT-like feature to retail investors with proper safeguards in the trading setup of exchanges.”


Mind your fungibles and plan to sidestep falling knives
The classic professional floor trader mantra is liquidity of product and ease of immediate exchange. It’s known in trader parlance as ”fungability”. When you open a trade, you want to be sure that once you move to close it, it will be done immediately without undue spread affecting your hard-earned profits. But, as we have seen all too often, markets suffer crisis moments which economists describe as liquidity spirals.

Bearish Is The ‘New Black’
Sometime in late February becoming Bearish became the ‘new black’. As a long time contrarian I tend to spend more time arguing against overly bullish behavior and condoning caution. For the past several months, it seems as though bearishness and pessimism has become so mainstream that I have been on the other side of that argument and warning about a possible squeeze.

Options Insight: Is the Dollar Gaining Strength? (VIDEO)
Jim Strugger, MKM Holdings derivatives strategist, discusses market volatility and his options strategy for the PowerShares DB U.S. Dollar Index Bullish Fund. He speaks with Bloomberg’s Julie Hyman on “Bloomberg Markets.”

****SD: Strugger’s main point: equity markets experience volatility around central bank decisions no matter how well the Fed broadcasts its rate intentions.

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