Observations & Insight
Lee Hodgkinson, Euronext – Lessons from the 4-Minute Mile
“Everything is possible; nothing is easy.”
Roger Bannister, Clarence “Captain” Birdseye and Fedex founder Fred Smith all have one thing in common – they each proved that something previously declared “impossible” was not impossible, just really difficult. Whether it is the 4-minute mile, flash-frozen vegetables or getting a package delivered “absolutely, positively, anywhere overnight,” it can be done, says Euronext UK CEO Lee Hodgkinson in this MarketsWiki Education talk. He says that achieving the impossible requires focus, persistence and determination.
Nothing is impossible, says Hodgkinson, except running slowly while moving your arms really fast, and trying to eat three donuts in one minute without licking your lips. Not even Roger Bannister could achieve that feat.
Star Wars: The Fan’s Guide to Investing
RCM’s Attain Alternatives Blog
We’re officially two weeks away from the premiere of, “Star Wars: The Force Awakens.” We couldn’t help ourselves but create an infographic for Star War fans to navigate the galaxy of investments.
US Listed Options Volumes Slip in November; BATS’ EDGX Options Exchange Launches
Options traders capped the third-slowest month of trading of 2015 in November. US listed options volumes totaled 323.3 million contracts last month, 11% lower than October’s volume but 9.7% higher than the year-ago November. Through November 2015, year-to-date volume is 2.7% below 2014 same-period totals.
Who’s the Bear Driving Up the Price of U.S. Stock Options? Banks
Joseph Ciolli – Bloomberg
For more than a year, dealers in the U.S. equity derivatives market have noted a widening gap in the price of certain options. If you want to buy a put to protect against losses in the Standard & Poor’s 500 Index, often you’ll pay twice as much as you would for a bullish call betting on gains.
New research suggests the divergence is a consequence of financial institutions hoarding insurance against declines in stocks.
FOW International Awards 2015 Winners’ Guide
Press Release – FOW
The FOW International Awards recognise the very best in growth and innovation across the
global derivatives markets.
Each year we receive hundreds of entries into the awards. We then compile a shortlist
and send the shortlisted entry out to a panel of judges drawn from across the industry.
The awards recognise innovators from all segments of the market from interdealer
brokers to software vendors
****SD: To name a few: SGX nabbed global exchange of the year; CBOE won U.S. options exchange of the year; Trevor Spanner of LME Clear was awarded CEO of the year; GH Financials garnered best non-bank FCM of the year honors.
Asian investors keen on investing in equity volatility
Bayani S Cruz – The Asset
Volatility investing, in general, has been around for while and has been used in Europe and the US but in Asia it is not yet widely known among investors outside of hedge funds and the derivatives community.
The highly volatile markets in recent months are, however, raising awareness about equity volatility investing in particular, especially among private banking and high net worth investors.
Why Yahoo’s Slump Isn’t Erasing Marissa Mayer’s Stock Options
Caleb Melby and Brandon Kochkodin – Bloomberg
When Salesforce.com Inc. founder Marc Benioff said last week that Marissa Mayer had a “great pay package,” it may have been an understatement.
Shares of her company, Yahoo! Inc., are down more than 10 percent since February 2014, but her stock options granted at that time are still in the money. That’s because the strike price on the options, the biggest portion of her $42.1 million package that year, was set 15 months earlier when she was just four months into her job as chief executive officer and the stock was lower, according to Yahoo’s proxy. The options are part of multiyear retention and performance packages that repeatedly use that early stock price.
FIAs Heat Up With Volatility Control Options
Insurance News Net
Genworth is the newest carrier to enter the increasingly crowded market for volatility controlled indices inside of fixed index annuities (FIAs).
As reported last week, Genworth has debuted an “uncapped volatility control spread index crediting strategy.” It is based on the Barclays U.S. Low Volatility II Equity ER Risk Controlled Index (Barclays U.S. Low Volatility Index), and is currently available in certain of Genworth’s SecureLiving FIA products.
CME Group Announces Record Light Sweet Crude Oil (WTI) Futures and Options Trading Volume
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it reached a trading volume record for combined NYMEX WTI futures and options yesterday, December 8, of 1,841,295 contracts compared to the previous record of 1,772,232 contracts on August 31, 2015.
‘CBOE Options Institute at SGX’ Launches in Singapore December 9
The Chicago Board Options Exchange (CBOE) today launched the first international extension of the world-renowned CBOE Options Institute at Singapore Exchange (SGX) in a ceremony attended by CBOE Chief Executive Officer Edward T. Tilly and SGX Chief Executive Officer Loh Boon Chye.
CBOE Awarded U.S. Options Exchange of the Year By Futures and Options World For Fourth Straight Year
The Chicago Board Options Exchange was named “U.S. Options Exchange of the Year” for the fourth consecutive year at a December 8 awards ceremony during Futures and Options World magazine’s Derivatives World London Conference.
HKEx’s Derivatives Market Growth Strongly Supported By Overseas Investors And Exchange Participants
Hong Kong Exchanges and Clearing Limited’s (HKEx) Derivatives Market Transaction Survey 2014/15 (covering July 2014 to June 2015) found that derivatives trading by overseas investors (mainly institutions) and Exchange Participants (EPs) had compound annual growth rates (CAGRs) of 22 per cent and 21 per cent respectively in the past decade, strongly supporting overall derivatives market growth and contributing to record volume.
Trading Volumes Increase By 41 % As DGCX Celebrates 10th Anniversary
As the Dubai Gold & Commodities Exchange (DGCX) celebrated its 10th anniversary on 21st November, stellar volumes proved to be indicative of the Exchange’s success over the past decade. The Exchange recorded an overall monthly volume growth of 41% vs Nov 2014 and an incremental growth of 23% in volumes on year-on-year basis. Strong Open Interest and diversified growth across its asset classes has contributed to this month’s success with average daily open interest steadying at 96,011 contracts.
****SD: “Indian Rupee Options has continued to draw appeal from market participants and is reflective in its growth of 84% vs. Oct 2015.”
GMO Click Sees Lower Binary Options Losses During November
Jeff Patterson – Finance Magnates
Japanese broker, GMO Click Securities, has reported its binary options metrics for the month ending November 2015, which showed that traders have dealt with slightly mitigated financial losses with their trading than in October 2015, according to a GMO Click statement.
****SD: “GMO Click’s data shows that 73.96% of binary options accounts lost money during the month.”
London Stock Exchange To Deepen India Ties
Mark Kleinman – Sky News
The owner of the London Stock Exchange (LSE) is to unveil a deal today aimed at deepening its ties to India weeks after the first visit to the UK by an Indian prime minister for a decade.
Regulation & Enforcement
ASIC Fines Australian Investment Exchange, Etrade, for Regulatory Infringements
Irina Slav – Finance Magnates
The Australian Securities and Investments Commission (ASIC) has fined Etrade Australia Securities and Australian Investment Exchange (AUSIEX) for failure to comply with two infringement notices handed to the two companies by the markets Disciplinary Panel.
Etrade was penalized for mishandling a client order for the purchase of a lot of put options.
The Role of Technology in Financial Markets Regulation
Matthew Kulkin and Jason Weinstein – Bloomberg BNA
In response to the ”Great Recession,” the financial crisis of 2008 that resulted in millions of unemployed Americans and trillions of dollars in lost wealth, 1 Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (”Dodd-Frank Act”). The Dodd-Frank Act changed the regulatory system charged with regulating the financial systems viewed as responsible for the crisis.
Nasdaq Reintroducing FPGA Order Entry Ports, Announcing Port and Pricing Updates for 2016
Nasdaq plans to re-introduce Field Programmable Gate Array (“FPGA”) technology on all Nasdaq order entry port servers, including Dedicated OUCH. By taking advantage of hardware parallelism, FPGA technology is capable of processing more data packets during peak market conditions without the introduction of variable queuing latency resulting in more consistent, deterministic behavior.
Chinese Trading Tech Leader Shenzhen Kingdom Adopts McObject’s DBMS in New Order Execution Systems
McObjectA, provider of database management system (DBMS) software for trading and other capital markets applications, announced that Shenzhen Kingdom Technology Co. Ltd., the largest financial securities software developer and systems integrator in China’s domestic market, has deployed new order execution system products incorporating McObject’s eXtremeDBA DBMS. Based on its present dominant market share, Shenzhen Kingdom expects 40% of professional traders in China to adopt the new VIP Quick Order and VIP Stock Options within two years, Shenzhen Kingdom Chief Architect Guiquan Zhong said.
Symphony: movement in a major key
Barry May – The Baron
Is Symphony a potential Bloomberg killer? And if the financial sector’s new business communications system can slay that dragon, what harm could it do to Thomson Reuters?
Fidessa’s derivatives platform named Sell-side Trading System Of The Year at FOW awards; Scores hat-trick, winning for the third consecutive year
Fidessa group plc (LSE: FDSA) today announced that its derivatives trading platform has scooped the Sell-side Trading System Of The Year award at the FOW International Awards for the third year running. This latest accolade marks the end of a very successful year for Fidessa, during which it also won in the same category at FOW’s Asia Awards – again for the third year in succession.
Orc Recognized as Prop Traders’ First Choice at Annual FOW International Awards
Orc, the global market leader in electronic trading technology for listed derivatives, was named “Prop Traders’ ISV of the Year” at the FOW International Awards, presented by FOW yesterday in London.
Indicator of the Week: The Best Stocks For Volatility Traders
Rocky White – Schaeffer’s Research
2015 is coming to a close and it will be the fourth straight year where the average CBOE Market Volatility Index (VIX) was below 20. The red line in the chart below, which I added mostly out of curiosity, marks the average daily value of the VIX since 2000. It’s about 20.7. A low VIX indicates that option prices are low and, therefore, options get bigger returns on relatively smaller stock moves. Additionally, with the growth in weekly options, there are more opportunities to benefit from the lower option prices.
Bank of America and Peer Stocks Could Jump on Fed Rate Hike
Steven M. Sears – Barron’s
Hedge funds in recent years seem to have done their best to shed their reputation as the smart money, but it’s still interesting to keep an eye on how they are investing. Ahead of next week’s meeting of the Federal Reserve’s rate-setting committee, the answer from the options market is simple: They’re buying upside calls on financial stocks.
El Nino investment options range from pest control to ski resorts
David Randall and Jo Winterbottom – Reuters
As the El Niño weather phenomenon makes the U.S. Northeast warmer, the Midwest drier, and the South and the West wetter this winter, Eric Marshall, portfolio manager of the $2 billion Hodges Small Cap fund, is not one of those people who just talks about the weather. He’s doing something about it.
An Early Retrospective on ^SPX and ^RUT
Kevin Davitt – CBOE Options Hub
The end of any calendar year gives us a perfect opportunity to look back and evaluate the year that was, and perhaps prognosticate about the year that may be.