Observations & Insight
Brian Conlon, First Derivatives Chief Executive, Dies at 53
Katherine Burton – Bloomberg (SUBSCRIPTION)
Brian Conlon, founder and chief executive of First Derivatives Plc, a company he founded more than two decades ago in Northern Ireland, has died. He was 53.
He died on July 28, according to his company, which provides software and consulting services to financial and other firms. In May, First Derivatives said Conlon had been diagnosed with cancer and would continue to work during his treatment. It didn’t specify which type of cancer.
***SD: Our condolences. It is quite a feat to found one of only two listed companies in Northern Ireland and grow it to a roughly $1 billion valuation.
OCC Adds Leaders from Morgan Stanley and Bank of America Merrill Lynch to Board of Directors
OCC, the world’s largest equity derivatives clearing organization, announced today that Susan O’Flynn, Managing Director and Global Head of CCP Strategy and Resource Optimization with Morgan Stanley, and Stuart Bourne, Managing Director, Head of Americas Asset Management Services with Bank of America Merrill Lynch, have joined OCC’s Board of Directors as Member Directors.
The Power of the People
Microsoft acquired LinkedIn for more than $26 billion in 2016 and the platform now has more than 500 million users. Need any more proof of the power of networks? In this video, ChartIQ Chief Revenue Officer Julie Armstrong provides her personal take on the importance of networking for one’s career, including why she was urged to learn how to play golf.
Watch the video »
LSE-Refinitiv deal faces long antitrust review: sources
Pamela Barbaglia – Reuters
U.S. buyout fund Blackstone Group Inc (BX.N) is expected to announce the merger of its majority-owned financial data firm Refinitiv with the London Stock Exchange Group Plc (LSE.L) within a week, but the deal is expected to face a long antitrust review before it can close, four sources told Reuters.
****SD: This pair up would be a titan and help erase the taste of the LSE’s multiple failures to merge with Deutsche Boerse. If the deal goes through it would be quite the windfall for Blackstone, too. For more see the FT’s London Stock Exchange lays $27bn bet that data are the future, Financial News’ LSE-Refinitiv: Five things you need to know about the merger; Reuters’ LSE’s bid for Refinitiv spotlights quest for data, globality; Markets Insider’s The London Stock Exchange has a graveyard of past merger attempts. Here’s why the $27 billion Refinitiv deal may be a winning bet and, via Yahoo, Bloomberg’s LSE Soars on Bet $27 Billion Refinitiv Bid Will Boost Bourse. Related to the deal is this story – Deutsche Boerse no longer expects to buy Refinitiv forex assets.
EU banks seek last-minute margin reprieve for equity options; European dealers want exemption rolled over, to avoid handing US firms a regulatory advantage
Samuel Wilkes – Risk.net (SUBSCRIPTION)
Trying to win a race can be almost impossible if your car is carrying a much heavier load than other competitors. Europe’s dealers are sounding the alarm that, in under six months’ time, they will be weighed down by posting non-cleared margin on some trades, while their US competitors will be exempt.
JPMorgan, UBS Among Banks Facing $1 Billion FX-Rigging Suit
Kaye Wiggins – Bloomberg (SUBSCRIPTION)
JPMorgan Chase & Co. and UBS Group AG are among five banks being sued over allegations of foreign-exchange rigging in a class-action lawsuit seeking more than 1 billion pounds ($1.2 billion).
Barclays Plc, Citigroup Inc. and Royal Bank of Scotland Group Plc are the other three targets of the U.K. suit that will say pension funds, asset managers, hedge funds and corporations lost out because of market manipulation between 2007 and 2013 and should be compensated.
****SD: There have been rumblings about renewed efforts of EU regulators looking into big bank FX dealings for quite some time. That investigation involves an array of potentially manipulative derivatives transactions over multiple years, though this piece doesn’t go into that. For more see Lexology’s piece from February European Commission Extends FX Scrutiny to FX Options. Other sources with the lawsuit story: Reuters and The Guardian.
Pound’s tumble accelerates below $1.23 as no-deal Brexit fears jump
John Kemp – Reuters
Sterling sunk more than 1% to a 28-month low on Monday, as more investors scrambled to factor in the growing risk of a no-deal Brexit and the chance that new British Prime Minister Boris Johnson will call an early election.
Hedge funds dump oil as fragile calm settles on Mideast
John Kemp – Reuters
Hedge funds sold oil last week, reversing most of the purchases made the week before, as tensions in the Middle East reached a fragile equilibrium and prospect of armed conflict receded.
Exchanges and Clearing
More Exchanges Add ‘Speed Bumps,’ Defying High-Frequency Traders
Alexander Osipovich – WSJ (SUBSCRIPTION)
High-frequency trading firms are hitting a growing number of “speed bumps” around the world—the latest blow to a business that has struggled in recent years.
Exchanges on both sides of the Atlantic are increasingly embracing the mechanisms, which impose a split-second delay before executing trades.
****SD: Also see the Cboe’s blog from last week: Exchanges Want to Give Public Investors a Fair Shot.
Q&A: Dave Hoag, Chief Information Officer for OCC, on the Importance of Peer Relationships and His Advice for Aspiring CIOs
H. Michael Burgett – National CIO Review
Dave Hoag, Chief Information Officer for OCC (Options Clearing Corporation), found a passion for technology in his childhood that has stayed with him his entire life. Programming was a hobby for him from an early age. That hobby developed into a college major, and that college major launched a career that’s led him to be the technology leader for the world’s largest equity derivatives clearing organization
SMBC Capital Markets, Inc. Selects Beacon Platform, Inc. for Derivatives Trading, Analytics and Risk Management Solutions
SMBC Capital Markets, Inc. to use Beacon to accelerate its front office technology transformation
The market could be in for a ‘VIXplosion,’ says widely followed strategist Sven Henrich
Lizzy Gurdus – CNBC
We could be headed for a VIXplosion. The CBOE Volatility Index, known commonly as the VIX or the stock market’s fear gauge, has been sitting at relatively low levels as stocks reach all-time highs. And while muted market fears might seem advantageous for now, the VIX could effectively be a ticking time bomb, says Sven Henrich, founder and lead market strategist at NorthmanTrader.
Dark Soils Bursting With Wheat Underscore Record Bearish Bet
Michael Hirtzer – Bloomberg (SUBSCRIPTION)
In North Dakota, crop tour estimates yields will climb 5%; Big supplies drag down prices for variety used in pizza crusts
The darker the better. That’s generally the case when it comes to crop soils, where rich hues signal fertile ground. In North Dakota this year, the fields in the Red River Valley look they’re covered in cast-iron black carpet.
Swiss Central Bank Fires Warning Shot on Currency
Paul J. Davies – WSJ (SUBSCRIPTION)
The Swiss central bank appears to have taken its most significant steps to weaken the Swiss franc in two years, after looming rate cuts from U.S. and European central banks put upward pressure on the currency.
****SD: Tidbit at the end of the story: “However, the central bank could have masked its intervention, but didn’t, according to UBS’s Mr. Flury. ‘It could have done this via options and then we wouldn’t see it,’ he said. ‘Maybe they wanted to show the market that they are around.'”
Virtue signalling ETFs: religion, veganism and marijuana used to tap trends
Jennifer Thompson – Financial Times (SUBSCRIPTION)
Many exchange traded funds — collections of stocks that track an underlying index — have moved beyond traditional global indices to instead converge around an ever-wider variety of given themes.
A growing number of thematic ETFs now aim to tap into long-term structural trends such as changing consumer tastes or technological innovation, or market themselves to a particular group.
****JB: See also The Financial Times – ‘Sin stock’ ETFs strive to make good on returns and Leading index providers maintain grip as ETF margins fall.
Negative Yields Could Be the Death of Bond Markets
Brian Chappatta – Bloomberg (SUBSCRIPTION)
Negative yields have never truly made sense.
And yet, if you work in finance or even just read about markets in general, it’s starting to feel as if the once-absurd (or, at least, strictly academic) is starting to be considered, well, normal. Bloomberg Businessweek’s latest cover in Europe and Asia reads: “No Escape From Low Rates: A Decade of Cheap Money Is Warping the World.” It follows the European Central Bank’s decision last week to keep its key interest rate below zero, and it hinted at cutting the rate even further in the near future.
Hedge Funds Chasing 400% Return Show Risk in China’s Wild Market
As China’s share market was cratering at the end of 2018, Liu Yue bet almost his entire fund on just two stocks. It could have ended in tears, but he knew his firm had a once-in-a-lifetime opportunity to snare the ultimate prize for a hedge fund in China — being crowned champion of the year.
His bet paid off and Guangdong Chaokin Investment Co. has since been swamped with investor inquiries. Many of his peers haven’t been as lucky.