Mounting Bearish Bets on Japan Stocks Is Nothing to Worry About, Analyst Says; Do financial derivatives impact corporate innovation?

Nov 26, 2019

Observations & Insight

Trading platform migration complete, Cboe’s Chris Isaacson outlines next steps

Chris Isaacson, Cboe Global Markets executive VP and chief operating officer, talked to JLN at FIA Expo 2019 about the exchange operator’s next steps after finishing the three-year-long migration of Cboe’s exchanges to Bats technology. Isaacson said his focus now includes the construction of a new Cboe data platform, overcoming Brexit fatigue and looking at ways to build exchange-traded ESG products.

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Lead Stories

Mounting Bearish Bets on Japan Stocks Is Nothing to Worry About, Analyst Says
Min Jeong Lee and Shingo Kawamoto – Bloomberg
Japan’s market is on a roll, with the Nikkei 225 Stock Average trading near a one-year high. And investors shouldn’t anguish over a rising number of bearish bets. While there are almost twice as many put options as calls on the benchmark gauge — the ratio between the two has hit a level not seen since February 2006 — the increase in outstanding puts is partly due to traders selling those contracts because they don’t expect stock prices to fall much from current levels, according to Makoto Sengoku, a market analyst at Tokai Tokyo Research Institute Co. in Tokyo. The Nikkei 225 has rallied 17% in 2019, heading for a seventh year of gains in eight.

Do financial derivatives impact corporate innovation?
Jacob Wolinsky – ValueWalk
Innovation drives economic growth, and today is imperative for companies to gain, and maintain, success. But the need to meet quarterly profits and other factors can also hinder executive decision-making to innovate. Can financial derivatives such as options trading activity help executives to overcome short-termism? And, in particular, is there a positive correlation between options trading and a company’s ability to innovate?

Wall Street Pay News: Bank Bonuses Likely to Suffer in 2019
Sonali Basak – Bloomberg
Quants on Wall Street have been in high demand, but that’s no guarantee they’ll see big increases in their bonus check.
Many workers with tech skills on the sell side can expect roughly the same payout this year as last year, while most trading professionals will see smaller bonuses, according to an analysis by recruiting firm Options Group. Equities traders will fare the worst, with the steepest declines, while credit and securitized products are among the only groups with projected increases.

Schwab’s Mammoth Deal Has to Win Over the Little Guy, Too
Brian Chappatta – Bloomberg
It’s official: Charles Schwab Corp. has agreed to buy TD Ameritrade Holding Corp. for $26 billion in an all-stock transaction. Now the question on Wall Street is whether the acquisition, which would create a behemoth with $5 trillion in assets, will come under scrutiny from antitrust regulators.

Exchanges and Clearing

SGX RegCo launches 2019 list of SGX Fast Track companies
Singapore Exchange Regulation (SGX RegCo) today said a total of 95 companies are on the SGX Fast Track list, allowing them to enjoy prioritised response on selected corporate action submissions to SGX RegCo. SGX Fast Track aims to recognise companies that have high corporate governance standards and have maintained a good compliance track record. Selection is based on internal and external criteria focused on corporate governance standards, compliance track record and the quality of the company’s submissions. In general, qualified companies will stay in the Fast Track programme for two years.

Regulation & Enforcement

CFTC codifies relief for CPOs and CTAs, harmonizing rules with SEC
The U.S. Commodity Futures Trading Commission held a public meeting Nov. 25 in Washington, D.C., to discuss final amendments to several sections of the agency’s Part 4 rules. The amendments, which passed in two separate packages, provided registration and compliance relief to certain types of commodity pool operators (CPOs) and commodity trading advisors (CTAs).

U.S. securities regulator proposes new rules on use of derivatives in exchange traded funds
Katanga Johnson – Reuters
The U.S. securities regulator on Monday proposed new regulations for the use of derivatives by investment funds to introduce some safeguards for more risky products and increase competition.
The proposal from the Securities and Exchange Commission (SEC), which is subject to public consultation, would address concerns over the risks posed by so-called inverse and leveraged exchange traded funds (ETF), after some products experienced heavy losses during a spike in volatility in February 2018 subsequently dubbed “volmageddon.”

Cboe wants to install a speed bump — Wall Street hates the idea
Bill Alpert – Financial News London
When the heroes of Michael Lewis’ book Flash Boys launched the IEX exchange in 2016, Wall Street was split on the benefits of its attempt to slow high-speed traders by a fraction of a second. This June, after Cboe Global Markets proposed a speed bump for one of its stock exchanges, most of Wall Street said they hated the idea.

U.S. derivatives regulator fines Goldman Sachs $1 million for record-keeping lapses
Michelle Price – Reuters
The U.S. Commodity Futures Trading Commission (CFTC) said on Tuesday it had ordered Goldman Sachs (GS.N) to pay $1 million for failing to make and keep certain audio recordings in relation to its swap trading business.


Itiviti adds low-latency gateways in Thailand to extend ASEAN market reach
Itiviti blog
Bangkok, November 26, 2019 – Itiviti, a leading technology, and service provider to financial institutions worldwide, today announced new gateways to the Stock Exchange of Thailand and the Thailand Futures Exchange, enabling its domestic and international customers to trade listed equities and derivatives in the Thai markets.

Peggy Sullivan wins Women in Finance award for Excellence in Service Providers
Business Wire (press release)
Vela, a leading independent provider of trading and market access technology for global multi-asset electronic trading solutions, announced that its Chief of Staff Peggy Sullivan has been recognized for Excellence in Service Providers at Markets Media’s 5th Annual Markets Choice Awards: Women in Finance presented at a gala dinner in New York last week.

Trading Technologies Launches Colocated Access to Thailand Futures Exchange
Trading Technologies (press release)
Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and the Thailand Futures Exchange (TFEX) today announced the launch of colocated execution and client connectivity services to TFEX, connecting via the exchange’s proprietary EMAPI API from within TFEX’s SET Data Center in Bangkok.


Stories of have-a-go forex trading heroes belie a quiet market
Katie Martin – Financial Times
Tabloid tales of currency-trading whizz-kids are back.
You know the sort of thing: young men (they are always men) in their early 20s or even late teens. They manage to secure full-page treatment, telling the world how they turned a modest lump of cash, perhaps their first pay cheque, into serious money through their mastery of forex. Cue pictures of fast cars and designer trainers.

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