NSE derivatives accessible to US clients; Shanghai copper options; Fresh vol bets

May 18, 2018

NSE derivatives accessible to US clients; Shanghai copper options; Fresh vol bets

May 18, 2018

Spencer Doar

Spencer Doar

Associate Editor

Observations & Insight

Michael Lewis’ Wall Street Movie ‘Flash Boys’ Heads to Netflix
Dave McNary – Variety
Netflix has acquired movie rights Michael Lewis’ real-life financial drama “Flash Boys: A Wall Street Revolt” — a project that had been in development at Sony Pictures in 2014.

*****SD: Tagline – “Based on a book that made market makers start calling themselves electronic liquidity providers.”

Lead Stories

NSE derivatives access to US clients enabled
Times of India
The National Stock Exchange of India (NSE) on Friday said it has become the first Indian stock exchange to be part-30 exempted by the Commodity Futures Trading Commission (CFTC). The CFTC exemption enables NSE members to trade in derivatives for US clients.

****SD: I wish all indexes had a name as good as the Nifty 50 – the Dow is more dow-ner and S&P 500 hardly rolls off the tongue…

Metals traders weigh their options as Shanghai trials new copper contract
Melanie Burton and Tom Daly – Reuters
The latest step in China’s push to develop its commodities derivatives market gets under way on Monday as the Shanghai Futures Exchange (ShFE) launches a month-long test of a much-anticipated copper options contract.

****SD: This is the crux of the endeavor – “…Guy Wolf, global head of market analytics at brokerage Marex Spectron, was skeptical about the project’s chances given that the ‘vast majority of liquidity’ on the ShFE is in the front-month copper contract. ‘You cannot create a liquid options market around an illiquid future,’ he said.”

Investors Bet on Fresh Stock Volatility Like It’s August 2016
Yakob Peterseil and Dani Burger – Bloomberg
Stocks are calmer these days, but there’s one corner of the market where investor nerves are on full display.

****SD: Now if only Prince were around to revamp his classic “1999”…

Hedge Fund Returns Rose in April for First Gain Since January
Adam Manzor – Bloomberg
Hedge fund returns increased 0.78 percent in April, reversing two consecutive monthly declines. The swing of 134 basis points was driven by gains in all seven tracked fund types as managers capitalized on plunging volatility and activist and special situation strategies.

Goldman C.E.O. Blankfein Is Likely to Step Down in December
Kate Kelly – NY Times
A new era at Goldman Sachs is taking shape.
The Wall Street giant’s president, David M. Solomon, is likely to be named chief executive officer by the end of this year, and he is already structuring his senior management team, according to people familiar with the firm’s plans.

Exchanges and Clearing

Cboe Global Markets Announces 2018 Annual Meeting Results
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced the shareholder voting results from its 2018 Annual Meeting held today.

Cboe Global Markets Declares Second-Quarter 2018 Dividend
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced its Board of Directors has declared a quarterly cash dividend of $0.27 per share of common stock for the second quarter of 2018. The second-quarter 2018 dividend is payable on June 15, 2018, to stockholders of record as of June 1, 2018.

WFE expects increased focus on sustainable commodity derivs
Louisa Chender – Global Investor Group (SUBSCRIPTION)
As exchanges look to improve their involvement in sustainable finance there is likely to be an increased focus on commodity derivatives, according to the World Federation of Exchanges (WFE).

Regulation & Enforcement

British MEP hits back at EU clearing proposals
Samuel Agini – Financial News (SUBSCRIPTION)
Kay Swinburne, one of the UK’s most prominent MEPs, has sounded the alarm after European lawmakers backed rules designed to give them more power over foreign clearing houses.


VIX Cycles Point to Market Correction
Chris Vermeulen – Equities.com
Recently, we authored an article about Fibonacci price levels in which we referred to a term called “Fibonacci Price Ladders”. This is our own term, as far as we know, and we used it as a way to attempt to explain how price operates within the Fibonacci theory. Our objective was to allow the reader to think of a standard ladder and how each ladder rung allows the climber to advance (move up) or decline (move down) using the ladder. We hope it helped all of our readers to better understand the concept of how price rotates within a trend to establish longer-term price trends.

Stocks an unlikely shelter from debt, dollar, emerging market storms
Jamie McGeever – Reuters
U.S. bond yields are the highest in seven years, the dollar is strengthening, emerging markets are wobbling, and oil is up to $80 a barrel. Yet there is an unlikely oasis of calm out there: stocks.

How to Bet on Chip Stocks
Gunjan Banerji – Barron’s (SUBSCRIPTION)
Wild swings in technology shares aren’t scaring investors away. And some say the group’s latest rally will persist.
U.S. stocks have risen in May, along with tech, a sector that propelled the broader Standard & Poor’s 500 index higher for much of last year. Despite being among the most turbulent groups, technology remains the S&P 500’s best performer this year, up almost 10%.

Soros Finds Another Route to Profit From Tesla’s Volatile Stock
Dana Hull and Pierre Paulden – Bloomberg
…The hedge fund manager disclosed a $35 million stake in the hybrid securities this week, a position that a person with knowledge of the matter said is part of an arbitrage play designed to harvest volatility.

****SD: Lots of ways to skin the volatility cat.


The Funniest Jokes Jokes About Economists
Joel Anderson – Equities.com
What happens when you put 10 economists in a room? You’ll get 11 opinions.
That old joke is arguably more popular to the general masses than most actual economic theories. It’s no wonder that economists tend to get such a bad rap. Nobody truly understands what they do and how they do it. Quite frankly, nobody wants to.

****SD: I think my favorite is “Two economists are sitting at a nudist colony. One says, ‘Have you read Marx?’ The other says, ‘It’s these wicker chairs.'”

Falling-back is not failure, not even with CAT
Jim Toes – STA
In the military, falling-back happens all the time and for good reasons – none of which equate to quitting or failure. Rather, falling-back is viewed as a sound response to a dangerous situation and as a means to achieving victory. Don’t believe me? Well, listen to one of STA’s favorite decorated war heroes, Jason Redman who, among his many achievements, speaks before business leaders on strategies that work well on both the battlefield and in business. Distinguishing between falling-back and quitting or failure is one such lesson.

****SD: CAT FAQs were updated recently. The above piece is from October of last year but still relevant.

Vatican says ‘amoral’ financial system needs infusion of ethics, more regulation and derivatives are ‘ticking time bomb’
Sridhar Natarajan – Financial Post
The Vatican called for more regulation of markets and financial systems on Thursday, saying economic crises showed they were not able to govern themselves and needed a strong injection of morality and ethics.

****SD: In case you missed yesterday’s weird release from the Holy See Press Office…

Credit Suisse Seeks Larger Share of Burgeoning Debt Swaps Market
Credit Suisse Group AG is seeking to grow its market share for a type of derivative that’s gaining favor among investors as a way to wager on corporate debt.

****SD: “‘We are pleased to leverage our market-leading position in CDX indexes and options to further expand our cash derivatives product offering, where we have seen an increase in client demand,’ said Credit Suisse spokeswoman Candice Sun.”

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