OCC Educating Lawmakers on Potential Impact of Tax Reform on Listed Equity Options Market
Craig Donohue – OCC
Last November?s national election results brought dramatic change to Washington, D.C., not only in the White House, but also on Capitol Hill. One of the areas that OCC and the U.S. Securities Markets Coalition has been paying close attention to is the issue of comprehensive tax reform and its potential impact on the U.S. listed equity options markets.
Over the past three years, policymakers from both parties have proposed a variety of financial product tax reform proposals that could impact listed equity options and other derivatives. These proposals could make the use of listed equity options much less attractive to market participants than under current law.
Low VIX Got You Down? These Fear Gauges May Do the Trick
Dani Burger, Cecile Vannucci , and Liz McCormick – Bloomberg
Everything’s fine and calm on Wall Street if you trust the market’s standard fear gauge. Just one problem: the world doesn’t feel so calm these days.
Between an unpredictable political climate, rising interest rates and stretched valuations, there’s building frustration that the CBOE Volatility Index, or VIX, is losing its luster as a reflection of investor anxiety. The measure, which tracks expected volatility through options pricing, sits just two points above its historical low.
Does the CBOE takeover of BATS go against the spirit of MiFID?
FTSE Global Markets
The takeover of BATS by the CBOE could present significant challenges to smaller MTFs looking to make a mark in a post MiFID world. Sylvia Smit, head of Equity Markets Delivery at Delta Capita looks at some of the potential issues they might face.
Virtu Financial Makes Bid to Acquire KCG Holdings; KCG evaluating proposed price of between $18.50 and $20 a share, which would value it at up to $1.33 billion
Telis Demos and Liz Hoffman – WSJ
Trading firm Virtu Financial Inc. has made a bid to acquire rival KCG Holdings Inc., which could help shore up businesses that have been struggling with damped market volatility.
Yellen Calms Fears Fed’s Policy Trigger Finger Is Getting Itchy
Rich Miller, Christopher Condon and Jeanna Smialek – Bloomberg
Federal Reserve Chair Janet Yellen sought to reassure investors that the central bank’s latest interest-rate increase wasn’t a paradigm shift to a trigger-happy policy driven by fears of faster inflation.
Fed rate hikes + low growth = recession, says stock-market strategist
Mark DeCambre – MarketWatch
The Federal Reserve on Wednesday lifted benchmark interest rates for only the third time in about a decade, and that has caused trepidation among some market participants.
Gold-miner stocks, ETFs primed for more volatility, says Goldman Sachs
Ryan Vlastelica – MarketWatch
Gold-miner stocks, which were among the strongest performers of 2016, have seen a massive shift in sentiment of late. That volatility will persist as the underlying commodity struggles for direction, Goldman Sachs wrote on Wednesday.
The High Impact Of Low Volatility
Bob Lang – Benzinga
The volatility index, or VIX once again closed under 12 percent last Friday. It has hovered in the range of 10-13 percent for the entirety of 2017 after it collapsed from a high in the low twenties following the Presidential election.
That seems like eons ago, right? And with this low volatility comes frustration for those sitting on the sidelines waiting to get involved with the stock market.
Exchanges and Clearing
CME Group Announces Rutgers University Wins 14th Annual Trading Challenge
Press Release – CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the winners of its 14th annual CME Group Trading Challenge, including the first-place winners from Rutgers University. This is the first time in three years that the winning team has been from a university in the United States.
This year’s competition saw record participation from nearly 600 teams, made up of more than 2,300 students from 35 countries around the world. The four-week electronic trading competition is open exclusively to teams of currently enrolled graduate and undergraduate students, offering them a chance to learn hands-on techniques for trading futures across all major asset classes on CQG’s real-time professional trading platform. The trading challenge also helps educate the next generation of finance professionals on the significance of CME Group’s global derivatives markets.
HKEX to introduce options on three more blue chips on 10 April
Valentina Kirilova – LeapRate
Hong Kong Exchanges and Clearing Limited (HKEX) will introduce options on Hang Seng Index constituents AAC Technologies, Geely Automotive and Link REIT on Monday, 10 April 2017 to further strengthen its options market.
Hunting unicorns, Singapore Exchange turns to dual share system
Anshuman Daga – Reuters
Singapore’s plans to become the first Asian bourse to allow dual class share listings is catching the attention of tech entrepreneurs and could help turn a staid market into a buzzing tech hub, as the city-state looks to rebrand its image.
Regulation & Enforcement
Reaction begins to OCC’s fintech charter draft
Steve Cocheo – Banking Exchange
The release March 15 of draft chartering manual language for the much-debated concept of national bank charter applications from fintech firms contained no surprises. Nor was the initial reaction surprising either.
The Comptroller’s Office published a draft section for its licensing manual, “Evaluating Charter Applications From Financial Technology Companies.” The OCC also released a summary of the 100+ comments it received on the publication of its concept paper late last year.
Trump’s CFTC Pick Intends to Slash Financial Regulations
Marcy Gordon – AP Business Writer via US News
President Donald Trump’s choice to head the agency overseeing some of the riskiest corners of the financial world says he plans to ease regulations put in place following the 2008 market meltdown.
Exchange chiefs play down regulatory divergence
Luke Jeffs – Futures & Options World
The world’s top exchanges sought to play down the possibility of regulatory divergence between the US and Europe after the new chairman of the CFTC said he wants to roll-back some of the US swaps rules.
Speaking at a panel of exchange chief executives on Wednesday, the heads of the CME and Nasdaq said they were not overly concerned about the possibility of regulatory divergence across regions.
Heinz Security Guard Accused by SEC of Insider-Trading Plot
Christian Berthelsen – Bloomberg
Todd David Alpert was a security guard for a board member of H.J. Heinz Co. in 2013 when federal regulators say he received an email from his employer spelling out terms of an impending takeover of the food company.
High-frequency trading has reshaped Wall Street in its image
Ryan Vlastelica – MarketWatch
“We’re all high-frequency traders now.”
So wrote Credit Suisse on Wednesday, in a report that outlines the huge impact that high-frequency trading has had on Wall Street, resulting in much higher overall trading activity and a bias toward parts of the market that are easiest to trade with high-frequency strategies. In other words, high-frequency has reshaped the financial industry in its image.
Cost Averaging, Options, and VIX: Better Strategies for Market Timing
Who says you can’t time the market? Actually, a lot of people, including experienced financial advisors.
“Timing the market is very difficult. An investor might get lucky once in a while, but to consistently be able to time the market is next to impossible,” said Robert Siuty, senior financial consultant for TD Ameritrade.
That said, there are ways traders and investors can use timing as part of their strategy. Just perhaps not in the traditional sense of trying to get into or out of a stock at just the right time.