Risk of Big Rates Swings on Brexit Vote Is Options Trading Arena; Charles Schwab on no-commission trading: ‘Wall Street would have never done this’

Oct 18, 2019

Lead Stories

Risk of Big Rates Swings on Brexit Vote Is Options Trading Arena
Tanvir Sandhu – Bloomberg
The risk for big market swings on the back of the Brexit vote in Parliament Saturday is the ideal territory for savvy options traders. There is scope for gilt yields to keep moving higher if a deal is ratified by lawmakers. But the outcome of the vote remains too close to call and so positioning for it is best done through options that protect the risk either way.

Charles Schwab on no-commission trading: ‘Wall Street would have never done this’
Chris Matthews – MarketWatch
Chuck Schwab, founder and chairman of the Charles Schwab Corp. is taking a victory lap. As the man who helped launch the discount brokerage revolution after the Securities and Exchange Commission dismantled the system of fixed-price commissions on stock trades way back in 1975, his firms decision to cut commissions to $0 is just “completing the path” he began more than 40 years ago, he said at an event for his new book “Invested” in New York Thursday.

The Weekly Fix: Coming Full-Circle to a Mid-Cycle Adjustment
Bloomberg – Sponsored by Eurex
Market participants were seemingly betrayed on July 31, when Federal Reserve Chairman Jerome Powell suggested that the central bank’s first interest-rate reduction in nearly a decade was part of a “mid-cycle adjustment” rather than a full-blown easing cycle. Fast forward a couple months, and the price action is increasingly a story of traders coming around full-circle to the Fed’s view – and implicitly acknowledging that a shallower-than-previously-anticipated easing cycle is a positive development.

Wave and Vertalo start by tokenizing yield, with race horses and whiskey as long term possibilities
Aislynn Keely – The Block Crypto
Asset management firm Wave Financial launched its first bitcoin yield fund last month with the help of Vertalo, the tokenization solution company that helped PrimeTrust put cap tables on blockchain earlier this year. Wave touts the fund as the first crypto derivatives-based yield fund on the market, but the partnership is planning to expand to legacy markets. The fund itself generates yield by selling call options on bitcoin held in the fund, generating premiums from the high volatility.

Can’t afford a $1,780 share of Amazon? Charles Schwab will offer fractional share trading in an effort to attract younger investors (SCHW)
Ben Winck – Business Insider
Charles Schwab will soon offer fractional stock trades in an effort to bring in younger clients, the Wall Street Journal reported Thursday. Fractional shares allow traders to own slivers of a stock, opening up expensive stocks like Amazon and Berkshire Hathaway Class A to younger and less wealthy investors. The new program will arrive soon after the firm slashed commission fees from its stock trades. Peers including E*Trade, TD Ameritrade, and Fidelity quickly followed suit. Watch Charles Schwab trade live here.

Regulation & Enforcement

A proposal to amend The Nasdaq Options Market LLC (“NOM”) Pricing Schedule at Options 7, Section 2, titled “Nasdaq Options Market—Fees and Rebates.”

Notice of Disciplinary Action
CME Group
FILE NO.: CME 14-9725-BC MEMBER: Harris Andrew Klein (HRIS) CME RULE VIOLATIONS: 521. REQUIREMENTS FOR OPEN OUTCRY TRADES (in part) In open outcry trading, bidding and offering practices must at all times be conducive to the competitive execution of transactions. All open outcry transactions, including spread and combination transactions, shall be made openly and competitively in the pit designated for the trading of the particular transaction. No bid or offer shall be specified for acceptance by a particular trader. Transactions may take place only at the best price available in the open outcry market at the time the trade occurs.

SR MIAX 2019 44
Proposal to amend Exchange Rules 521 and 530 to make permanent certain options market rules that are linked to the equity market Plan to Address Extraordinary Market Volatility.


Cybersecurity Workshop
Is your firm prepared for a ransomware attack? Join the Market Technology Division on Tuesday, October 29 for an interactive cybersecurity workshop that takes you through a ransomware scenario that potentially poses systemic risk to the futures markets and participants. Bring your colleagues that would need to collaborate under a dramatic market disruption scenario, including teams that need to communicate, address issues and ensure business continuity on behalf of the clearing house, clearing members and buy-side participants.

Expo covers the cleared derivatives industry from end to end. Whether ground-breaking fintech startups in the Innovators Pavilion or leading voices analyzing the most pressing issues, the 35th Annual Futures & Options Expo is your destination to build partnerships, spot trends and define the future of our industry. Join us October 29-31 in the heart of the futures industry, Chicago, to explore ways to amplify innovation, fuel progress and take on the industry’s biggest challenges.


Why Markets Are Rising Despite a Trade War, Brexit and Impeachment Threats
Ira Iosebashvili and Akane Otani – WSJ
The world seems more tumultuous than it has in years. Congress is weighing impeachment, the U.K. is on the verge of a momentous vote regarding its role in Europe, and the U.S. and China are still mired in a trade war. Yet the S&P 500 is within about 2% of its all-time high. What’s going on with Wall Street?

(PODCAST) OB 847: The Revenge of Micro
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