Lead Stories

US Options Volume Falls in December
TABB Forum
US listed options volume declined in December as traders pulled back after an active November propelled by the surprise election of Donald Trump. Volume totaled 327.5 million contracts in December 2016, a 14.5% decline from November’s 383.2 million contracts.

Cliff Asness – 2016 Beyond Equities: Still Boring
Writing my post titled “2016 Was Not a Particularly Volatile Year” on realized risk/variability turned out to be even more fun than usual as I got a lot of great comments on it. Of course, some didn’t buy it. Some said things like “yeah, but you have to admit this or that was crazy,” whatever this or that was. Sometimes I agreed, sometimes I didn’t. We all have a different definition and standard for crazy! By far the most common comment was “ok, you just looked at the S&P 500, what about…?” I can’t look at everything, or in fact anything more, but I can ask for help!

The tasty nation adds an entree, tastyworks: Tom Sosnoff and the tastytrade crew are “going to murder passive investing”
Spencer Doar – JLN
The team behind retail brokerage thinkorswim, and more recently the financial news network tastytrade, is once again hoping to take the retail broking industry by storm with the opening of their new brokerage, tastyworks. Launched on January 3, the low-commission offering is the next logical step in fulfilling the goals the group has had since thinkorswim was founded 17 years ago, despite the fact that the plan “was never to open another brokerage firm,” according to Tom Sosnoff, co-founder of thinkorswim and tastytrade, and 30-plus-year options trader

****SD: In case you missed it yesterday.

Trump rally makes stock options great again for some CEOs
Tim McLaughlin and Ross Kerber – Reuters
Donald Trump once described Jamie Dimon as “the worst banker in the United States,” but the president-elect has helped make the boss of JPMorgan Chase & Co (JPM.N) $50 million richer.

****SD: And on the flip-side, Bloomberg has Trump Doomsayers Miss a Money-Making Opportunity

Turkish lira’s slump sours emerging market mood
Sujata Rao – Reuters
The Turkish lira skidded 2 percent to record lows on Wednesday, unnerved by authorities’ failure to announce decisive stabilising steps as the currency decoupled from broader emerging markets, which mostly traded firmer. The lira has already lost 8.5 percent against the dollar this year – the world’s worst-performing big currency – shrugging off the central bank’s Tuesday move to add dollar liquidity to financial markets and a smaller-than-expected current account deficit. tmsnrt.rs/2egbfVh

****SD: As a proxy, EEM is actually up about a buck this year, and overall down a buck since the U.S. election. I use EEM as a proxy since it has a very liquid options markets (despite the fact that the VWO underlying has more AUM), as measured by open interest (though far behind SPY). The most activity is at the Jan 20 40 strike where open interest is some 430k contracts.

Anatomy of a currency floor removal
Alexandra Scaggs – Financial Times
Two years (nearly to the day) after the Swiss National Bank got rid of its currency’s floor against the euro, the Bank of England has published a market-structure autopsy of the event. In an interesting turn, the paper also explores the longer-term impact of the sudden, unexpected change: Trading networks fragmented, the market’s intermediaries asked for more collateral, and transaction sizes became smaller.

****SD: If currencies were a game of Operation, where would the Swissie be located?

IG Group Renames Binary Options Product to Digital 100s
Finance Magnates
Leading UK brokerage IG has renamed the binary options product on its website. The company is now using a new name for the same type of all-or-nothing binary outcome contracts. The company calls the contracts Digital 100s, which stands for the outcome of the trade.

****SD: If people hate binary, just don’t call it binary. Problem solved. NYSE pretty much did that with its ByRDs product line (‘Binary Return Derivatives Options’).

Contango Helps Inverse VIX ETFs Outperform
Max Chen – ETF Trends
contango-helps-inverse-vix-etfs-outperformCBOE Volatility Index, or VIX, exchange traded funds track the futures and suffer when the market is stuck in contango. However, inverse VIX ETFs are capitalizing on the phenomenon, steadily strengthening on the quirk in the markets.

Saxo expand collateral choices for margin trades
The company said the inclusion of the new features was intended to “increase trading opportunities for sophisticated investors with existing long-term holdings” without the need for additional cash when trading products such as contracts-for-difference, foreign exchange futures and options.


NCDEX proposes hybrid options trading
Business Standard
With options trading in commodities about to start, the National Commodity and Derivatives Exchange (NCDEX) has asked the Securities and Exchange Board of India (Sebi) to allow derivatives that have elements of the European and American systems. However, Sebi will approve European-style options, in which the date of expiry is pre-determined and in sync with the expiry of the relevant futures contract. The regulator has conveyed this to market participants.

Will exchanges replace Prime brokers? That is the question.
Maria Nikolova – FinanceFeeds
FinanceFeeds saw 2016 as the year of Prime Brokerages, especially in London, where a raft of newly established prime brokerages and firms offering liquidity has been the overall dynamic. With big banks deleveraging in order to comply with strict capital and liquidity demands, requirements towards their mid-size clients are becoming tougher. What will Prime Brokerages do in response to this? Will they manage to thrive in 2017?

China exchanges still rife with illegal behavior: paper
China’s trading exchanges are still rife with illegal behavior despite a recent crackdown by authorities, the official China Securities Journal reported on Wednesday, citing a recent meeting of the country’s securities regulator.

NYSE to Expand Floor Trading to All U.S. Equity Securities in 2017
The New York Stock Exchange (NYSE), part of Intercontinental Exchange (ICE), today announced plans to expand its floor-based trading operations, offering investors even greater access to trade all U.S. securities for the first time with NYSE’s unique and proven market model.

EEX Group reports another record year in 2016
Valentina Kirilova – LeapRate
The European Energy Exchange (EEX) continued its growth story and was able to significantly increase its trading volumes in 2016. On its core markets – the power, gas and CO2 markets – it set new records while achieving growth in new market segments.

CBOE, C2 and CFE Trading Schedule for Martin Luther King, Jr. Holiday
CBOE Holdings, Inc. (NASDAQ: CBOE) today announced the following trading schedule for Chicago Board Options Exchange (CBOE), C2 Options Exchange (C2) and CBOE Futures Exchange (CFE) in observance of the Martin Luther King, Jr. holiday, observed on January 16.

MIAX Options Exchange: Amendments To MIAX Options Rule 515A
MIAX Options has filed with the Securities and Exchange Commission to make the MIAX Options PRIME pilot program permanent.

Regulation & Enforcement

New Finra head Robert Cook wants to publish exam result summaries
Mark Schoeff Jr. – InvestmentNews
New Finra CEO Robert Cook has struck a popular chord with one of his first initiatives as head of the broker-dealer regulator with a proposal to release a summary report of examination findings.

Remarks Of CFTC Chairman Timothy Massad Before The London School Of Economics
Press Release
We find ourselves in a very different position than eight years ago when President Obama was about to take office. In January of 2009, the world was in the depths of the worst financial crisis since the Great Depression. Financial institutions across the globe were on the brink of collapse. In the United States alone, we were losing more than 750,000 jobs a month. Over time, nearly nine million people lost their jobs, over five million lost their homes, and thirteen trillion dollars in family wealth was destroyed. Many lives were shattered, and many opportunities were lost.

****SD: The Financial Times’ Philip Stafford on Massad’s remarks here.

FCA Warns of Clone Firm Pretending to be ICE Futures Europe
Rosemary Barnes – Finance Magnates
The United Kingdom’s financial markets watchdog, the Financial Conduct Authority (FCA), today exposed another fraudulent entity, this time bringing to light the clone firm Liffe Exchange which has been included in its warning list of unregulated entities, according to an FCA statement.

****SD: A chance for a whole new Liffe!

Breaking: Banc De Binary Renounces CySEC License
Victor Golovtchenko – Finance Magnates
The Cyprus Securities and Exchange Commission (CySEC) has issued a communique that reveals that binary options broker Banc De Binary has renounced its license. The news comes only days after Finance Magnates revealed that the company is preparing to close down its operations.


HSBC adopts Bloomberg’s collateral management ahead of non-cleared margin rules
Hayley McDowell – The Trade
HSBC and other financial institutions have implemented Bloomberg’s MARS collateral management and reconciliation service, ahead of impending non-cleared derivatives rules.


Traders Set to Converge on Windy City for 91st Annual STAC Mid-Winter Meet
John D’Antona – Traders News
Trading professionals will be converging on the Windy City this week to discuss ideas, chart trading strategies and make new connections in the year’s first affiliate meeting. This week, beginning Wednesday, January 11, the Security Traders Association of Chicago (STAC) will be convening its 91st annual mid-winter meeting at the Hilton Chicago hotel.

33rd Annual CBOE RMC Set for March 8 – 10
Russell Rhoads – CBOE Options Hub
As we turn to a New Year, we all look forward to certain things. For me, near the top of that list is the spring edition of CBOE’s Risk Management Conference (CBOE RMC). We now have three versions of RMC with the US version taking place in a warm weather venue each spring for the past 32 years. The 33rd Annual CBOE RMC will be held in Dana Point, California at the Monarch Beach Resort from March 8th to March 10th.

Calling all Java Software Engineers – Friday 20th January 2017
CME Group Jobs
Calling all Java Software Engineers Welcome to the CME Group; Where Futures Are Made . Are you a Problem solver, difference maker, trailblazer? Then we are looking for you. We are hosting a recruitment drive on Friday 20th January 2017 As a Java Software Engineer you will be working within our Engineering and Execution Division that is responsible for developing and maintaining applications and software that are critical to our core business. To be eligible to attend this event you must have the following experience; 4 – 7 years’ commercial development experience in Core Java including; MVC Spring Database experience in either Oracle or SQL Join us on Friday 20th January for the opportunity to join our team and shape your future with CME Group.


S&P 500 Futures: ‘Water in the Bathtub’
Danny Riley – MrTopStep via Yahoo
After Monday’s lower lean, “Turnaround Tuesday” opened the regular session at 2264.50, down two ticks, and traded weaker on the open, as the index futures had a hard time rallying. Then, due to what some chatter called a “fat fingered” trade in the SPX options, the S&P’s took about a 5 handle dive in 20 seconds.

Trump’s game of chicken with China is a lose-lose situation
Sue Chang – MarketWatch
Despite their shared history and geographic proximity, China is not Japan, something President-elect Donald Trump should remember when he attempts to bully China into submission, according to analysts.

Euphoria or Respite in Hated Bull Market? What Some Charts Show
Lu Wang – Bloomberg
There’s little doubt that optimism over Donald Trump’s policy plans has spurred animal spirits largely absent in the stock rally that began in 2009. With the S&P 500 Index hovering around a record, what’s debatable is whether the sentiment has gone so far it spells trouble.

Get Whatcha Need
Leo Murphy – Trading Technologies
I think maybe Mick Jagger needs to talk to some of today’s graduates and hiring managers. It seems that some aren’t sure what they want—and consequently don’t get what they need. The current skills gap quandary is not a myth, but rather an expensive problem. And it seems that it is “degree agnostic.” Consider These Are The Skills Bosses Say New College Grads Do Not Have, which cited research by PayScale covering over 63,000 managers and 14,000 graduates. The study showed that new graduates lacked hard skills, such as writing proficiency, public speaking and data analysis, as well as soft skills, like critical thinking and problem solving.

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