October 19, 2016: Nasdaq (Nasdaq: NDAQ) has officially announced that Shanghai Futures Exchange (SHFE), one of the world’s largest futures markets, has launched a new market surveillance platform powered by SMARTS, Nasdaq’s flagship surveillance solution.

“We are truly honoured to be working with Shanghai Futures Exchange on their market surveillance efforts and believe that our partnership underscores the exchange’s commitment to maintaining the integrity and transparency of their marketplace,” said Ulf Carlsson, Vice President and Regional Manager, North Asia and Japan, Nasdaq. “As the Chinese exchange continues to increase its footprint globally, it simultaneously needs market monitoring capabilities that are scalable and match this growth. Our technology is proven across the board to be a true leader in the surveillance space, and we look forward to a long relationship with SHFE and supporting them in their efforts.”

The new system processes significant volumes of market information in real-time for SHFE to detect anomalies and also includes tools that allow analysts to make sense of the vast amounts of data for investigative purposes.

“We’re excited to work with such a rapidly developing exchange as the Shanghai Futures Exchange,” said Tony Sio, Head of Exchange & Regulator Surveillance, Market Technology, Nasdaq. “Markets globally have become increasingly sophisticated, and we continuously develop new technology to allow exchanges to monitor this activity. By taking in vast quantities of market events at the lowest level of detail, the tools build advanced models of the overall market as well as each participant’s behavior. Collaborating closely with SHFE, we have been able to incorporate the unique characteristics of a Chinese exchange into the solution. Market integrity is core to effective marketplaces and it is a privilege to be able to assist SHFE as the exchange evolves and grows.”

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IFM Correspondent

July 29, 2015: ATIG Investment and Securities provides professional services, such as Forex and CFD Trading, Equity Trading, Futures and Options Trading, Portfolio Management and Corporate Finance. The forex business has been growing in Turkey since 2011 and ATIG started providing forex services in 2012. In an interview, Okan Boke, the General Coordinator of ATIG, says, “Forex is not something in which you can be successful with luck alone.”

Tell us about the journey of ATIG Investment Securities since it was founded.

We have bene focusing on two parts:

1. the local equity and future business accompanied by the corporate business

2. the rather newly developed forex business

Despite the fierce competition from other investment and brokerage houses, ATIG has worked hard to receive respect in the first part. In the forex business, due to our backgrounds, experience and strong IT department, we are ranked among the top five. The IT expertise coupled with our long experience will take us to the top in forex business in Turkey.

What are your expectations from the forex sector in 2015?

Forex business is very new in Turkey and regulated by the Capital Market Board. The margin or accounts of the investors are held by the Clearing House (Takasbank) of Turkey. That is a very big advantage. Unfortunately, clients are not too successful at trading but if these markets are advertised in a smart and correct manner, we see big potential in the coming years. Turkish people love trading and they want to take risks. Sometimes, they make money, sometimes they lose but the young population of Turkey and desire of trading in Turkey make me think that forex markets have huge potential for Turkish investors. So, it will get bigger and bigger.

What do you think about the course of the forex industry?

Forex industry in Turkey is one of the very few, may be the only one, that is regulated by Capital Market Board (SPK). Of course, it might be regulated all around the world, but the main advantage is that all the accounts of the customers are held at the clearing house of Turkey. That makes investors feel very secure about their investments. That might be the main advantage of the Turkish forex sector and I think this application does not exist anywhere in the world. Therefore, we should be using this advantage. We can only make money if our clients make money. So, they stay in the game and they trade more and more. Looking at the success ratios of individual traders in Turkey, I don’t see too much success in the trades of the customers. We need to educate the people about the risks that they take. For example, if you are making money on a trade, you should not just exit the position immediately, try to wait bit longer and run the profit. I believe that discipline is the main area investors should be educated in.

Could you tell us about your services and activities, investment instruments, your corporate structure and the team you work with?

The team that we are working here with is excellent. We are trying to select people who are fit for the market and can be good team members. When it comes to our investment instruments, we provide customers with every financial asset such as CFDs, ETFs, all kind of currency pairs and we are very active in future trading. We also provide our customers with an online service for 24 hours. We are very active in the local equity business and local future business. In Turkey, lately corporates are trying to borrow from the capital markets by using the corporate bond issues. We have a corporate finance team at ATIG and they are in touch with clients. In the forex market, we are pricing our customers in each and every single currency pair. I think our prices are very competitive. It all comes back to strong IT background. If your IT background is good and the firm is trustable, then you can always be on top.

Please explain the risk and advantages.

I have been active in this sector for 25 years and it is not easy as it seems to make money. You have to be very careful in the market place. You have to watch and analyse all the daily economic and political issues that may have an effect on the pricing. It is not like something that you could trade at a coffee break; it’s more like a full-time business. You have to concentrate on the market, follow and watch everything such as news, daily bullets, political developments. For example, in Turkey, we watched the elections very closely. These kinds of things are very important in trading. If you do not watch these developments, if you have no idea what is going on, there is no way you can be successful. Forex is not something in which you can be successful with luck alone. The most important advantage is that it is a leveraged business. However, this advantage can turn to a disadvantage very quickly if not used properly.

What are your plans and objectives for the coming years?

If you consider that we have been around for only 2.5 years in this market, the position that we have reached right now is very promising, but not enough. There is no limit like “enough” for us. We try to be more and more active with a wider customer base and improve every day. How would we be better? It is probably if we have more happy customers. That should be our aim for the next few years.

How to succeed in the forex sector?

Most important, people need to be educated for whichever sector they are in. Also, they should concentrate on the markets to follow and watch everything, such as news, daily bullets, political developments. It will help them improve their vision in finance. Customers have to be educated and informed all the time about the risks and rewards of the forex market, the equity market or any kind of financial asset class. Therefore, we start to educate our own staff because they have to be face to face or on the phone all day with their clients to help them. Unfortunately, in this market, there is no right and wrong. For example, I have experience of 25 years but do not really know where USD will be tomorrow. We are telling them what kind of data we are expecting. The best you can do is to try to be interactive with your clients, share with them everything that you know, but do not make decisions on their behalf. Decisions should be always made by the customers. We tell them what we expect and they should be making the final decision on their trades.

                      Okan Boke

About Okan Boke

Okan Boke graduated from the Austrian High School in Istanbul. He went to Texas A&M University for undergraduate and graduate degrees. He has a B.S. and M.S in Industrial Engineering. However, his career has been entirely in finance. He started as an option trader at Citibank, New York, before returning to Turkey to work for Citi in Istanbul. He worked for some other banks, including Inter Bank, Korfez Bank, TAIB Bank and TSKB, before moving back to the USA in 2009 to work for a hedge fund in Chicago. The fund was not successful. He quit his job and returned to Turkey. He joined ATIG about a year ago. He has worked in the treasury departments of banks. At ATIG, though his title is General Coordinator, he is more like a big brother trying to help young people solve their problems, do their jobs better and improve themselves.

Also Read:

The power of 3

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8th July 2014

• Bloomberg Commodity Index falls for second consecutive week
• Oil droops as Iraq fears fade and Libya is poised for export resumption
• Outlook to bumper corn and soybean crops in the US dent prices

Commodities kicked off the second half of 2014 with a mixed performance across some of the major sub-sectors. The Bloomberg Commodity Index (formerly DJ-UBS) nevertheless fell for a second week in a row due to heavy losses in crops, including corn and soybeans, together with soft commodities such as sugar and Arabica coffee. Precious metals were higher despite the adversity stirred up by another strong US jobs number, which strengthened the dollar and sent stocks and bond yields higher.

The energy sector fell for a third consecutive week, as worries related to Iraq faded and two major Libyan export terminals reopened for business after a year-long blockade was lifted.

Industrial commodities, led by nickel and copper, were the major winners with copper seeing a third weekly rise. Continued signs of improved economic growth from the world’s two biggest consumers, China and US, at a time of falling inventories, saw the metal break higher through technical resistance to reach a four-month high.

Palladium at 13-year high

Palladium was another winner as the price rose to a 13-year high on expectations of continued strong demand from car manufacturers at a time of dwindling supplies following a five-month strike in South Africa, the world’s second largest producer after Russia. According to insiders, the supply deficit will rise to a record this year on a combination of strong industrial demand for catalytic converters and investment demand through exchange traded funds backed by the metal, which have risen to new highs.

Rally in cattle futures

Cattle futures in the US continue to rally on short supply with Americans paying the most ever for their Fourth of July holiday barbecue. Texas, the top producing state, and California have seen rising drought problems and this has forced ranchers to reduce herd sizes. In addition, this year’s very cold winter reduced the availability of pastures and forced another herd cull in affected areas.

Appetite for gold

Gold hit a multi-month high during the week as it continued to shrug off the potential price negative news from the US where monthly job creation continues to gather pace leading to speculation about an earlier-than-expected start to the rate tightening cycle.

This week’s strong jobs report saw stocks reach a new record while bond yields and the dollar rose and all of these could eventually obstruct gold’s further progress. But so far the appetite for gold seems to be on the rise with holdings in exchange traded products backed by physical gold seeing a couple of days with healthy inflows, while speculative traders such as hedge funds recently increased their net-long position in gold futures by the most since 2007.

For now, the metal remain range bound between 1300 and 1331 USD/oz; and as traders swap their trading screens for shorts and shades, activity will begin to slow. This is not necessarily something that will bring calm to the market with the average performance of gold during July and August in the past five years showing 3 and 5.5 percent, respectively. A close above 1331 USD/oz could open the way for a move towards 1370 USD/oz followed by the March high at 1392 USD/oz.

Oil slackening

Brent crude and WTI crude oil fell for a second week as the risk of Iraqi oil disruptions faded and, more importantly, news from Libya that two of its major oil terminals are finally going to reopen following a year-long blockade. This shifted the focus somewhat from the risk of supply disruptions, which drove oil prices higher during June, to the potential for increased supplies over the coming months, not least from Libya where the Es Sider and Ras Lanuf ports are once more under government control. These two terminals have a combined capacity to ship up towards of 560,000 barrels per day. The ports handover means that Libyan exports could resume some time in the near future (barring a setback) and exports could rise above 800,000 barrels per day, the highest since July 2013.

As a result of this and increased shipments from the North Sea this July, the front month spread between the first and the second futures month on Brent crude oil has collapsed from 88 cents backwardation (1st month above 2nd month) to flat in just a few weeks. Such an easing of the front month spread does not paint a picture of tight supply and at the same time it has eroded the potential profit being made from the rolling of a record net-long speculative position into a falling backwardation.

Brent crude broke support at 112 USD/barrel and WTI crude at 104 USD/barrel and both are now at risk of a deeper correction towards 109.40 and 103 respectively. Strong seasonal demand from refineries in the US and a renewed inventory reduction at Cushing, the delivery hub for WTI crude, would favor an outperformance of WTI over Brent crude.

Crops plunge

The price of key crops such as corn and soybeans traded on the Chicago Board of Trade (CBOT) plunged on Monday following the release of two reports from the US Department of Agriculture. Both the quarterly stock report and the latest update on planted acreage surprised the markets with the stock report showing domestic stockpiles of grains as being significantly bigger than what was forecast. Soybeans received some additional selling pressure from an upgrade to the planted acreage, which will help remove the tightness that kept prices supported throughout last winter and spring.

Ole Sloth Hansen, Head of Commodity Strategy, Saxo Bank

– See more at: http://www.internationalfinancemagazine.com/article/Oil-dips-gold-resilient-despite-US-economic-cheer.html#sthash.gkjnbQ9W.dpuf

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23rd July 2013

Derivatives are financial instruments whose value is a function of the price of another asset, as the name implies derivative contracts derive their value from the performance of an underlying security. A derivative contract, in their most basic form, represents the right to buy or sell a security at a specified price; derivatives are generally used as a hedging tool to guard against market fluctuations. The features of derivative contracts, such as purchase or sale price, size and expiry date are all pre-determined. The value of these financial instruments is derived from an underlying asset (stocks, bonds, commodities etc). Traders can swap interest rates, take bets on whether a firm can go bankrupt and safeguard against future asset price increases.

Two common types of Derivatives are:

Futures:  A future contract is an agreement to buy or sell an underlying asset in the future at a pre-determined price. The buyer in this transaction is obliged to take delivery of a specific quantity of an underlying asset at a specific date and price determined at the time of transaction. Conversely, the seller agrees to deliver a specific quantity of an underlying asset at a specific date and price determined at the time of transaction.

For example: When an investor gets into a futures contract, he agrees to buy or sell an asset at a predetermined price in the future. For example today is 18^th July and the spot price of gold is $1,000, a three month gold future (expiring on 18^th October) is trading at $ 1,010. As an investor I believe the price of gold is going to rise over the next three months, so i enter into a long futures contract at current future prices of $ 1,010. As on 18^th October, the gold spot price would increase to $ 1,100, so I make a profit of $ 90. Similarly if gold prices had fallen to below $1,010 as on 18^th October, i would have incurred a loss equal to the difference between the initial futures price and the final spot price.

Options: An option contract is an agreement between two parties for a specified time period which gives the holder the right, but not the obligation, to buy or sell a specified number of shares, at a pre-determined price. Options can be bought and sold like shares.

There are two types of options:

Call: A call option gives its holder the right, but not the obligation, to purchase a specific quantity of an underlying asset, at a given price for a specified time period. In order to obtain that right, the holder must pay a premium to the seller. The seller of the call option has the obligation to sell a specific quantity of an underlying asset at the strike price indicated, if the holder exercises his right. Against this obligation, the writer receives a premium paid by the buyer.

For Example: Today is 18^th July and as quoted in the earlier example, the spot price of gold is $ 1,000, a call option that gives the holder the right to purchase gold for $ 1,000 as on 18^th October is trading at $ 30. As an investor I believe the price of gold is going to rise over the next three months, so i spend $ 30 to and purchase the call option. As on 18^th October, the price of gold is $ 1,100, now i exercise the “call” option and purchase gold for $ 1,000 and make a profit of $ 100. My net profit after deducting the cost of option would be $ 70. If the market price at expiry was below $ 1,000, i would not have exercised this option (as the market price is cheaper than the option strike price) and my profit would have been zero, after factoring the cost of option my net loss would be $ 30. The major advantage of this form of derivate trading (as quoted in the example) is if the prices of gold were to fall, no matter how much it fell, my maximum loss would always be at $ 30, the price paid for the option, whereas my net profit from is infinite.

Put: A put option gives its holder the right, but not the obligation, to sell a specific quantity of an underlying asset, at a given price (strike price) by a specific date (the expiration date). In order to obtain this right, the holder must pay a premium to the buyer. The buyer has the obligation to purchase a specific quantity of the underlying asset at the strike price indicated, if the holder exercises his right. Against this obligation, the writer receives the premium paid by the buyer.

For Example: You bought a company’s shares for $ 31, but you are concerned the shares of the company may drop due to a weakening market. A good way to protect yourself from this situation is to buy a ‘put’ option. So you decide to buy an August 30^th put for a premium of $ 1, which costs you $ 100. Buy buying the put you are locking the value of your stock at $ 30 per share until the expiration date. If the stock price falls to $ 20 per share, you can still sell it someone at $ 30 per share, as long as the option has not expired. By using this option as portfolio insurance, it fixes your worst risk at $ 200, which is inclusive of the $ 100 premium and the loss of $ 1 per share you can lose after paying $ 31 per share for the stock.

Forward Contract: A forward contract is an agreement to sell a currency, commodity or other asset at a specified future date and at a predetermined price. This may be the current price or the exchange price, or an agreed forward price, which would be at a discount or premium to the spot rate. Fundamentally, forward and future contracts have the same function as both contracts allow the traders to buy to buy or sell a specific asset at a specified time and a given price, however, future contracts are exchange traded and hence standardized contracts. Forward contracts on the other hand are private agreements between two parties and are not rigid to the terms and conditions stated in the agreement. The chance of default in this contract is high due to the absence of an exchange or clearing houses. Future contracts have clearing houses that guarantee the transactions and lowering the probability of default drastically.

Swaps: Swaps are derivative contracts and trade over the counter. The most commonly traded and liquid interest rate swaps are known as “vanilla” swaps, which exchange fixed rate payments for floating rate payments based on LIBOR and FCA regulations. Swaps have been categorised into equity swaps, commodity swaps, currency swaps and interest swaps.

Who Bears the Risks ?

After reading the above paragraphs of the article, you may be puzzled to understand who will ultimately bear the risk of derivatives? And what is the purpose of investors and speculators in the derivative market? Assad Dossani, a financial analyst and columnist who also trades on derivatives says, Investors take on the risks that hedgers want to get rid of, hedgers pass on the risk to investors and investors as a result expect to earn a profit for taking on the risk.

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