Pounded By The Pound: Sports Direct’s Hedges and the Cable Flash Crash

Introduction Just after midnight London time on October 7th, 2016, GBPUSD (henceforth “cable”, henceforth “betty”1) abruptly plunged from 1.2620 to 1.1841 1.1938 1.1378 1.1500 1.14912 in the space of about three minutes, then just as quickly bounced back to the mid-1.20s. Explanations for the move ranged from “algorithms!” to “fat fingers!” to “stop-losses being executed in the typically thin, illiquid markets that prevail between NY and Tokyo timezones” to “hard Brexit” to, probably, “aliens landing on the grounds of Buckingham Palace!

40-Times-Leveraged Short Volatility Trade Goes Horrifically Wrong For Everyone Involved

…or, Managing and Mitigating the 2014 CNH FX TARF blowup (Author’s note: I wrote this a year or so back for a few friends on Finance Twitter who wanted to know what FX TARFs were and what effect the huge vol overhang from USDCNH TARFs would have on the spot market. I figured that the shenanigans in USDCNY yesterday made it an appropriate time to dig this up and republish it for a wider audience.

What’s mine is yours; what’s yours is mined

(I was going to turn this into a tweetstorm, but it’s a bit over the line for what would be a reasonable-length tweetstorm and also I am an old fart who thinks tweetstorming is unwieldy. Am I the only one who thinks tweetstorms are kind of annoying? Apparently I am.) The big news in bitcoin-land today is the nine-figure-USD evaporation of the Mycoin exchange in Hong Kong (the SCMP article is paywalled but also worth a read) which turned out to have been a ponzi scheme.

Trading while insolvent is apparently fine if you’re a bitcoin exchange

Amid the fiasco of MtGox’s apparent collapse last night (acquisition? rebranding? god knows), some kind person leaked MtGox’s “Crisis Strategy Draft”. It’s an internal Powerpoint that appears to describe a plan for shutting down MtGox and relaunching it as “Gox” - a new, trustworthy Bitcoin exchange from the people who brought you this. And this. And there is _so much_ icky stuff in there. On page 2, there’s the admission that they’ve been robbed of nearly 750,000 BTC - call it $400 million and you’re not far off.

This is what we call idiosyncratic risk

So despite having been away from Disneyland-with-the-death-penalty for more than a year, I can’t resist keeping up with the news from Singapore’s spectacularly dodgy S-chip stocks - the Chinese small-caps that infest the lower reaches of the SGX because it’s the only exchange that will take their listing fees. And one of them - an abalone-farming firm named Oceanus Group - dropped an absolute humdinger of an announcement a few days ago.