On Tuesday morning while speaking at London’s annual International Derivatives Expo, ICE chairman and chief executive, Jeffrey Sprecher, was among other exchange officials who warned that the market’s low volatility could calm investors “into a false sense of security,” reported IFR.?
Sprecher said on a panel,??It feels like there is something about to happen. It?doesn?t feel like calm to me as it?s hard to see how central banks will change their policy?It feels like we?re on the cusp of something. I?m a contrarian to the VIX.?
His comments come as the VIX ‘s level is at seven-year lows amid the S&P 500 continuously reaching all-time highs.?
On Tuesday, the VIX closed at 10.99, down 1.43% while the Dow hit a record for the fourth straight day. The stock market highs been riding on good economic data news. While the sleepy summer months are looming, some think the second half of the year could bring back volatility.?
Meanwhile, over in Europe, last week the European Central Bank announced an easing package, including a negative deposit rate. Some think there are headwinds here and on Tuesday, Andreas Preuss, Eurex’s also spoke out on the panel, concurring with Sprecher regarding volatility.?
He said via IFR,??We are in the middle of a combination of cyclical and structural change to the industry and I?ve not found anyone capable of giving me a dissection of how much is structural and how much is cyclical.?My view is that the lion?s share is structural in some products and the lion?s share is cyclical in other products. In exchange-traded fixed income and equity index trading it is driven by cyclicality – we?re at rock bottom in terms of volatility and rates, but I believe that the second half of 2014 could offer the shy beginning of an new trend in volatility.?