Low Volatility Favors Investors Right Now

LEAD STORIES 

Low Volatility Favors Investors Right Now
Plus, 2 tricks for using the VIX in your trading
Jan 31, 2012
By Adam Warner, InvestorPlace
News Flash: The CBOE Volatility Index (CBOE:VIX) has had a pretty severe drop these past few months. By some measures, this is as fast as it has ever declined. In fact, the VIX has pared nearly 2/3 of its “value” in less than four months. I use the term “value” loosely, though, as the VIX is not a stock or a commodity or any sort of hard asset. It’s a statistical calculation — essentially a measure of the price investors will pay for portfolio protection. The VIX has no fair value, just simply a market value. And right here, right now — investors have placed a lot less value on that protection than they did just a few short months ago.
Is a Low VIX Cause for Celebration … or Alarm?
So what does a low VIX mean for you? Should you worry that other investors are not all that worried any more? Or should you gain extra confidence now that investors appear to be bubbling with confidence?  

http://jlne.ws/ztF4iZ

Brace Yourselves. The Euromoney FX Poll Is Open
By Katie Martin, The Source - WSJ
Last Thursday morning in London an announcement went out over the speaker system of a large bank’s foreign-exchange trading floor.
“OK everyone, the Euromoney poll is now live…” it began. Moments later came the sound of a grown man screaming in mock agony, horribly aware of the pressure he will face in the coming weeks to extract votes from his clients. The scene is likely to have been repeated on every major currencies-dealing floor in the City that day, as banks brace for the biggest annual public-relations (and ego) war at the heart of a global $4 trillion-a-day market. First launched in 1979, the annual poll run by Euromoney magazine has become the de-facto benchmark of banks’ market share–the Oscars of the FX industry. Voting this year closes March 2, and the results are published in May...
Competition is turning to extremes. The head of operations at one large retail FX-trading venue, who didn’t wish to be named, said that this year, one bank sent its global head of foreign-exchange options on an overseas trip to visit him and try and secure his vote–the first time anyone has gone to such lengths.
http://jlne.ws/yuB5CS

Largest option buying in equities so far
by David Russell from optionMONSTER
Nearing the halfway mark in today's session, here are the individual equity names with the most call and put buying on optionMONSTER's ActionTracker data system.
Thoratec (THOR): More than 5,000 April 32 calls were bought for $1.60 to $1.70 as investors positioned for upside in the stock. THOR fell 4.04 percent to $29.72.
http://jlne.ws/xHwVqd

EXCHANGES

Maple Group and TMX Group Announce Extension of Offer to TMX Group Shareholders to February 29, 2012
MAPLE GROUP ACQUISITION CORPORATION Press Release
TORONTO, Jan. 31, 2012 /CNW/ - Maple Group Acquisition Corporation ("Maple"), a corporation whose investors comprise 13 of Canada's leading financial institutions and pension funds, and TMX Group Inc. (TSX: X) today announced the extension of Maple's offer to acquire a minimum of 70% and a maximum of 80% of the shares of TMX Group to 5:00 p.m. (Eastern Time) on February 29, 2012, unless further extended or withdrawn. The Maple offer is part of an integrated acquisition transaction, valued at approximately $3.8 billion, to acquire 100% of TMX Group shares. The TMX Group Board of Directors continues to unanimously recommend that shareholders accept and tender their shares under the Maple offer.
http://jlne.ws/wEyzFt

Nasdaq OMX makes clearing house pledge
By Philip Stafford in London
Nasdaq OMX has moved to reassure investors trading on its exchange in Europe that their funds cannot be touched by administrators in the event of a broker default. The transatlantic exchanges operator put the pledge at the heart of an overhaul of its clearing default fund. The group is switching to a member-financed default fund for its Nordic business on March 1 in preparation for sweeping incoming European legislation that will elevate the role of clearing houses in safeguarding the world’s financial system.
http://jlne.ws/xOMhWO

NASDAQ OMX had the Lowest Relative Performance in the Specialized Finance Industry
FINANCIAL NEWS NETWORK ONLINE
By Mallory Stone in Fast Lane, Financial News Network
Here are 5 stocks in the Specialized Finance industry ranked by performance. We compiled the trading activity from yesterday and then analyzed the industry looking for stocks that were underperforming. This is what we found:
NASDAQ OMX (NASDAQ:NDAQ) ranks first with a loss of 2.65%; NYSE Euronext (NYSE:NYX) ranks second with a loss of 1.81%; and Moody's (NYSE:MCO) ranks third with a loss of 1.65%.
http://jlne.ws/wUlZYb

NYSE-Deutsche Börse merger: Commission veto likely
By Eric van Puyvelde Tuesday 31 January 2012
It seems most likely that on 1 February the European Commission will veto – under the EU’s merger control regulation – the merger between Deutsche Börse and NYSE Euronext. NYSE Euronext groups the New York, Paris, Brussels, Amsterdam and Lisbon exchanges. If the merger took place, Deutsche Börse shareholders would have 60% of the holding, while NYSE shareholders would have 40%. NYSE would become the world’s largest stock market operator in all market activities (cash, derivatives, delivery versus payment, custodial services and market data). Over the last weeks, the leaders of the two financial firms took many steps and made many declarations to demonstrate their determination to see the project through. But the Commission is concerned about overlaps in the stock options sector in Europe and in stock-index futures and interest rates.
http://jlne.ws/x7ASh8


OPTIONS ON FUTURES 

Crude Options Volatility Declines as Futures Slip a Second Day
By Barbara Powell, Bloomberg - Jan 30, 2012
Crude oil options volatility declined after underlying futures fell for a second day as European leaders sparred with Greece over a debt reduction program to keep the region’s financial crisis from spreading.
Implied volatility for at-the-money options expiring in March, a measure of expected price swings in futures and a gauge of options prices, was 27.6 as of 3:30 p.m. in New York, down from 27.7 on Jan. 27.
Crude for March delivery fell 78 cents to settle at $98.78 a barrel on the New York Mercantile Exchange, the lowest settlement since Jan. 20.
http://jlne.ws/AhPW1k 

Bursa Malaysia Readies New Clearinghouse For 1Q Launch
Written By Jacob Bunge, Dow Jones Newswires
Published January 31, 2012
PALM BEACH, Fla. -(Dow Jones)- Bursa Malaysia Bhd (1818.KU) is preparing to launch a new trade-clearing facility for its derivatives markets that will enable the Kuala Lumpur exchange to offer a broader range of contracts, according to a senior executive.  The firm anticipates the new clearinghouse, built on technology supplied by Korea Exchange, to start operations in the first quarter, said Sree Kumar, general manager of business development for Bursa Malaysia. Bringing the new facility online will enable Bursa Malaysia to offer options on crude palm oil, its most heavily traded commodity market, as well as options on the country's main stock index and new futures contracts denominated in foreign currencies.
http://jlne.ws/AwByv7


STRATEGY 

Using Options to Play Facebook's Public Debut
By Steven M. Sears, Barrons.com
MONDAY, JANUARY 30, 2012
The best way to invest in the most-anticipated IPO since Google's may not be in the stock itself.
Facebook's expected initial public offering will be hot, but the best trade may be on the company's options.  Six days after the shares start trading, as specified by options industry trading rules, exchanges will list puts and calls on Facebook's shares.  Investors can leverage the Facebook stock hysteria by using options -- especially bearish put options -- to play the stock in what could be the largest initial public offering ever floated on the stock market.  Facebook is expected to reveal the size of the offering when it files papers with the Securities and Exchange Commission in two days. And that will set off a mad dash at exchanges, and especially brokerage firms, as investors jockey to get a piece of the deal.
http://jlne.ws/wFtOLr 

A Cautious Bet on Riverbed Technology
By STEVEN M. SEARS, Barrons.com
How to use options to profit from even a modest rally in the fallen networking stock.
Pity the investors who went long on shares of Riverbed Technology. The networking-equipment provider's shares have fallen 20% in the past week following a first-quarter earnings report that disappointed Wall Street.
Analysts who follow Riverbed (ticker: RVBD) have since been locked in a bull-bear debate over the company's merits. Such disagreement often helps stocks because it blends and balances extreme optimism and pessimism, which can coalesce to create opportunities for stocks to rise.
To better balance the risk, and potential reward, in a fluid market condition, investors should consider an options trade that lets them control Riverbed Technology's stock for a little bit of money while also limiting the risk.
http://jlne.ws/wmoRjo 

VIX - Options Volatility Sonar: Tuesday Recap And Amazon Earnings Special
Seeking Alpha
by: Erick McKitterick January 31, 2012
Tuesday, S&P futures traded up very nicely into the U.S. opening bell. The market was off to the races until the consumer confidence number mentioned in yesterday's article put the brakes on the rally. S&P ETF (SPY), Nasdaq ETF (QQQ) and the Russell ETF (IWM) all put the brakes on as they traded back down to flat to slightly positive. The CBOE Volatility Index (VIX) spiked hard after the abysmal CB consumer confidence number showed a reading of only 61.1 which missed forecasts by a mile at the 68.2 level. This is the worst number miss since August of 2011.
http://jlne.ws/wBrfC9

 

EVENTS 

 

Live Webinar: Trading the New ICE Weekly Sugar, Coffee and Cotton Options

Thursday, February 2
1:30 PM CT/2:30 PM ET
Please join ICE as it presents an overview of its new weekly options on sugar, coffee and cotton futures and a session with Mark Longo of OptionsInsider.com on how you can incorporate these short-dated instruments into your trading.
For information, contact: webinar@theice.com

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AFP: Tie-up with NYSE Euronext not vital for Deutsche Boerse

LEAD STORIES 

AFP: Tie-up with NYSE Euronext not vital for Deutsche Boerse
By Etienne Balmer (AFP) – 1 day ago
FRANKFURT — The proposed merger of Deutsche Boerse and NYSE Euronext -- which now looks almost certain to fail -- is not vital for the German company's survival, say analysts and industry experts. According to NYSE Euronext chief executive Duncan Niederauer, there is only a "glimmer of hope" that the tie-up, which would create the world's largest market operator, will be approved by European competition authorities.
EU competition authorities opened a probe into the deal in August over concerns that the merged company would control 90 percent of the European derivatives market.
http://jlne.ws/AyoV2Y

U.S. Stock Futures Slide on Greece Debt Concerns; Thomas & Betts in Focus
Forbes
Options volume remained mildly bullish on Friday, with calls maintaining their edge over puts on the session. Overall, the Chicago Board Options Exchange (CBOE) saw 1.98 million calls trade compared to 1.7 million puts. As a result, the single-session CBOE total put/call volume ratio finished at 0.88, down moderately from Thursday’s reading of 0.98.
http://jlne.ws/xqET2Q

U.S. Stock Options With Biggest Changes in Implied Volatility
By Bloomberg News - Jan 30, 2012
The following are the U.S. stock options that had the biggest percentage changes in implied volatility from the previous trading day as of 11:30 a.m. in New York. This {OSCH } search was limited to options that are more than 10 days from expiration, have trading volume of at least 200 contracts and have strike prices within 5 percent of the underlying security's price.
http://jlne.ws/AuKlqz

EXCHANGES 


Nasdaq Earnings Preview: What We're Watching
January 30th, 2012 by Trefis Team
Nasdaq OMX (NASDAQ:NDAQ) is going to announce its fourth quarter earnings on Wednesday, February 1, 2012. Last quarter, the company benefited from the increase in trading volume and reported an all time high revenues of $438 million. In the fourth quarter, however, the company will be hard-pressed to match the third quarter’s trading surge as fears over the debt crisis in Europe coupled with the slowdown during the holidays weighed on the trading revenues. Nasdaq OMX provides trading, exchange technology, securities listing and public company services and competes with CME Group (NASDAQ:CME), NYSE Euronext (NYSE:NYX), IntercontinentalExchange (NYSE:ICE) and CBOE Holdings (NASDAQ:CBOE).
http://jlne.ws/woO0nl
 ICE Brent Crude Benchmark Reaches Open Interest of One Million Contracts
LONDON, Jan. 30, 2012 /PRNewswire via COMTEX/ -- IntercontinentalExchange /quotes/zigman/373487/quotes/nls/ice ICE -0.82% , a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, announced today that the benchmark ICE Brent Crude futures contract reached a new record open interest level of 1,001,286 contracts on 26 January, 2012.
http://jlne.ws/xZyG4V



TECHNOLOGY
 
Scaled Dynamics, Inc. Joins CQG’s Certified API Partner Program
Press Release January 30, 2012 – Scaled Dynamics, Inc. is proud to announce that it has joined CQG’s (www.cqg.com) Certified API Partner Program. Scaled Dynamics’ GateKeeper application, a multi-platform front-end trading interface, will offer a full suite of automated trading tools utilizing CQG’s market data and order entry. Consultants are also available to build custom-tailored solutions for individual execution or risk management needs.
“We are pleased to welcome Scaled Dynamics to our API partner program,” said Mark Fischer, CQG’s Vice President of Product Management. “The combination of Scaled Dynamics’ ability to deliver a range of custom trading solutions together with CQG’s extensive exchange connectivity is a win for traders seeking flexibility and global reach.”
http://jlne.ws/AacyKf


STRATEGY
 An Options Strategy Beats the S&P
By STEVEN M. SEARS, Barrons.com
Writing covered calls would have increased performance smartly over the past five years, Goldman finds. A baker's dozen stocks that could benefit.
Only fools and suckers do nothing but hope that stock prices rise. But too many investors have recently lost too much money doing just that.
All across America, people are receiving annual investment reports and many are having glum talks with brokers about why their stock portfolios barely budged in 2011. Those people, especially retirees and those on the cusp of what was once dubbed the Golden Years, lost an all-important year of returns.
THE TYPICAL STOCKBROKER'S EXPLANATION—that the Standard & Poor's 500 ended the year roughly where it began—is of little solace to those who depend on investment portfolios to help finance their retirement. 

http://jlne.ws/wn0dP1

Complete Volatility Review
By Mark Sebastian TheStreet
This complimentary article from Options Profits was originally published on January 23 at 7:38am EST.
At some point I am going to stop being bearish on the volatility complex. However, that time has not come yet. While this week we saw, for the first time in a long time, the CBOE Volatility Index (VIX) end slightly higher, and the SPX end slightly lower I don't think it is much cause for alarm. Let's examine the market's movement instead of the market's direction.
http://jlne.ws/yOsvMZ

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OptionsXpress Benefits from Complex Orders

LEAD STORIES


OptionsXpress Benefits from Complex Orders
Peter Chapman, Traders Magazine Online News, January 27, 2012
The options industry recorded double digit growth last year, and at least one broker credited the use of sophisticated strategies for its good fortune.
OptionsXpress, bought by Charles Schwab & Co. in September, saw the number of options trades done by its 400,000 customers jump by 10 percent last year. Multi-leg strategies that establish directionally neutral positions increased in popularity, while those that are bullish or bearish saw less use.
"We have seen an increase in the use of more advanced strategies," Nina Milovac, the director of OptionsXpress' educational efforts, said at a recent industry conference. "The biggest increase was in the butterfly strategy."
The retail broker handled 27 percent more butterfly trades in 2011 versus 2010, Milovac said. The spread trade is constructed with four options-either all calls or all puts. Two options are bought. Two are sold. A directionally neutral position is achieved. Overall, OptionsXpress' highly active customers boosted their use of spread trades by 18 percent over the previous year. Spreads include butterflys, condors, diagonals, verticals, ratios, boxes, calendars, and others.
http://jlne.ws/ygHVgr

*OptionsXpress is not the only entity affected by this increase in complex strategies. JLN Options has upcoming interviews with Steven Crutchfield, CEO of NYSE Amex Options, and John Goode, CIO of BOX, on the need for Complex Order Books to handle these trades.

Regulators Eye Exchange Technology
By JACOB BUNGE, WSJ.com
The technology used by U.S. stock exchanges faces tougher scrutiny from regulators following several high-profile breakdowns over the past year that snarled trading, according to people familiar with the matter. The Securities and Exchange Commission is drawing new standards for trading systems that would give the agency more powers to step in when problems occur. The vulnerability of U.S. stock trading to problems in increasingly interdependent electronic systems was highlighted by the May 2010 "flash crash," which sharpened the SEC's focus on technology.
The May 2010 'flash crash'—as seen from the floor of the Big Board—pushed regulators to propose new powers to address trading problems.
Exchanges run by Nasdaq OMX Group Inc. and Direct Edge Holdings suffered big technology glitches over the past year that forced them to make up millions of dollars in losses to customers. Minor problems, such as a server outage that affected trading data for some stocks on the New York Stock Exchange this week, are more common.
http://jlne.ws/w4Ud2I

VIX - Options Volatility Sonar: Thursday Recap
Seeking Alpha
Thursday followed up the amazing day we had on Wednesday with S&P futures trading higher on the backs of a great report out of Caterpillar (CAT). Caterpillar beat the street by a mile and raised its revenue outlook for 2012 now expecting revenue of 68 to 72 billion and expects to earn around 9.25 per share. Other companies beating expectations were Bristol-Meyers (BMY), Time Warner (TWX), and 3M (MMM). Once again it appears the long volatility trade was wrong again as The CBOE Volatility Index (VIX) continued its march toward 17. Then the rally began to fade with the VIX perking up but VIX futures were actually down as depicted below.
http://jlne.ws/yt3qyp
 
U.S. Stock Options With Biggest Changes in Implied Volatility
By Bloomberg News - Jan 27, 2012
The following are the U.S. stock options that had the biggest percentage changes in implied volatility from the previous trading day as of 11:30 a.m. in New York. This {OSCH } search was limited to options that are more than 10 days from expiration, have trading volume of at least 200 contracts and have strike prices within 5 percent of the underlying security's price.
http://jlne.ws/yZ0Jvh

EXCHANGES 

NYSE Chief Sees Other Options Should Deutsche Boerse Deal Fail
Businessweek
January 27, 2012
By Nandini Sukumar and Erik Schatzker
Jan. 27 (Bloomberg) -- NYSE Euronext, awaiting a final decision from the European Union on its merger with Deutsche Boerse AG, has other acquisition opportunities, Chief Executive Officers Duncan Niederauer said today.  There are “lots of assets that are available,” Niederauer said in an interview with Bloomberg Television in Davos, Switzerland. “Everyone will take a look at LME, LCH is an important asset,” he said, declining to comment on whether NYSE would make an offer.
http://jlne.ws/AhqD6W
 
Northwestern Memorial names Bernick, Brodsky to board posts
Crain's Chicago Business
By: Kristen Schorsch and Thomas A. Corfman January 26, 2012
(Crain's) — Former Alberto Culver Co. executive Carol Bernick and Chicago Board Options Exchange CEO William Brodsky have been picked for top board posts at Northwestern Memorial HealthCare.
Ms. Bernick has been named chairman of the Chicago-based health system's board. She was executive chairman of the Melrose Park-based cosmetics company until she sold it for $3.7 billion in May 2011 to Unilever PLC.
Meanwhile, Mr. Brodsky has been named chairman of the board of the flagship Streeterville hospital.
http://jlne.ws/wKFvRs 

Wall Street's Sexiest Model
Emily Lambert, Forbes
Apologies to anyone who clicked on this story expecting to read about Christie Turlington or the latest Heidi Klum-Seal split news. But this is about Wall Street’s sexiest models – we’re talking about math.
The last few years have given us plenty of reasons to hate financial models. Models that promised to increase efficiency and manage risk became substitutes for common sense and justifications for greed. The real estate bubble was of course justified by them.
Yet people at hedge funds and trading firms, using models to mint money, remain passionate believers. Another supporter is George Szpiro, a mathematician turned writer who recently released a book called Pricing The Future, about the history of the Black-Scholes equation, the most famous model in finance and the one that launched this quantitative revolution (plus the Chicago Board Options Exchange). Szpiro, interviewed from his home in Jerusalem, explains why he still trusts models but why we should keep a close eye on the people who use them:
http://jlne.ws/zANGkT

* Yeah, it's about the Black-Scholes model. But the funniest thing in this article is that there is an actual link to the Heidi Klum-Seal split news.

TECHNOLOGY 

Liquidity Centers Are Big Business
By Greg MacSweeney, Wall Street & Technology
Exchanges are the latest participants to jump into the data center colocation game as the appetite for hosted services shows no letdown.
Truth be told, data centers aren't all that exciting. The server rooms largely are nondescript, dimly lit, extremely utilitarian and cold -- both literally and aesthetically. But the technology inside the buildings is another story. The technology continues to evolve at blinding speeds, with stages of technological innovation often visible inside a single facility. Newer data centers are huge -- typically 200,000 square feet or more -- and they often roll out in phases, which makes it possible to witness improvement from Phase 1 development to Phase 3 development.
In Equinix's facility in Secaucus, N.J., for instance, the cooling vents in the first phase were located close to the ceiling. In subsequent phases, the vents were lowered just above the server cabinets to blast cool air directly into the racks. While the change may not seem like a huge technological advancement, it increases cooling efficiency, something that is extremely important in an operation where cooling and power comprise the No. 1 cost.
http://jlne.ws/xOND0e


STRATEGY 

Hedging against disaster even as markets grow calm
By Gertrude Chavez-Dreyfuss,Reuters
NEW YORK | Fri Jan 27, 2012
Don't be deceived by the U.S. stock market's rousing start this year or the new-found stability of the euro.
After months of seizing on every incremental development in Europe as a reason to buy or sell, markets have started 2012 on a firm footing. The S&P stock index is up 4.8 percent so far this year and the euro has rebounded from recent declines on hopes the euro zone will survive a likely default by Greece.
But fund managers betting on economic armageddon say the worst is far from over as they eye the negotiations to restructure Greece's debt warily. While well-worn measures of volatility such as the CBOE Volatility Index show relative calm, indexes that track bets on extreme outcomes are rising. It's why "tail risk" investing - pursued by funds that bet on steep, unexpected drops in asset values - is still attracting investors eager to protect against unlikely outcomes such as a market crash. The recent decline in volatility has made these hedges cheaper.
http://jlne.ws/zG4eBV

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In Options Land, Near-Term Signals All Clear. But Midyear In Doubt

LEAD STORIES 

In Options Land, Near-Term Signals All Clear. But Midyear In Doubt
By Brendan Conway, Reuters
The market dynamic has been repeated several times since the financial crisis: Stocks rise sharply, and investors’ interest in options wanes at the very moment that it would cost less to buy options as portfolio insurance.
By a range of measures, the U.S. options market illustrates investors’ near-term bullishness. The Chicago Board Options Exchange Volatility Index, the “fear index,” has drifted below its historical average. That decline, which reflects the lower prices investors pay for puts and calls on the Standard & Poor’s 500-stock index, is the clearest sign of decreased demand for options. Meanwhile, the number of put options granting the right to sell the most popular exchange-traded fund, the SPDR S&P 500 ETF (SPY), fell to a one-year low of 8.8 million contracts following last Friday’s monthly options expiration, as more traders unwound their protective positions. The figure, known as the “open interest,” includes put options of all maturities.
http://jlne.ws/wJGg73

CBOE Futures Exchange (CFE) to Launch Futures on Radar Logic 28-Day Real Estate Index on February 2

CHICAGO, Jan. 26, 2012 /PRNewswire/ -- CBOE Futures Exchange, LLC (CFE) announced today that on Thursday, February 2, it plans to launch futures trading on the Radar Logic 25-Metropolitan Statistical Area (MSA) RPX Composite Index (futures symbol: RPXCP). The index tracks U.S. residential housing values as a whole and is one of several Radar Logic 28-Day Real Estate indexes on which CFE may offer futures contracts.

CFE also announced that Barclays Capital will serve as the Designated Primary Market Maker (DPM) for Radar Logic 25-MSA RPX Composite Index futures.

"We are pleased to partner with Radar Logic to bring to market the industry's first real estate futures contract featuring comprehensive national residential real estate values and daily pricing," CFE Managing Director James F. Lubin said. "Now, with CFE futures on RPX indexes, the residential real estate community will have a powerful risk management tool combining these unique contract features with the benefits of an exchange-traded marketplace — improved price discovery, market transparency, execution certainty and centralized clearing." 

http://jlne.ws/dqtww6 

‘Extreme’ S&P 500 Momentum, VIX Signal Drop

By Lu Wang - Jan 26, 2012
The Standard & Poor’s 500 Index’s best January rally since 1997 has pushed a pair of momentum and sentiment gauges to levels seen only 6 percent of the time since 1993, a sign the market is due for a pullback, BTIG LLC said. The benchmark index’s 14-day relative strength index, which measures the degree that gains and losses outpace each other, rose above 70 yesterday for the first time since Feb. 18, according to data compiled by Bloomberg. Some technical analysts consider RSI readings above 70 a sign that stocks have risen too far, too fast. The Chicago Board Options Exchange Volatility Index (VIX), a gauge known as the VIX, fell below 20 for the first time since July on Jan. 19.
http://jlne.ws/zi7iDA

VIX ETFs Go Over A Cliff (VXX, TVIX, VXZ, XIV)
Wall Street Sector Selector
VIX Goes Over A Cliff (VXX, TVIX, VXZ, XIV)VIX ETFs tumble in response to Dr. Bernanke and FOMC interest rate announcements.
VIX, the CBOE Options Market Volatility Index, commonly known as the fear indicator, continued its plunge today as stocks rallied in response to Dr. Bernanke’s and the Federal Reserve’s ongoing accommodative monetary policies. VIX is widely seen as a predictor of future stock prices as when fear is high in the markets, VIX rises and stock prices tend to decline while the opposite is true in rising stock markets.
http://jlne.ws/AlYL2A

Fidelity Research Reveals Traders' Motivations Beyond Investment GainsKeys to Success: Consistency, Curiosity and Flexibility
Press Release, BOSTON, Jan 26, 2012 (BUSINESS WIRE) -- Fidelity Investments(R), a leader in helping individuals research and invest in the financial markets, today released research that shows active investors and active traders(1) derive on average 18 percent of their annual income from trading activities, but more than three quarters (78 percent) say they enjoy trading for other reasons. The survey also reveals the traits these traders consider key to their investing success, and what they would do differently if they could start over.
Beyond investment gains, traders find motivations in the following activities:
-- Fifty-four percent enjoy discovering new opportunities ("the thrill of the hunt").
-- Fifty-three percent enjoy learning new investing skills.
-- Many also enjoy engaging in social activities, including more than half who share news of their investing "wins and losses" with friends and family (59 percent share wins, 52 percent share losses), and half who seek guidance from trading peers.
http://jlne.ws/zwd9mD

EXCHANGES

Nasdaq’s Greifeld Says Not Interested in LSE, NYSE Bids
Businessweek January 26, 2012
By Elisa Martinuzzi and Whitney Kisling
Jan. 26 (Bloomberg) -- Nasdaq OMX Group Inc. isn’t interested in buying the London Stock Exchange Group Plc or another attempt at NYSE Euronext, even as antitrust regulators recommend against Deutsche Boerse AG’s bid for the owner of the New York Stock Exchange, Chief Executive Officer Robert Greifeld said. Nasdaq OMX, which made a failed hostile bid for NYSE Euronext in April, doesn’t want the LSE, Greifeld told reporters today in Davos, Switzerland. He said later that he wouldn’t consider a second attempt at NYSE Euronext because the U.S. Justice Department rejected the idea.
http://jlne.ws/AhI3eM

STRATEGY

Volatility Spurs Aggressive Algo Strategies
In volatile markets traders choose more aggressive algorithmic trading strategies and increase the level of human interaction.
By Kerry M. Bowbliss, Advanced Trading January 25, 2012
Equity traders are no strangers to volatile markets, and in the last several months they have responded similarly to how they have during other turbulent times, by trading more aggressively.
"We see a definite shift in what people choose when you hit the very high volatility days," says Dan Mathisson, managing director and head of Advanced Execution Services, Credit Suisse. When the market gets volatile, people shift from patient algos to aggressive algorithms. He explains, "There is much less use of full day VWAP and our Guerilla algorithm and a shift to Sniper and Blast, our most aggressive tools."
Mathisson adds, "And we see shifts within algos, when people have a choice as to whether they want to be patient or aggressive with a particular algorithm, they choose aggressive."
http://jlne.ws/wXw0dW

 

 

Growth concerns behind bearish options bets in YumBy Doris Frankel and Lisa Baertlein, Reuters

Wed Jan 25, 2012
* Yum February $60 puts stand out
* Yum overall options volume above the norm this week
By Doris Frankel and Lisa Baertlein
Option investors appear to have worries about Yum Brands Inc , taking out protection against a share price decline ahead of the fast-food chain's quarterly report early next month, analysts say.
Prospects of slowing Chinese growth and unfavorable exchange rates, the same headwinds that threaten rival McDonald's Corp , are worrying investors in the fast food purveyor.
http://jlne.ws/yT0VSl

How to Use Options to Wring Return From Yahoo!
By STEVEN M. SEARS, Barrons.com
How to extract more return from the search engine's moribund stock with options.
Yahoo! (ticker: YHOO) is dead. Or at least its stock has been dead money.
The stock has barely budged in the past year, and now it tops J.P. Morgan's list of "range-bound stocks" that is distributed to Wall Street's top investors. Rather than hoping Yahoo is acquired by another company, the rumor du jour swirling around it for the past few months, sophisticated investors can still profit from its stalled shares. Specifically, they can sell a March $15 put and March $17 call and profit while Yahoo remains stalled. Shares were recently at $15.64.
http://jlne.ws/xXg7EA

OPTIONS EDUCATION

 

 

Eurex and IFM announce joint educational initiative

Eurex Group News Release
IFM to deliver its best-in-class derivatives education for Eurex training purposes/ Eurex webinar series to target traders and investors in English and Portuguese languages
Eurex Group and the Institute for Financial Markets (IFM) announced today that they have teamed up to offer a joint educational initiative. Both partners aim to bring IFM’s best-in-class derivatives education to Eurex Exchange members and potential clients as well as the general industry. One joint initiative will be the first-time offering of IFM’s well-respected courses in the form of webinars in English. A large subset of the webinars also will be available in Brazilian Portuguese. Members of the brokerage community will be involved to further extend customer outreach.
http://jlne.ws/xiQFM8

EVENTS 

Penson Worldwide, Inc. Fourth Quarter 2011 Conference Call On Tuesday, February 28, At 10 AM Eastern (9 AM Central)
Press Release
Penson Worldwide, Inc. (NASDAQ: PNSN) will host a conference call on Tuesday, February 28, 2012 at 10:00 AM Eastern Time (9:00 AM Central Time) with Philip A. Pendergraft, Chief Executive Officer; Bryce B. Engel, President & Chief Operating Officer; and Kevin W. McAleer, Chief Financial Officer. The call will be held to discuss results for the fourth quarter ended December 31, 2011 that will be issued in a release after the market closes on Monday, February 27, 2012. The call will be accessible live via a webcast on the Investor Relations section of www.penson.com. A webcast replay will be available shortly thereafter. Access the webcast link in advance to download any necessary software.
http://jlne.ws/wWtZzx

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How Buy-Side Traders Are Adapting to the Volatility

LEAD STORIES 

How Buy-Side Traders Are Adapting to the Volatility
Advanced Trading
Buy-side traders are demanding stronger trading tools to navigate the increasingly volatile markets, according to a recent TABB Group study.
By Miranda Mizen, Tabb Group January 25, 2012
Profound change can be rather subtle. While it is obvious that current events cause changes in the market that require adaptation by buy-side trading desks, it is not always obvious to what extent change becomes the new norm. This year, conversations during the rollercoaster markets of August with 68 buy-side traders for TABB Group's annual buy-side equity study, "Coverage Under Fire," suggest that the needle on the dial has moved. Even if the VIX -- the Chicago Board Options Exchange Market Volatility Index -- trends southward again, the wheels on the permanent rollercoaster have been greased, and the tools on the buy-side trader's desktop need to keep up.
Perhaps surprisingly, only 47 percent of the buy-side traders interviewed by Tabb Group said they had actively changed the way they trade due to the volatile conditions.
http://jlne.ws/yA6NdG


Global firms sharpen currency hedging on euro concern
Reuters
International firms are spending more time at the highest levels discussing how to hedge currency risk, particularly euro-denominated earnings and transactions, in readiness for a worst case scenario of a euro zone breakup. Companies are scrutinizing the inbuilt protections in their hedge contracts and robustness of the settlement process if the euro were to collapse, bankers and executives said in interviews leading up to and during the World Economic Forum in Davos.
"Any CFO or any CEO of a company today, much like in the late 70s, is spending more time thinking about alternate outcomes," said Vasant Prabhu, chief financial officer of U.S. hotel operator Starwood Hotels & Resorts Worldwide Inc (HOT.N). "And currencies clearly are an element of that right now."
The implied volatility on 1-year euro/dollar contracts, a guide to future price direction in the spot currency market, has come down from the highs of October/November. But companies remain worried about future swings and the impact on earnings and acquisitions. Firms are increasingly turning to tools such as currency options -- which give them the right but not the obligation to buy or sell a currency at a particular exchange rate - to protect against extreme volatility.
http://jlne.ws/wRj3KF

NYSE Dream of Global Exchange Coming Apart on Derivatives Review
Businessweek January 25, 2012
By Nina Mehta, Bloomberg
A decade-long march by market owners toward greater worldwide scope may be ending in Europe with antitrust regulators recommending against Deutsche Boerse AG’s bid for NYSE Euronext. Should the deal be blocked, it would mean $37 billion in exchange mergers announced since October 2010 failed to close, according to data compiled by Bloomberg. Stock and derivatives venues completed $28.7 billion of takeovers in 2007 and 2008 as the Chicago Mercantile Exchange purchased rivals Chicago Board of Trade and the New York Mercantile Exchange.
http://jlne.ws/xiK4Ma

UPDATE: EU's Barnier: Need Time To Review Deutsche Boerse/NYSE Deal
--"Waiting reserve" leaves open chance to challenge antitrust regulators on merger
--EU competition authorities recommend blocking deal on near-monopoly in derivatives
--Exchanges press case for creating a European champion exchange
By Jacob Bunge, Matthew Dalton and Ulrike Dauer Of DOW JONES NEWSWIRES
A key member of the European Commission signaled Tuesday that he wanted more time to review the proposed merger of NYSE Euronext (NYX) and Deutsche Boerse AG (DB1.XE, DBOEF), casting new uncertainty around a deal that many investors and analysts already have given up for dead. Michel Barnier, the European Union's commissioner for internal market and services, on Tuesday placed a so-called "waiting reserve" on the matter, giving him leeway to potentially challenge a recommendation from EU antitrust regulators that the $17 billion combination be blocked.
"The decision that must be taken by the college is important, and the commissioner Michel Barnier who has been on a long, official trip to China, Japan and then London, hopes to take the personal time necessary before pronouncing on the issue," said a spokeswoman for Barnier in a statement Tuesday.
http://jlne.ws/zIv0NB

EXCHANGES

BATS debut primary listing sees modest volumes
The maiden primary listing on BATS Global Markets (BATS) has seen modest but promising volumes on its initial day of trading.
The Trade News
The iShares MSCI Norway Capped Investable Market Index Fund (ENOR) traded 4,803 shares yesterday on BATS Exchange. By comparison, the established Global X FTSE Norway 30 ETF, on rival platform Nasdaq, traded 19,486 shares on the same day. The new BATS instrument is the first of nine new exchange traded funds (ETFs), sponsored by BlackRock’s iShares ETF business to list on the BATS Exchange.
The nine iShares funds are based on MSCI indices and were chosen to provide investors with the chance to access international markets. The eight other ETFs scheduled to begin trading before the end of the week are: iShares MSCI Australia Small Cap Index Fund, iShares MSCI Canada Small Cap Index Fund, iShares MSCI Denmark Capped Investable Market Index Fund, iShares MSCI Germany Small Cap Index Fund and iShares MSCI United Kingdom Small Cap Index Fund.
http://jlne.ws/yEz6cO

CBOE Emerging Market Volatility Feature for Options Profits
By Jill Malandrino, The Street 01/25/12
Russell Rhoads is an instructor with The Options Institute at the Chicago Board Options Exchange. He is a financial author and editor having contributed to multiple magazines and edited several books for Wiley publishing. In 2008 he wrote Candlestick Charting For Dummies and is the author of Option Spread Trading: A Comprehensive Guide to Strategies and Tactics. Russell also wrote Trading VIX Derivatives: Trading and Hedging Strategies using VIX Futures, Options and Exchange-Traded Notes. In addition to his duties for the CBOE, he instructs a graduate level options course at the University of Illinois - Chicago and acts as an instructor for the Options Industry Council.
Russell: Next Tuesday, January 31, the CBOE is going to roll out a second method of taking a position based on an outlook for the market's expectation of volatility for emerging markets. Options on the CBOE Emerging Markets ETF Volatility Index (VXEEM) will commence trading as a compliment to VXEEM futures. VXEEM futures began trading earlier this month at the CBOE Futures Exchange.
http://jlne.ws/yVLO7T

Montreal Exchange Achieves New Trading Records
Press Release
MONTREAL, Jan. 24, 2012 /CNW/ - Montreal Exchange today announced that it achieved two new daily records.
Daily open interest reached 5,401,436 contracts on January 19, 2012, surpassing the previous record of 5,325,519 contracts that was achieved on January 18, 2012. A new overall daily volume record of 346,497 contracts was also established for equity and ETF options on January 20, 2012, surpassing the previous record of 287,593 contracts that was established on December 17, 2010.
http://jlne.ws/xiPFze

EARNINGS PREVIEW:Trading Slowdown, Regulatory Woes Hang Over Exchanges In 4Q
WSJ.com
By Mia Lamar and Jacob Bunge Of DOW JONES NEWSWIRES
TAKING THE PULSE: The new year finds exchanges in soul-searching mode as a nearly year-long push by NYSE Euronext (NYX) and German exchange operator Deutsche Boerse AG (DB1.XE) to seal their $17.7 billion tie-up is seen as all but dead amid increasingly unlikely European Union approval of the deal. The collapse of that deal--the sector's largest in years--would cap a year that saw the failure of several ambitious, cross-border exchange mergers, and push executives toward smaller, less-transformative dealmaking.
Exchanges in the fourth quarter were hard-pressed to match the third quarter's trading surge as a normal slowdown during the holidays was only worsened by nagging fears over the debt crisis in Europe. Stock exchanges have been particularly hard hit, with December ranking as the quietest month for buying and selling U.S. equities in four years. Meanwhile, the collapse last year of MF Global Holdings (MFGLQ) remains an overhang on the futures sector as questions persist over regulatory practices.
http://jlne.ws/wI0Qkw

Illinois business tax climate debate
chicagotribune.com January 25, 2012
State drops from No. 16 to No. 28 after ratcheting up individual income tax and corporate income tax rates
Let's talk climate change. Not weather, but taxes.
When the Tax Foundation issues its annual State Business Tax Climate Index for 2012 on Wednesday, it will show Illinois underwent the most dramatic shift of any state in the union, tumbling a dozen places since its 2011 report from No. 16 in the relative standings to No. 28 this time around.
Frankly, Chicago's winter so far wasn't this predictable.
It's possible to quibble about the 75-year-old Tax Foundation, which describes itself as a nonpartisan tax research group but some consider pro-business and conservative because of groups that fund it, or its methodology. But Illinois, desperate to get its budget in order, ratcheted up its individual income tax rate 67 percent, from 3 percent to 5 percent, and bumped its corporate income tax from 7.3 percent to 9.5 percent.
The state didn't exactly earn a gold star and a pat on the back.
http://jlne.ws/xz15ZF


STRATEGY 

Buy VIX Options When They're Cheap
By STEVEN M. SEARS, Barrons.com
Buy cheaply priced call options in the stock market's fear gauge to protect recent gains and to hedge against bad news.
If you want a good deal, buy air-conditioners in January.
The same thinking works in the options market. When VIX is below 20, as it is now for the fourth consecutive day of a relatively calm week for the markets, investors can buy relatively inexpensive Chicago Board Options Exchange Volatility Index (VIX) call options to protect profits, and hedge portfolios without paying a fear premium. Investors normally rush to pay top dollar for VIX hedges when the stock market is dramatically declining and VIX dealers have sharply increased call prices. (Calls increase in value when the underlying security price rises.)
http://jlne.ws/Ar3QdP

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CBOE to Launch Trading in CBOE Emerging Markets ETF Volatility Index Options on January 31

LEAD STORIES

CBOE to Launch Trading in CBOE Emerging Markets ETF Volatility Index Options on January 31
CHICAGO, Jan. 24, 2012 /PRNewswire/ (Press Release) -- The Chicago Board Options Exchange (CBOE) announced today that it will begin offering trading in options on the CBOE Emerging Markets ETF Volatility Index (VXEEM) on Tuesday, January 31. The new options contract follows the introduction of trading in CBOE Emerging Markets ETF Volatility Index security futures (futures symbol: VXEM) at CBOE Futures Exchange (CFE) on January 9, 2012. Investors can use either or both products to hedge emerging markets volatility exposure or to make direct plays on emerging markets volatility. CBOE Emerging Markets ETF Volatility Index options and security futures are the first of several ETF-based volatility index products planned for launch at CBOE and CFE in 2012.

http://jlne.ws/dqtww6

NYSE-Deutsche Boerse May Lack EU Support
By Aoife White and Nandini Sukumar - Jan 24, 2012
NYSE Euronext (NRX) and Deutsche Boerse (DB1) AG are unlikely to garner enough support from European Union commissioners to overturn a looming veto over their plan to create the world’s largest exchange, according to four people familiar with the situation. The EU’s antitrust chief, Joaquin Almunia, won’t face significant opposition from other EU commissioners to his proposal to block the deal at a Feb. 1 meeting, said the people who can’t be identified because the discussions aren’t public. The European Commission, the EU’s executive arm, is led by 27 commissioners drawn from each of the bloc’s member states. They must jointly approve EU decisions.
http://jlne.ws/yi2vB4

SCENARIOS: Deutsche Boerse-NYSE Euronext Deal Options
By Reuters January 24, 2012
European Commission officials are set to vote in early February on Deutsche Boerse's proposed $9 billion takeover of NYSE Euronext to create the world's biggest stock exchange. 
The 27 European Commissioners will cast their votes following a recommendation to block the deal by antitrust commissioner Joaquin Almunia, who is worried the combined entity will have more than a 90 percent market share in some key listed derivatives contracts in Europe. Almunia has said European markets must remain fair, efficient and competitive for both companies and investors and that competition between exchanges is necessary.

http://jlne.ws/zdWITR

New ETFs spur RRSP options
Canadian Exchange Traded Funds have become a money magnet
By Peter Evans, CBC News

Last Updated: Jan 24, 2012
Many financial gurus say the key to successful investing is diversification. It wasn’t all that long ago that getting broad market diversification in a portfolio was costly and difficult, but exchange-traded funds have made do-it-yourself investing more practical — and there are some big changes happening now in the Canadian ETF market as a result. In the past, an investor would either have had to deal with a stock broker – an endangered species these days – to buy individual shares in companies. Or maybe pay to have a professional money manager manage their investments in a mutual fund.
http://jlne.ws/z3rq23

Crude Options Volatility Falls as Futures Rise on Iran Oil Ban
By Barbara Powell - Jan 23, 2012
Crude oil options volatility fell for the first time in three days as underlying futures rose after the European Union agree to ban oil imports from Iran.
Implied volatility for at-the-money options expiring in March, a measure of expected price swings in futures and a gauge of options prices, was 29.8 as of 3:30 p.m. in New York, down from 30.3 on Jan. 20. March crude oil rose as much as 1.9 percent in intraday trading before settling 1.3 percent higher.
“We rallied back so volatility came off,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.
Crude for March delivery rose $1.25 to settle at $99.58 a barrel on the New York Mercantile Exchange, the first increase in four days.
http://jlne.ws/y6pnz9

OPTIONS REPORT: RIM Reshuffling Barely Dents Market's Outlook

--Options market's Research In Motion volatility outlook is little changed Monday following BlackBerry maker's executive succession
--Research In Motion options trading at twice normal clip, but trading is mixed
--Analyst says market signals view that executive reshuffling "not that much of a change"
By Brendan Conway Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The U.S. options market's muted reaction to Research In Motion Ltd.'s (RIMM) management reshuffling underscores the extent to which traders were already anticipating turmoil for the beleaguered BlackBerry maker's stock. Pricing gauges for put and call options to buy and sell the company's Nasdaq-listed stock barely budged Monday with word that longtime co-Chief Executives Jim Balsillie and Mike Lazaridis would be replaced by the little-known Thorsten Heins. The shakeup follows a plunge in the company's stock over the last year as weak earnings reports and a series of service outages fueled investor doubts of the company's competitive position versus the likes of Apple Inc. (AAPL). In a conference call, the Waterloo, Ontario, company touted the change and downplayed takeover speculation.
http://jlne.ws/yvlsCn

EXCHANGES

BATS Exchange Launches First Primary Listing With iShares ETF Today

BATS Global Markets Press Release
KANSAS CITY, Mo., Jan. 24, 2012 /PRNewswire/ -- BATS Global Markets (BATS), a global operator of stock and options markets, today announced the iShares MSCI Norway Capped Investable Market Index Fund (BATS: ENOR) will begin trading today on BATS Exchange, the first of nine new exchange traded funds (ETFs) sponsored by BlackRock, Inc.'s (NYSE: BLK) iShares® ETF business scheduled to commence trading on the Exchange beginning this week.
http://jlne.ws/zs6KwU

TECHNOLOGY

Options IT Sees Surge in Demand Among Hedge Fund Managers for its Private Cloud-Deployed Financial Office ServiceFinishes 2011 Signing 16 PIPE Core Clients, Adding Nearly 350 End Users Globally for its Flagship Financial Office Delivery and Support Service
Press Release, LONDON, Jan 24, 2012 (BUSINESS WIRE) -- Options IT, provider of the Options PIPE Private Financial Cloud services platform for the exchange, banking, trading and investment communities, today announced a strong surge in demand in 2011 among hedge fund managers for its PIPE Core financial office delivery and support service. Options IT signed 16 PIPE Core hedge fund clients across North America, Europe and Asia, representing nearly 350 new end users of the service in 2011. The solid growth in demand indicates a sustained recovery in the alternative investment management space globally and a continued adoption of on-Demand technology infrastructure services like Options IT's Private Financial Cloud services platform.
http://jlne.ws/zWg9pg

STRATEGY

A Bull and Bear Bet
By STEVEN M. SEARS, Barrons.com
Investors concerned the stock market is poised for a short-term technical correction, but afraid to miss a potential rally, can use a simple options strategy to simultaneously be a bull and a bear.
By "strangling" the stock market with a put and call option that have different strike prices, and the same expiration date, investors can benefit from a sharp decline, or sharp rise.
Buying the February 132 call on the SPDR S&P 500 (ticker: SPY), and the February 130 put on the SPDR S&P 500 lets investors leverage intense crosscurrents roiling the market. (The SPDR S&P 500 exchange-traded fund was trading at 131.24 in midday trading Tuesday.) Many investors think the Standard & Poor's 500 index, recently at 1304, has risen too far too quickly since the year began.
http://jlne.ws/ymEIaT

Are Buy-Write ETFs Worth The Cost?
By: Eric Dutram, Zack's Investment Research
January 24, 2012
Although stocks have begun the new year on a high note, many investors remain uncertain about the market nonetheless. Weaker than expected earnings at some firms and continued concerns over the health of key markets such as China and Europe could weigh down securities throughout the first quarter of the year. In light of this, some investors have taken to strategies that allow investors to stay allocated to the market but that could offer some level of downside protection as well.
http://jlne.ws/x3piYX

OPTIONS EDUCATION

The Newest Innovation in SPX Options
Tuesday, January 24, 2012
By James Bittman, Senior Instructor, Chicago Board Options Exchange
New Friday-afternoon-settled options on the S&P 500 (SPX) have hit the marketplace, says Jim Bittman of the Chicago Board Options Exchange (CBOE), who describes the benefits and helpful tips for trading them.
As an option trader, you are probably aware of the SPX options, but there’s a new product from the CBOE, the SPXpm options.
Our guest today is Jim Bittman to talk about that. So, Jim, first of all, what is the new product?
Well, the traditional S&P 500 index options called SPX came out of the 80s, where the options stopped trading on Thursday and they settled Friday morning, which is very unusual compared to options on stocks that continue trading all the way through Friday afternoon. So, we added a new all-electronically-traded contract. It’s the same size, but it settles on Friday afternoon—the same way other ETF options, stock options, and some other index options settle. With institutional money looking at the S&P 500 index, we wanted to make this product available for them, so for quarter ends, for year ends, we have the afternoon settlement.
http://jlne.ws/w6tVOU

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NYSE Euronext Explores Adding Partners To Amex Joint Venture

LEAD STORIES 

NYSE Euronext Explores Adding Partners To Amex Joint Venture
By Jacob Bunge Of DOW JONES NEWSWIRES
NYSE Euronext (NYX) may add more equity partners to its Amex stock-options exchange, expanding a strategy that has boosted trading volume and turned the platform into the Big Board parent's largest U.S. derivatives market. Seven banks and trading forms agreed to take a near-50% stake in NYSE Amex in 2009 in return for a steady flow of trading business that has almost doubled contract volume on the former American Stock Exchange, which NYSE acquired a year earlier. NYSE Amex has held conversations with several more firms interested in joining the venture, though there are no formal discussions right now, according to Steve Crutchfield, chief executive of the exchange.
"We would certainly entertain the possibility of adding new partners over time," said Crutchfield in an interview on the sidelines of a Security Traders Association event.
Expanding the consortium ownership group could further lift business on NYSE Amex, which is the fourth-largest U.S. options exchange and has outgrown NYSE Arca, its sister market. The original equity-sharing deal underscored the king-making power of big firms, which do their own options trading and also handle the orders of individual investors. This month NYSE Amex's market share of all U.S. options trading was 13.3%, compared to 7% when NYSE Euronext bought the exchange, according to data from the clearinghouse OCC.
http://jlne.ws/wP9li1

Nifty Options Prices Near 3-Month Low on Interest Rate Pause Expectations
Bloomberg
By Santanu Chakraborty - Jan 23, 2012
Options to protect against losses in Indian stocks fell to the lowest level since October amid expectation the central bank will keep interest rates unchanged and as the rupee strengthened. India VIX (INVIXN), a gauge of options prices in the S&P CNX Nifty Index, was 22.64 at 12:15 p.m. in Mumbai, near the lowest since Oct. 28, data compiled by Bloomberg show. VIX soared 64 percent last year, its biggest annual gain since 2008 when the Nifty had its largest-ever yearly decline.
http://jlne.ws/z6VgnP 

FOCUS: Speculators Start Buying Metals Futures, Options Again -CFTC

Forbes (Kitco News) - A price rebound for metals across the board encouraged speculators to start to rebuild bullish positions in both precious and base metals futures and options, according to U.S. government data released Friday.
All metals contracts traded on the Comex division of the New York Mercantile Exchange and the Nymex saw net long positions for speculators rise in both the legacy and disaggregated weekly commitment of traders reports. These were released by the U.S. Commodity Futures Trading Commission for the week ended Jan. 17. Speculator’s positions in copper also turned to net long from net short for the first time late last year.
http://jlne.ws/zAjvko

Increased liquidity likely to boost short term options trading by hedge funds and institutions
Hedge Funds Review
Author: Clare Dickinson
Short-term options accounted for a growing portion of total options volumes last year and hedge fund use is likely to grow in 2012, says Tabb. Infrastructure requirements may be prohibitive, however.
Short-term options (STO) were a significant factor in record options volumes last year as their popularity among institutional and retail investors increased. Hedge funds are employing them for directional bets and hedging purposes and their use is likely to grow in 2012 as a result of increasing liquidity.
The STO market is relatively new. The options, originally based on indexes, were introduced by the Chicago Board Options Exchange (CBOE) in 2005 but it was June 2010 when they began to take off following a take-up by multiple exchanges plus the introduction of STOs on single stocks and exchange traded funds (ETFs), according to Andy Nybo, a principal and head of derivatives at Tabb Group and author of Accelerated Expirations: The Growing Relevance of Short-term Options.
http://jlne.ws/y3sDiZ

January 23, 2012: Index, ETF option volumes near midday
Chris McKhann tradeMONSTER
Option volume remains strong with at 5.8 million contracts so far today, with mixed sentiment in the indexes and ETFs, optionMONSTER's data systems show.
The SPDR S&P 500 Fund (SPY) has seen 662,000 options trade, 383,000 of which are puts. The CBOE Volatility Index (VIX) options are next with 238,000 and are dominated by 144,000 puts, a ratio that is seen as bullish for stocks.
http://jlne.ws/xycZqL

EXCHANGES 

Speculators have field day with options
In an uncertain equity market, investors find solace in the segment
B G Shirsat & Rajesh Bhayani / Mumbai Jan 24, 2012
If the market is not conducive for investment, speculate was the formula of global investors in 2011. This is reflected in turnover data of exchanges globally, as culled from the World Federation of Exchanges (WEF). Derivative trading data across the globe suggest that trading in index-based options grew, despite cash market volumes shrinking. And, even within derivatives, volumes other than in index options showed no significant rise. The data showed equity cash segment volumes remained stable despite a fall in market capitalisation. The number of contracts traded in equity derivatives grew 9.4 per cent as speculators increased their presence in derivatives, especially in stock index options.
http://jlne.ws/zmzfgq


STRATEGY 

A Risk-On Stock Options Trade
MONDAY, JANUARY 23, 2012
The Striking Price By STEVEN M. SEARS, Barrons.com
How to maximize returns and limit risk with a few well-placed call options.
The Standard & Poor's 500 index is up about 4.6% since the year began, and one measure of the risk of owning stocks, the Chicago Board Options Exchange's Volatility Index (VIX), has fallen to the relatively optimistic level of 18.07. Before the excitement of a rising market makes the flat overall performance of the 2011 U.S. stock market a distant memory, one lesson must be remembered: take advantage of alternate beats in the stock and options market to avoid getting hamstrung by the market's risk on/risk off tempo. When stock prices are high, and options prices are low, as they are now, take profits on stocks, and buy options on that which was just sold.
http://jlne.ws/Ak7AMC

Don't Drink the Rally Kool-Aid: It's Time to Get a Bit Short!
InvestorPlace
Why it’s time to buy these S&P 500 put options
By Dan Sheridan, Sheridan Mentoring
Where is most of your money stashed? I’m not trying to get personal, I promise! But, I’m willing to bet the bulk of it is in your retirement account.
Another question: Will the stuff in your retirement account be happier if the market goes up or down? The answer is probably, “Up!”
Your portfolio likely has a strong bullish bias. 2008 hurt so much because most of your assets were in the market when everything fell apart between the eight months of torture between September 2008 and March 2009.
Do I know something you don’t know about the market? Of course not. What I do know, however, is that your portfolio is probably leaning long and the market is trading in the upper end of the range. And with those kinds of conditions, I’d personally like to start having a few put options around. In particular, I’m going to focus on the SPDR S&P 500 (NYSE:SPY), which is currently trading at $131.54. The one-, two- and three-year high is around $135.
http://jlne.ws/yGrSH1 

VIX Products: Is There A Need For More Low Volatility ETFs?
Bill Luby: The more I think about it, the less I understand the need for even more low volatility ETPs. Sure, I understand that in high volatility markets many investors want a more conservative portfolio that is insulated against sharp moves in the wrong direction. In that respect, I can somewhat understand the appeal of the hugely popular PowerShares S&P 500 Low Volatility Portfolio ETN (NYSEArca:SPLV), which has now attracted more than $1 billion in assets in the eight months since it launched.
http://jlne.ws/wnNyAv


OPTIONS EDUCATION

 

OIC launches the latest podcast, "Does the Rumor Mill Effect Options?" in its weekly podcast series, Options Talk with OIC.

http://jlne.ws/ai4hAU

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NYSE May Appeal If Deutsche Boerse Deal Blocked

LEAD STORIES

NYSE May Appeal If Deutsche Boerse Deal Blocked
By Doug Cameron, The Wall Street Journal
The head of NYSE Euronext (NYX) said the exchange may appeal if European regulators block its planned merger with Deutsche Boerse AG (DBOEF, DB1.XE).
The exchanges are lobbying fiercely to preserve the planned pact after European Union antitrust examiners last week recommended that EU commissioners block the deal, on grounds that it would create a monopoly in European listed futures and options trade.
"If the deal is blocked we will consider all options, including an appeal," NYSE Chief Executive Duncan Niederauer said in an interview with Cinco Dias, the Spanish newspaper.
http://jlne.ws/zRCmcc

STAC Coverage: Options Industry Looks to Long-Onlys for Future
By Peter Chapman, Traders Magazine
Options industry officials are looking to traditional money managers for growth.
According to one veteran options executive, growth in the use of options by retail investors is flagging, so the industry is looking upstream for order flow.
"Growth in options is plateauing on the retail side," Alan Grigoletto, an official with the Options Clearing Corporation's Options Industry Council said at an industry conference yesterday, "There is so much more ground to be broken with wealth advisers, pension funds and endowments."
http://jlne.ws/AsiHg0

Buy-Write Strategy Gets Another Look
By Peter Chapman, Traders Magazine
After three years of near dormancy, mutual funds using covered calls showed signs of life last year. That's despite signs of investor dissatisfaction with fund companies.
Two new closed-end funds that cover at least half of their stock holdings with call options -one from Gabelli Funds and the other from John Hancock-launched in 2011.
That brought the total number of closed-end funds classified as buy-write funds to 31, according to Morningstar. It also added about $600 million in net assets to the group, increasing the total kitty to about $21 billion.
http://jlne.ws/welEbF

Market makers buck trend as profits surge
By Telis Demo, Financial Times
Market-making firms bucked the trend of poor results for trading groups, though the results are unlikely to be sustainable.
Knight Capital reported net income in the quarter was $40m, almost four times the $9m profit in the same quarter last year, principally on stronger revenues in its market-making unit, which matches stock trades primarily for retail brokerages.
The increase came despite weak volumes, which has been the cause of poor results across Wall Street. However, Knight was able to profit from elevated volatility by providing matches for traders who would otherwise not find them in the public markets.
http://jlne.ws/xvinzX

Interactive Brokers Group Announces 2011 Results
Press Release
Interactive Brokers Group, Inc. an automated global electronic broker and market maker, today reported diluted earnings per share of $1.40 for the year ended December 31, 2011, compared to diluted earnings per share of $(0.22) for 2010. Reported results for 2010 reflected a negative $0.71 per share impact from additional taxes triggered by the approximately $1 billion special dividend paid in December 2010. The company considers the special dividend to be non-operating in nature...
Market Making segment income before income taxes increased 363%, to $415 million, in 2011. This increase was driven by a swing in currency translation gains, which contributed 53% of the rise, reflecting an $11 million gain in 2011 compared to a $161 million loss in 2010. Currency translation effects are reported as part of Trading Gains in the Market Making segment. The remaining increase reflected trading gains on higher actual-to-implied volatility, higher options trading volumes and wider bid-offer spreads. Pretax profit margin expanded to 59% in 2011 from 24% in 2010. Market Making options contract volume increased 16% in 2011.
http://jlne.ws/zDJMuY

Hong Kong Stocks Rise on U.S. Jobs Data, Falling European Yields
By Kana Nishizawa and Jonathan Burgos, Bloomberg
Hong Kong stocks advanced, with the Hang Seng Index (HSI) posting its biggest weekly gain since the start of December, as U.S. initial jobless claims and European borrowing costs declined...
Futures on the Hang Seng Index advanced 1.1 percent to 20,187. The HSI Volatility Index fell 2.4 percent to 21.81 today, indicating options traders expect a swing of 6.3 percent in the benchmark over the next 30 days.
The Hang Seng Index tumbled 20 percent last year amid concern China would continue to curb lending and Europe would fail to resolve its debt crisis. Companies in the gauge traded at 10.1 times forecast earnings at the last close, down from 14.4 times at the beginning of 2011, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index trades at 12.6 times.
http://jlne.ws/zOuuA8


EXCHANGES

Lower volumes pressure Q4 earnings at U.S. exchanges
By John McCrank, Reuters
Investors pulled back from trading in the fourth quarter as headlines out of Europe undermined faith in the markets, limiting the earnings power of U.S. exchange operators, which derive much of their revenue from trading fees.
Earnings at the exchanges kick off with CME Group Inc (CME.O) on February 2, hot on the heels of a regulatory ruling out of Europe expected on February 1 on the fate of Deutsche Boerse's (DB1Gn.DE) $9 billion takeover of trans-Atlantic rival NYSE Euronext (NYX.N).
Exchange profits for the quarter ended December 31 are expected to be mixed, with all but CME seen surpassing their year-ago results. All, however, are seen well off their results from the third quarter, when volumes spiked along with volatility.
http://jlne.ws/xseJdS

Exchange and Clearing Fees For New Weekly Options Contracts
ICE Futures US - Press Release
Effective with the start of trading on February 6, 2012, the non-member Exchange and Clearing fee for the new Weekly Option Contracts on Sugar No. 11®, Coffee "C"® and Cotton No. 2® will be $1.05 per side.
The new weekly option contracts are short-life options that share most of the contract terms of the existing monthly option contracts - including strike price, minimum price quote, trading hours and exercise and assignment provisions. The new weekly options, however, expire on a different date than the monthly options, providing an expiration on each Friday that is not already the expiration date for a monthly option on the relevant futures contract. For each product, three weekly option expirations are listed concurrently, so each weekly option has a trading life of approximately four weeks.
http://jlne.ws/yqBOD0

ELX Names Richard Jaycobs Chief Executive Officer
Press Release
NEW YORK, NY, Jan 20, 2012 (MARKETWIRE via COMTEX) -- ELX Futures, L.P. (ELX), a leading electronic futures exchange, announced today that veteran futures industry executive Richard Jaycobs will succeed Neal Wolkoff as Chief Executive Officer of ELX.
Mr. Jaycobs, a 25-year veteran of the futures and derivatives industry, has served as President of the Cantor Exchange, a CFTC-regulated exchange committed to providing the market with innovative products in entertainment, weather, and news events. Earlier, he served as CEO of the Chicago-based Clearing Corporation (formerly the Board of Trade Clearing Corporation), CEO of onExchange, and Managing Director at the New York Cotton Exchange.
http://jlne.ws/xEAvQh


STRATEGY

Showdown: Bear Puts vs. Bear Calls
By Josip Causic, MoneyShow.com
A recent market example is used to illustrate the differences in risk between the bear put and bear call option strategies and considerations traders should take when choosing one over the other.
A bear put and bear call are both bearish vertical spreads. The first one is a debit spread, and the latter one is a credit spread. In which case would one make more sense to trade over the other? It depends on the implied volatility (IV).
http://jlne.ws/wsmDHy

Straddling Earnings Season - Know Your Options
by Kevin Matras from Zacks.com, NASDAQ
With earnings underway, here's an options strategy that's perfect for a company about to report.
A straddle involves buying both a call and a put at the same strike price (at-the-money) at the same time.
With options, you buy a call if you expect the market to go up. And you buy a put if you expect the market to go down. A straddle, however, is a strategy to use when you're not sure which way the market will go, but you believe something big will happen in either direction.
http://jlne.ws/yeLKsA

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A Q&A With CBOE's CEO Brodsky and COO Tilly

LEAD STORIES

A Q&A With CBOE's CEO Brodsky and COO Tilly
By Peter Chapman, Trader's Magazine
Chicago Board Options Exchange chairman and chief executive officer Bill Brodsky and president and chief operating officer Ed Tilly broke bread with the New York City press corps in January in order to update the scribes on the exchange operator's initiatives. Reporters learned that a quarter of CBOE's volume came from proprietary products, specifically its index options, but over half its profits. CBOE's year-old C2 exchange was achieving the company's goals, the executives said, trading 228,000 contracts per day in last year's fourth quarter, but they still increased its rebate in January. Traders Magazine presents a slice of the Q&A session.
http://jlne.ws/A1GVAv

Stocks Gain on Bank Profits, U.S. Economy as Euro Climbs on Bond Auctions
By Stephen Kirkland and Rita Nazareth, Bloomberg
U.S. stocks rose for a third day as Bank of America Corp. (BAC) posted a profit and jobless claims slid, while European equities and the euro climbed as French and Spanish borrowing costs decreased at auctions...
The S&P 500 gained 4 percent this year through yesterday, the best start to a year since 1987, as U.S. economic reports and speculation that China will loosen monetary policy outweighed concern that downgrades for European nations would worsen the debt crisis.
The Chicago Board Options Exchange Volatility Index, the benchmark gauge of U.S. options prices known as the VIX (VIX), dipped below 20 for the first time since July amid lower demand for protection against losses in equities.
http://jlne.ws/Amw0D2

Buyer’s Market for Options
By: Lori Spechler, CNBC
Despite nagging concerns about the euro zone, major stock indices — S&P 500, Nasdaq, Russell 2000 — are off to a strong start this year, while volatility has been falling.
And as volatility falls, so do those sky high option premiums that were more common in 2011...
“The trade is to really get out there and make a statement and buy volatility at these levels," says Alex Panagiotidis, managing director of Sterne Agee Institutional Equity Options.
http://jlne.ws/y3A1NY

Short-Term Options Drove US-Listed Options to Record Levels in 2011
By Martin Rabkin, RiskCenter
Short-term options represent one of the most successful products launched by options exchanges in recent years, with demand from retail and institutional investors driving growth, says TABB Group in new research published yesterday, “Accelerated Expirations: The Growing Relevance of Short-term Options.”
“However, as more names are added to the list, investor interest and volume will rise”
According to TABB, short-term options (STOs) were a significant factor behind record options volume in 2011 with STOs accounting for 8.3% of the total 4.6 billion contracts traded for the year. Short-term options accounted for a peak 11.7% of total volume in October 2011, when volume reached 45.7 million contracts. Comparatively, one year earlier in October 2010, STOs trading volume totaled 20.8 million contracts.
http://jlne.ws/xZow7U


EXCHANGES

The World Federation of Exchanges Publishes 2011 Market Highlights
Press Release via The Wall Street Journal
Equity volumes in 2011 remained stable despite a fall in market capitalization, while derivatives, bonds, ETFs, and securitized derivatives continued to grow strongly, according to figures released today by the World Federation of Exchanges (WFE).
WFE statistics are culled from WFE member exchanges, which continued to increase their listings and diversify their product offerings in 2011. Specific 2011 highlights from WFE are as follows:
http://jlne.ws/xiBRTE

Turkey: Going forward costs brokers and exchanges dear
By Nick Lord, Euromoney
TurkDex introduces exchange-traded options; ISE [Istanbul Stock Exchange] head steps down
Turkey continues to open up to derivatives and structured products while much of Europe clamps down on them.
Last year saw the introduction of warrants and ETFs traded on the Istanbul Stock Exchange (ISE). This year will see the introduction of exchange-traded options contracts on TurkDex, the derivatives exchange based in Izmir.
Ilhami Koc, CEO of Is Investment Bank, has stated that the next stage in Turkey's financial development will be the deepening of the country's derivatives markets.
http://jlne.ws/ABHSUh


STRATEGY

Using Option Premiums To Gauge Risk
Seeking Alpha
As someone who actively traded the markets during the 2008/2009 financial crisis, I have many memories from that time period that I doubt I'll ever forget. One observation I made then has to do with the put premiums on the SPDR S&P 500 (SPY) and PowerShares QQQ Trust (QQQ) in late September 2008, just prior to the bottom falling out of the markets. At the time, the VIX was quite elevated but nowhere near the incredible heights it would soon reach, yet puts on the SPY and QQQ were already trading at "you've got to be kidding me" prices. At the time, it seemed to me as if the market makers were almost daring people to sell the puts. Way out-of-the-money puts expiring just a few weeks later in October were trading at premiums normally reserved for options expiring many months later. On the flip side, it seemed crazy to purchase the puts betting on further declines in the major market indices at the prices they were being offered for. Yet, that was exactly what an investor wanting to make money should have done.
http://jlne.ws/wvmdqs

Using Options To Take Advantage Of Volatility
By Charles Brokop, Seeking Alpha
When I explain how someone can generate very solid returns with low volatility all while having their money in a money market or other cash vehicle, they usually look at me like a dog that heard a strange noise and give me the tilted head look. The investment discipline does take a while to understand and there are some moving parts involved; however, with the recent high volatility in the market over the past few years, learning this may be a valued strategy. This is an investment strategy that offers strong performance whether the market goes up, down, or stays relatively even, called an ‘Absolute Return Strategy.’ The transactions can also be done in most major brokerage accounts which are another benefit.
http://jlne.ws/wlSDCX

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SEC Clears Way For NYSE, Deutsche Boerse To Merge

LEAD STORIES 

SEC Clears Way For NYSE, Deutsche Boerse To Merge
By Jacob Bunge Of DOW JONES NEWSWIRES
The U.S. Securities and Exchange Commission on Wednesday approved the proposed merger of NYSE Euronext (NYX) and Deutsche Boerse AG (DB1.XE, DBOEF), while leaving room for the European Union to have final say on the deal. SEC officials approved a raft of rule filings by the NYSE Euronext-owned exchanges like the New York Stock Exchange and NYSE Amex, as well as the Deutsche Boerse-owned International Securities Exchange, relating to a change in ownership that would see the markets move under a new parent.
http://jlne.ws/y5LmVC

Europe Leans Toward Blocking NYSE-Deutsche Borse Merger
By JAMES KANTER, The New York Times
The European Union’s competition commissioner, Joaquín Almunia, won support on Tuesday from European government representatives on an advisory panel in his effort to block a merger between NYSE Euronext and Deutsche Börse, a move that is one of the last stages before a formal decision on the deal is made early next month...
The recommendation by the antitrust advisory panel, which is not binding, is the latest sign that the regulatory obstacles in the way of the deal may be insurmountable. The deal would put the vast majority of the European exchange-traded derivatives market, and a sizable proportion of the region’s stock trading, in the hands of one company.
http://jlne.ws/zh2fa6

EU’s Almunia Pledges to Spur Competition as DB-NYSE Veto Looms
By Aoife White and Nandini Sukumar, Bloomberg
Europe’s top antitrust regulator pledged to use “all available instruments” to spur competition in the region as he prepares to block the merger of Deutsche Boerse AG and NYSE Euronext...
EU regulators told the two companies that they plan to prohibit the deal to create the world’s largest exchange because it would monopolize derivatives trading in the region, according to two people familiar with the draft decision in December. NYSE and Deutsche Boerse appealed directly to European Commission President Jose Barroso last week to try and salvage their merger, arguing an EU ban would harm European exchanges and drive business to other parts of the world.
http://jlne.ws/y1rYeP

Bets Against Euro Lose Appeal As Market Calms
By Neil Shah, The Wall Street Journal
Some investors are curbing their negative bets against the euro and other risky currencies as market conditions improve, a sign that after months of tension they're starting to think Europe's problems won't infect the global economy.
For months, hedge funds and other professional money managers have dumped euros and used options bets to wager against the currency because of mounting concerns about Europe's debt crisis and the global economy. Government data released Friday showed traders had, as of Jan. 10, amassed the biggest negative position on the euro since at least 2007.
http://jlne.ws/wTIzhR

OptionsCity Software appoints Margaret Wiermanski as Chief Operating Officer
OptionsCity Press Release January 18, 2012
FOR IMMEDIATE RELEASE
Chicago – OptionsCity Software, Inc, a provider of end-to-end electronic trading software, has named Margaret Wiermanski as the company’s Chief Operating Officer.
“Margaret is a key addition to our management team,” said Hazem Dawani, CEO of OptionsCity Software, Inc. “Her extensive experience in financial management, operations, and compliance functions will be an asset to the OptionsCity team as we continue our growth and focus on global expansion.”
“I am excited to be part of the OptionsCity team,” remarked Margaret Wiermanski.  “What they have accomplished in a short time is impressive and they have built a solid foundation for its future expansion. What impressed me the most is the genuine enthusiasm of everyone at OptionsCity and their commitment to product ingenuity and customer service.”
http://jlne.ws/wBPXVE

EXCHANGES

CBOE Holdings, Inc (CBOE) Shares Given a “Sell” Rating by Goldman Sachs (GS) Analysts
LocalizedUSA
Posted by LUSA Staff on Jan 17th, 2012   
CBOE Holdings, Inc logoCBOE Holdings (NASDAQ: CBOE)‘s stock had its “sell” rating reiterated by Goldman Sachs (NYSE: GS) in a research note issued on Tuesday.
Separately, analysts at Jefferies Group (NYSE: JEF) cut their EPS estimates on shares of CBOE Holdings in a research note on Wednesday. They now have a “hold” rating on the stock. Analysts at Macquarie downgraded shares of CBOE Holdings from an “outperform” rating to a “neutral” rating in a research note to investors on Thursday, December 22nd. Also, analysts at Oppenheimer (NYSE: OPY) reiterated an “outperform” rating on shares of CBOE Holdings in a research note to investors on Tuesday, November 15th. They now have a $29.00 price target on the stock.
http://jlne.ws/xIw4w0

NASDAQ (NDAQ) Given “Conviction Buy” Rating by Goldman Sachs (GS) Analysts
LocalizedUSA
Posted by LUSA Staff on Jan 17th, 2012
NASDAQ (NASDAQ: NDAQ)‘s stock had its “conviction buy” rating reaffirmed by research analysts at Goldman Sachs (NYSE: GS) in a report issued on Tuesday.
Separately, analysts at Zacks Investment Research reiterated a “neutral” rating on shares of NASDAQ in a research note to investors on Thursday, November 10th. They now have a $26.00 price target on the stock.
http://jlne.ws/wxavPU



OPTIONS ON FUTURES

PowerShares Plans Active Equity/VIX ETF
By Olivier Ludwig, IndexUniverse
Invesco PowerShares, basking in the success of its low-volatility SPLV, filed paperwork with the Securities and Exchange Commission to market an actively managed equities-based portfolio that seeks to lower investment risks by pairing stocks with instruments related to CBOE Volatility, or VIX, futures.  Apart from equities and VIX-related tools, such as listed VIX futures contracts, the PowerShares Equity Allocation Portfolio will also invest in swaps and notes as well as money market instruments, according to the filing, which was dated Jan. 13.
http://jlne.ws/zqoNNb


REGULATION

Exemption for forex swaps and forwards should hold, says GFMA’s Kemp
By Joel Clark, Risk.net
A proposed determination to exempt foreign exchange swaps and forwards from mandatory clearing and exchange trading requirements under the Dodd-Frank Act is very likely to be confirmed, despite a nine-month silence from the US Treasury since it published the text in April 2011, according to James Kemp, managing director of the global foreign exchange division of the Global Financial Markets Association (GFMA) in London...
The global foreign exchange division is working on a number of regulatory projects this year as it seeks to help its members - 22 of the largest forex banks - prepare for mandatory reporting for all forex derivatives, as well as central clearing and exchange trading for those products not exempt, including non-deliverable forwards (NDF) and options.
http://jlne.ws/Ae8Nnk

Could This be the Next Financial Disaster?
By Dave Forest, OilPrice.com
I wrote last week about big changes coming to financial regulation in Europe.
Look for the sequel soon in the U.S. America is buckling down for a new era of financial rulemaking...
Another sore point in the wake of the financial crisis has been derivatives. Simply, financial instruments whose value derives from the value of a separate financial instrument. Derivatives range from the relatively simple (options) to the complex (credit default swaps).  Critics say that over the last several years financial industry players have been allowed to write derivatives too freely. The result being this area of finance ballooned. To the point that the estimated total value of derivates outstanding globally is a staggering $615 trillion.
http://jlne.ws/zr7yDH

TECHNOLOGY 

BATS To Move Disaster Recovery Site to Savvis' Chicago facility
Savvis will buildout and operate a secondary DR site for all three of BATS's U.S. stock and options markets.
By Ivy Schmerken, Wall Street & Technology
January 18, 2012
Today, BATS Global Markets said it would move its secondary disaster recovery site to the Savvis Chicago CH4 data center facility for all three of its U.S. markets. BATS already has a relationship with Savvis in Weehawken, New Jersey where it hosts the matching engines for BATS’ two equity markets, BZX and BYX exchange as well as the BATS Options Market. BATS’ primary sites will continue to be in Weehawken, N.J., but it will migrate the secondary DR sites to Chicago. As part of the agreement, BAT has extended its existing services contract for hosting its matching engines at Savvis’ Weehawken facility.
http://jlne.ws/AiV7e0

 

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