Banks beef up FX options teams as big moves boost risk, rewards
Nia Williams, Reuters
Banks are strengthening their foreign exchange options desks, investing in people and technology, as companies and hedge funds seek protection or profit from big moves in major currencies.
http://jlne.ws/YDpMXG Congress Considers Changing Taxation of Derivatives
Michael Cohn, Accounting Today
The House Ways and Means Select Revenue Measures Subcommittee held a hearing this week to discuss possible tax reforms on financial products such as derivatives.
http://jlne.ws/YDtJvq The Implications of Increased VXX Volume
Adam Warner, Schaeffer’s Investment Research
I took advantage of the Free Cramer to read me some Free Options. Specifically, Russell Rhoads on the surge in VIX derivatives volume this year.
He points out the very tight range in the CBOE Market Volatility Index (INDEXCBOE:VIX) itself so far this year, which sure seems like an odd backdrop for a surge in VIX futures and VIX exchange-traded note (ETN) volume. But as he points out, it’s surging.
http://jlne.ws/YtWKzs VIX ETFs Roar On Cyprus: Weekly VIX ETF Report
Wall Street Sector Selector
VIX ETFs add 20% for the week after the situation in Cyprus continues to spook world markets and investors.
http://jlne.ws/YtR5cV Volatility To Come Back for ‘Extended Periods’: Capital Economics
Brendan Conway, Barron’s
We’ve featured MKM Partners’ argument that market volatility has entered a lower post-financial crisis phase. Well, here’s Capital Economics taking the opposite view.
http://jlne.ws/YDu5SH Forget ETF Flows, Aggressive Fund Managers Now Holding Up Gold’s Price
Brendan Conway, Barron’s
The outflows from gold funds continue: The SPDR Gold Trust (GLD) exchange-traded fund shed $602 million in the last week and the figure for iShares Gold Trust (IAU) was $107 million, according to XTF.com.
http://jlne.ws/YtVlZY A Nightmare in Options trading
Bob Lang, Yahoo Finance
Below is a frightening story of an options trader gone rogue. It is scary because I saw this train wreck happen right in front of me with my own two eyes. I’m sure you have heard stories like this, they are countless. But I for one do not like to see people lose money, at least not without having a chance to win.
http://jlne.ws/YtPlQH Hedge funds are too big to beat the market
Larry Swedroe, CBS MoneyWatch
There’s an adage among investment professionals that you don’t want to be a member of a crowd. It means that it’s time to exit when an investment strategy gets “crowded” due to investors chasing returns.
http://jlne.ws/YtRnR3 Investors Pull $1.1 Billion From Hedge Funds
Morningstar has reported preliminary hedge fund performance for February 2013 as well as estimated asset flows through January 2013. The Morningstar MSCI Composite Hedge Fund Index rose 0.5% in February and 5.4% over the trailing 12 months.
http://jlne.ws/YDqBzA SEC OKs Plan for Lost Money in Facebook IPO
Matt Egan, Fox Business
The Securities and Exchange Commission gave its blessing on Monday to a $62 million Nasdaq OMX Group (NDAQ) plan to compensate market makers that lost money due to a technical glitch during the initial public offering of Facebook (FB) last May.
RegulationCFTC Shows Anticompetitive Behavior With Swap Margin Rules
Neal Wolkoff, TABB Forum
As Bloomberg’s threatened lawsuit against the CFTC suggests, the CFTC’s one-size-fits-all margin rules for swaps show the agency’s hesitation to open the largest segment of the over-the-counter derivatives markets to competitive forces.
http://jlne.ws/YDq3Ka SEC’s Walter urges “maximum” reliance on foreign swaps rules
Sarah N. Lynch, Reuters
The top securities regulator is urging international market regulators to find a compromise as they struggle to agree on how to apply new rules for cross border over-the-counter derivatives trades.
http://jlne.ws/YDqsML SEC OKs Payments on Nasdaq for Making Markets in ETFs
Nina Mehta, Bloomberg News (via Traders Magazine)
U.S. regulators approved Nasdaq Stock Market’s request to allow the sponsors of some exchange-traded funds to offer payments to market makers.
The Securities and Exchange Commission decision loosens a ban on the compensation that has been in place since 1997.
StrategyA Two-Way Play on the Bull…or Bear
Steven M. Sears, Barron’s
In the financial sector, sell puts and buy stocks such as Bank of America or Citi. In other groups, buy bullish calls slightly out of the money.
http://jlne.ws/YtP54n Inverse ETFs to Capitalize on Market Turns
Tom Lydon, ETF Trends
While it is painful to watch investment picks turn sour, more aggressive exchange traded fund traders are capitalizing on a market’s misfortunes with inverse fund products.