JLN Options: CBOE In Settlement Talks With SEC Over Investigation

Feb 8, 2013

Sanjeev Joshipura Sanjeev Joshipura of the Commodity Markets Council on Dodd-Frank in 2013
MarketsWiki.tv Sanjeev Joshipura, president of Commodity Markets Council, talks about how Dodd-Frank rules will impact his membership base. Joshipura talks with JLN editor-in-chief Jim Kharouf about the future of the controversial position limit rule, which was vacated by a US District Court on September 28, 2012. A new position limit rule is expected from the Commodity Futures Trading Commission (CFTC), which will include a cost-benefit analysis. CMC is also focused on the CFTC’s reauthorization this year and the continuation of EMIR regulations. Joshipura also talks about US and EU regulatory harmonization and the challenges facing that goal. Watch the video »

Lead Stories

CBOE In Settlement Talks With SEC Over Investigation
By Jacob Bunge and Saabira Chaudhuri, The Wall Street Journal
CHICAGO–CBOE Holdings Inc. (CBOE) is discussing a settlement with U.S. market regulators over an investigation into the options market operator’s regulatory functions, the company disclosed Friday.
CBOE estimates the size of its liability related to resolving the matter at $5 million, according to financial figures released by the company Friday, though CBOE cautioned that no agreement yet had been reached.
http://jlne.ws/14Yritc Exchanges turn up the volumes in January
Futures and Options Intelligence
A global upturn in derivative volumes during January is helping boost bullish outlooks shared by those who predicted a change of fortunes in 2013, writes Jonathan Watkins.
http://jlne.ws/11uP3dg Panic at the VIX-co
Don’t worry about big-money bets on the VIX
Adam Warner, Schaeffer’s Research
By my sophisticated estimates, this is about the 700th big-money “market crash” play that’s gone up in the CBOE Market Volatility Index (VIX) in the last few years. They’ve successfully timed maybe three of them, just by virtue of the fact that the market has accidents every now and then, and someone had to have owned some VIX upside into it.
http://jlne.ws/14HTDTf The CME Group Respectfully Requests That You Lazy Bastards Start Trading ASAP
Jon Shazar, Dealbreaker
The CME Group has some unfortunate news: Your lack of trading last year has hit it pretty hard in the wallet. But fear not: The company has already come up with one money-saving cutback for this year.
http://jlne.ws/11uMZSJ Monte Paschi says no more derivatives losses
Silvia Aloisi and Stefano Bernabei, Reuters
Italy’s Monte dei Paschi (BMPS.MI) said there were no more derivatives losses beyond the 730 million euros ($988 million) it has disclosed, which have rattled financial markets and become a campaign issue ahead of parliamentary elections.
http://jlne.ws/11uNlIU A Stock Market for the 1%? Terrible Idea, Says Ritholtz
Matt Nesto, Yahoo Finance
After a lengthy deliberation, and with very little fanfare, a 20-person panel of experts at the Securities and Exchange Commission (SEC) voted unanimously last week to recommend, in effect, that a new stock exchange be created for small- and micro-cap companies. It would only be accessible to so-called accredited investors — or people that typically have a net worth north of $1 million.
http://jlne.ws/14HR2ZH Euro outlook ‘unpredictable’ after recent strength
Miriam Siers, Joel Clark, FX Week
Despite the resurgence of confidence in the euro since the turn of the year, participants appear to be following the caution expressed by Mario Draghi yesterday over whether the trend is sustainable
http://jlne.ws/14HSJ9w

Exchanges

CBOE Holdings sees volume fall, but profits jump 25%
David Roeder, Chicago Sun-Times
The owner of the Chicago Board Options Exchange reported a 25 percent increase in fourth quarter profit Friday despite a drop in trading volume.
CBOE Holdings Inc. said its fourth quarter net income was $39.7 million, 45 cents a share, vs. $31.8 million, 35 cents a share, for the same period in 2011. Revenue rose 8 percent to $130.1 million.
http://jlne.ws/14HT3VN CBOE Holdings, Inc. Reports Record Fourth Quarter And 2012 Financial Results
Press Release (CBOE)
CBOE Holdings, Inc. (NASDAQ: CBOE) today reported record fourth-quarter GAAP net income allocated to common stockholders of $39.2 million, or $0.45 per diluted share, compared with $31.3 million, or $0.35 per diluted share in the fourth quarter of 2011.  On an adjusted basis, net income allocated to common stockholders was $38.9 million, or $0.45 per diluted share, compared with $33.2 million, or $0.37 per diluted share, in the prior year period.  Operating revenues for the fourth quarter were $130.1 million, an increase of 8 percent compared to $120.2 million in 2011’s fourth quarter.
http://jlne.ws/14HRtDo IntercontinentalExchange Sets New Daily Record for ICE NYH RBOB Futures
Press Release
IntercontinentalExchange (NYSE: ICE), a leading operator of global markets and clearing houses, reported record daily volume in the ICE NYH RBOB Gasoline futures contract. ICE NYH RBOB Gasoline futures traded 29,559 contracts on Feb. 7. The new record is more than 10,000 above the previous daily record of 18,832 contracts on June 26, 2012.
Additionally, ICE Brent Crude futures and ICE WTI Crude options both set open interest records on Feb. 7 of 1,535,748 and 737,719 contracts respectively.
http://jlne.ws/11uOIYb

Regulation

CBOE Group says in talks with SEC to settle regulatory probe
Reuters
CBOE Group Holdings Inc said Friday it is in talks with the Securities and Exchange Commission to settle a previously disclosed probe into its self-regulatory compliance.
http://jlne.ws/11uuIVx Legal scholar sees U.S. broker reform as no-nonsense measure
Suzanne Barlyn, Thomson Reuters
Feb 8 (Reuters) – Tamar Frankel knows it will be hard to shrink a sales-driven culture amongst securities brokers – an ethos that can force investors to become financial experts to safeguard their interests.
http://jlne.ws/14HTO15 Regulator, Go Slow on Reining in High-Speed Trading
Holly A. Bell, The Wall Street Journal
There has been much discussion lately about the risks associated with high-speed algorithmic trading and the need for aggressive regulation. But has the need for reg ulation p assed? Markets are often self-correcting, and there is some evidence to indicate this is occurring.
http://jlne.ws/14HU6VC

Strategy

Four Things You Need to Know About Volatility by Dan Passarelli
CBOE
There is volatility in the market, more so now than usual. Are you prepared to trade and profit from that volatility? Before you place another trade, make sure you know these Four Things Every Trader Must Know about Volatility.
http://jlne.ws/14HRbwc

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