Lead Stories

CBOE Joins S&P 500 Just After Completing BATS Acquisition
Victor Golovtchenko – Finance Magnates
CBOE Holdings, the holding company of the Chicago Board of Options Exchange, is on its way to join the S&P 500 stocks benchmark. The news comes just a day before the company is to complete its acquisition of BATS Global Markets.
Commenting on the news, the CEO of the company Edward Tilly said: “We are honored to join ranks with other great blue chip companies listed in the S&P 500. This recognition highlights our company’s continued strong growth since going public in 2010 and our acquisition of Bats Global Markets, expected to close tomorrow.”

***JB: Press release can be found below in the “Exchanges” section.

A Final Farewell from BATS’ Concannon
Traders News
As Bats Global Markets is on the verge of closing its deal with the Chicago Board of Options Exchange, CEO Chris Concannon took a moment to make some final remarks about his tenure at the bourse and make some final market structure predictions.

***JB: Chris Concannon gave a nice shout-out to John Lothian in his letter. We wish them all the best, whatever comes next.

Vanishing Volatility Is No Obstacle for ETPs Betting on Stock Turmoil
Gunjan Banerji – WSJ
Securities that allow investors to bet on turbulence or calm in the stock market are enjoying a resurgence, even during an unusual quiet period in which U.S. shares have set records daily.

Dow struggles to continue record run as traders await Trump speech
Victor Reklaitis and Ryan Vlastelica – MarketWatch
U.S. stocks edged lower on Tuesday, with investors reluctant to extend the market’s series of records as they looked ahead to a speech by President Donald Trump that could determine whether the market’s recent surge will be justified by government policy.

Buffett: Hedge funds fees border on obscene
Elizabeth Gurdus – CNBC
The “2 and 20” fee system that hedge funds use to charge their clients is overpriced and “borders on obscene,” billionaire investor Warren Buffett, chairman and CEO of Berkshire Hathaway, said Monday.
“Two and 20 is going to make a lot of people rich, and it’s going to make very few investors rich,” Buffett told CNBC, calling the charges “ridiculous.”

***JB: I’d love to be a fly on the wall when some hedge fund person told Buffett he deserved a 2 and 20 payout.

China Opens Currency Derivatives to Lure Overseas Bond Investors
China is giving overseas investors access to its foreign-exchange derivatives market to allow hedging of bond positions, in the latest bid to attract inflows.
Foreign institutions that invest in the interbank bond market can trade products including forwards, swaps, cross-currency swaps and options with domestic settlement agents, the State Administration of Foreign Exchange said in a statement posted on its website Monday. Access is limited to the hedging needs of private-sector investors’ onshore bond positions, the regulator said.

Exchanges and Clearing

ICE Reportedly in Talks with Former LME Boss to Launch Rival Metals Exchange
Aziz Abdel-Qader – Finance Magnates
Intercontinental Exchange (NYSE:ICE), a global network of exchanges and clearing houses, is in talks with Martin Abbott, the former CEO of the London Metal Exchange (LME), as the New York-listed group considers launching a new rival metals trading platform, according to a Reuters report.

LSE scuppers Deutsche Boerse merger hopes by rejecting EU demand
John O’Donnell, Pamela Barbaglia and Andreas Kröner – Reuters
The London Stock Exchange (LSE.L) has all but ended a planned merger with Deutsche Boerse (DB1Gn.DE) to create Europe’s biggest exchange, which had faced growing opposition since Britain’s vote to leave the European Union.
A demand from European antitrust regulators that it sell a trading platform in Italy was publicly ruled out by the LSE on Sunday, derailing the 29 billion euro ($31 billion) deal and knocking shares in both the LSE and Deutsche Boerse on Monday.

CBOE Holdings, Inc. To Join S&P 500
Press Release – CBOE
CBOE Holdings, Inc. (NASDAQ: CBOE) announced today that it will join the S&P 500 , effective at the open of trading on Wednesday, March 1.
“We are honored to join ranks with other great blue chip companies listed in the S&P 500,” said Edward Tilly, CEO of CBOE Holdings. “This recognition highlights our company’s continued strong growth since going public in 2010 and our acquisition of Bats Global Markets, expected to close tomorrow. The acquisition will enable CBOE to significantly expand its product line and broaden its geographic reach, solidifying our position as a leader in providing global investors with cutting-edge trading and investment solutions.”

Regulation & Enforcement

China allows foreign bond investors to trade derivatives – Asia Asset Management
Asia Asset Management
China is opening up its foreign exchange market by allowing foreign investors to conduct derivatives trading to hedge their foreign exchange exposures in its latest effort to bolster its bond market.
Foreign investors can now trade derivatives such as forward contracts, swaps and options with domestic settlements agents when investing in China’s interbank bond market, the State Administration of Foreign Exchange (SAFE) said in a new statement released on its website.


You Need to Own Puts
Randall Liss – The Options Insider
The stock market is on a run like I have never seen in my 40+ years in this business. If you have stocks in your portfolio (as well you should) then you must also be prepared for a downturn. Perhaps a big, mega downturn.
Hey, I was trading in October 1987 when the market crashed 22% in one day! I’m not saying that is likely anytime soon, but to say it can’t happen is foolish. Black Swans do fly, more often than intuition would suggest.

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