JLN Options: CBOE, Makers of VIX, To Launch a Fearless Index

Nov 30, 2012

Lead Stories CBOE, Makers of VIX, To Launch a Fearless Index
Brendan Conway, Barron’s
My headline is a bit cheeky, but watch tomorrow for the first dissemination of the CBOE Low Volatility Index, brought to you by the makers of the “fear gauge.” This index is actually pretty different from popular products that bear the “low volatility” moniker.
http://jlne.ws/11aEwRu
**  “…the only thing we have to fear is fear itself.” — Franklin Delano Roosevelt  (The geek in me wanted to quote from Dune about fear but I’ll spare you. –JB) **I wonder if the “fearless index” name will catch on? — SR Exchanges protest over margin rules
Michelle Price, Financial News
The world’s largest exchanges are scrambling to avert tough new capital requirements in a rare example of the international exchange community being back-footed by the global reform agenda. The exchanges say the new rules could significantly increase the cost of trading listed derivatives and may discourage firms from hedging their risk.
http://jlne.ws/QuMbH9 Compass Launches Eight (!) Volatility-Weighted Funds
Brendan Conway, Barron’s
The hunger for tools to combat, stay away from, profit by, or otherwise live with stock-market volatility knows no bounds. Or, at least, the number of products built for such hungers keeps on growing. We’ll see whether investors buy them.
http://jlne.ws/11aCDEl
**So many volatility products, so little time! — SR Exchanges Vs. Brokerages: The Power Struggle at the Heart of High Frequency Trading
Minyanville
High frequency trading has become the poster child for a slew of issues generated by technological developments in finance. Automation that eliminated the need for specialists on the floor of the New York Stock Exchange and eliminated arbitrage opportunities for brokers and day traders has swept through the world’s financial centers like a force of nature.
http://jlne.ws/11aE5qv Two charged with insider trading over 2009 IBM deal
Jonathan Stempel, Reuters
Two former stock brokers at a Connecticut financial services company were charged with insider trading on Thursday over a 2009 acquisition by computer giant IBM Corp…
Investigators said Conradt then tipped Weishaus, who in turn tipped three colleagues, who were not named in court papers. These five people placed the various improper trades in SPSS stock and options, according to the court papers.
http://jlne.ws/Vb8ctH

Exchanges

CME Group set to close deal for Kansas City exchange this weekend
Tom Polansek, Reuters
The filing, which the Kansas City exchange made with the Commodity Futures Trading Commission on November 15, said December 2 is the date for the “anticipated closing of the transaction whereby the KCBT will be acquired by CME Group Inc.”
http://jlne.ws/QuM9zd CME Drops Swaps Reporting Suit Against CFTC
Katy Burne, Dow Jones
CME Group Inc. (CME) said Thursday it has dropped its lawsuit against a federal regulator over trade-reporting rules, after a series of steps the regulator took in recent days went in its favor.
http://jlne.ws/Vb3SdG BATS Sweetens Terms for Individuals Trading Stocks
Matthew Jarzemsky, The Wall Street Journal
BATS Global Markets said Thursday it received Securities and Exchange Commission approval to try to lure individual investors’ trades by offering better pricing for buying and selling shares in Facebook Inc. FB (FB) General Electric Co. GE (GE) and other heavily traded names.
Approval from the SEC clears BATS to offer a one-year pilot program set to begin Dec. 17.
http://jlne.ws/QuM9PK CME Group Announces Trading Volume Record for its Gold Futures Contracts
Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, today announced a record in daily trading volume for COMEX Gold Futures. These contracts are listed by and subject to the rules of COMEX.
On November 28, COMEX Gold Futures reached a record daily volume of 486,315 contracts, surpassing the previous record of 484,721 set on May 29, 2012.
http://jlne.ws/QuM9zb
** Probably helps when a single fund dumps 24 tonnes of gold on the market in one go. –JB Professional Customer & Broker- Dealer Fee Change For December 3, 2012
Press Release (NYSE Amex Options)
The Exchange, pending effectiveness of SEC rule filings, is making a change in its fee schedule.
The Exchange is going to modify existing volume-based tiers and the associated rate per contract for certain electronic executions for Professional Customers and Broker-Dealers.
The Exchange proposes to change the tiers and the associated rate per contract as shown below:
(click for full size image)
(via email — no link) REGULATIONS CME rival says regulator’s swap rule change disruptive
Ann Saphir, Reuters
The Depository Trust and Clearing Corp on Thursday lashed out at a regulator’s decision to consider a rule change that would make it easier for DTCC rival CME Group to keep its customers’ swaps data to itself.
http://jlne.ws/Vb2HLp

Technology

Software Bug Made Swedish Exchange Go Bork, Bork, Bork
Karen Weise, BloombergBusinessweek
A computer error stalks the markets—again. An order on a relatively obscure derivatives index in Stockholm yesterday was asking to buy futures contracts on Swedish stocks valued at 131 times the country’s entire GDP. The order made the exchange go “bananas” and caused Nasdaq OMX to stop trading in Swedish derivatives for four hours.
http://jlne.ws/11aH8Px
** I wonder if they got Beaker to fix it? (I seriously hope I am not the only who gets that reference.) –JB

Strategy

It’s All In the Charts, If You Know What You’re Looking For
Sam Seiden, The Options Insider
What I always find fascinating are all of the different ways people look at charts and all of the different pieces of information people try to attain from a price chart. With so many different schools of thought on money, markets, charts, and so on, what should we really be looking for in a price chart?
http://jlne.ws/Vb8JM3

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