LEAD STORIES

CBOE Pays Fat Dividend, Stock Tagging New Highs
Zacks.com (via Forbes)
CBOE Holdings (CBOE) has been gaining traction with an annual dividend yield of 3.9% and a long-term growth rate of 12.5%, making this options and futures leader a promising pick for investors seeking both growth and income.
http://jlne.ws/123WfMx

Volatility returns to spook Wall Street
Anora Mahmudova, Financial Times
US equity markets began the week on slightly sour note, as stronger-than-expected durable goods data did little to lift the markets.
Businesses invested far more in December, with orders for durable goods jumping 4.4 per cent. A surprise jump at the end of the year indicates that companies did not hold back investment in 2012 as much as feared.
http://jlne.ws/Vi3HhL

Hedge Funds Boost Bullish Bets by Most Since July: Commodities
Elizabeth Campbell, Bloomberg
Hedge funds increased bullish commodity bets by the most in six months as accelerating growth from China to the U.S. boosted prices for a seventh week.
http://jlne.ws/WITpXz

Why One Big Trader Is Getting Into the VIX
Brian Stutland, CNBC
Since the beginning of 2013, the CBOE Volatility Index (the VIX) has fallen over 30 percent, and is now at lows not seen since 2007. But one trader believes that this could soon change.
http://jlne.ws/WIVbI1

Lowest Market Volatility Since 2007 Dividing Structured Notes
Alastair Marsh, BloombergBusinessweek
The lowest volatility for stocks, interest rates and commodities since 2007 is cutting potential returns on structured notes such as reverse convertibles and favoring securities in which capital is protected.
http://jlne.ws/T0oMi1

FOCUS: Speculators Add Again To Precious Metals Futures, Options — CFTC
Kitco News (via Forbes)
Speculators are slowly adding bullish precious metals trades back to their net holdings as these market participants increased their net-long positions on the Comex division of the New York Mercantile Exchange and the Nymex, according to U.S. government data.
http://jlne.ws/WIWmaC

Traders Take Their Swaps Deals to Futures Exchanges
Matthew Philips, BloombergBusinessweek
On Friday, Oct. 15, a rule designed to improve government oversight of the multitrillion-dollar market for derivatives took effect. The following Monday, many energy traders moved their swaps business to a futures exchange. After the U.S. Commodity Futures Trading Commission put two years into building its regulatory framework for swaps, a slice of the market simply sidestepped it. The CFTC was caught off guard by the move, says Scott O’Malia, one of five commissioners. “All these people left the swaps market due to regulatory uncertainty and confusion,” he says. “That is fundamentally a big problem with the swaps rules.”
http://jlne.ws/WIVqmH
** One has to wonder how in the world the CFTC missed this. Not like it was some secret everyone got together on to surprise the CFTC with.–JB

CME’s seasoned traveller plots an FX revolution
Tom Osborn, Financial News
For CME, the venture represents a major outlay. Never before has the mighty Merc, which hosts more than 90% of US futures trading, operated an exchange or clearing house outside the US. It also represents a huge revenue opportunity at a time of flux for the derivatives and foreign exchange markets…
CME is hoping to follow its efforts in FX futures with a suite of FX options, with a full European fixed-income franchise set to follow – with the potential inclusion of interest rate swap futures.
http://jlne.ws/123YnE4

CBOE Looks to Broaden Appeal of VIX Products
Peter Chapman, Traders Magazine
CBOE Holdings, buoyed by the phenomenal success of options and futures contracts based on its Volatility Index, is ratcheting up its efforts to broaden their appeal.
“The volatility business is only eight years old, but we see terrific growth,” Ed Tilly, CBOE’s president and chief operating officer, told a gathering of reporters in New York recently. “We see hedge funds, prop trading firms, (commodity trading advisors), insurance companies and other institutional users migrating to the product. It’s very important for us.”
http://jlne.ws/T0jL9j

EXCHANGES

CME CEO: Grains trading pause doesn’t make sense
ICE-NYSE Euronext deal not changing CME plans in EU
Reuters (via Chicago Tribune)
CME Group, the biggest operator of U.S. futures exchanges, has no plans to pause grain trading when the U.S. government releases major crop reports despite complaints by the world’s largest grain traders who say current practice distorts grain prices, the CME’s top executive said.
http://jlne.ws/123Wffs

ICE Seeks European Union Merger Review for NYSE Takeover
Aoife White, Bloomberg
IntercontinentalExchange Inc. (ICE) will seek a European Union merger review of its plans to buy NYSE Euronext to avoid multiple probes across the 27-nation bloc.
http://jlne.ws/WIUSNy

MCX stock exchange to start live trade on February 11 (India)
NDTV
The equity and equity derivative segment of MCX Stock Exchange (MCX-SX) will be inaugurated by Finance Minister P. Chidambaram on February 9. Securities and Exchange Board of India (Sebi) chairman UK Sinha and department of economic affairs secretary Dr. Arvind Mayaram will also be present at the function to be held in Mumbai.
MCX-SX will commence live trading two days later, the company said in a statement.
http://jlne.ws/T0pVq7
** Equity options are a part of this. –JB

REGULATION

Khuzami Says SEC ‘Very Focused’ on Policing High-Speed Traders
Dave Michaels, Bloomberg
Robert Khuzami, the U.S. Securities and Exchange Commission’s enforcement chief, said the agency is “very focused” on bringing cases against exchanges and traders when system or programming failures harm investors.
http://jlne.ws/T0l9Jb

Investors face derivatives cut-off
Mike Kentz, IFR
Asset managers face the prospect of their accounts being cut off from derivatives trading with bank counterparties if the firms aren’t able to get themselves registered with Legal Entity Identifiers (LEIs) by May 1.
http://jlne.ws/ViCWrI

TECHNOLOGY

Traders Make Peace With Computers 
Telis Demos, The Wall Street Journal
Years after an electronic-trading onslaught began decimating their ranks, Wall Street traders are making peace with computers.
Pressured by uncertain markets, soft growth and tough new rules, big banks are finding new ways to boost the profitability of their large stock-trading businesses—in many cases by feeding trades from computerized networks to the trading floor.
http://jlne.ws/T0sdp0

STRATEGY

Taking Advantage of Cheap VIX
Steven M. Sears, Barron’s
The CBOE Volatility Index, or VIX, has a “What, me worry?” vibe these days. As the Standard & Poor’s 500 stock-market index sells at five-year highs, the market’s volatility could be heading toward new lows. The VIX recently traded around 12, and it wouldn’t take much action on the downside to plunge through its record low of 9.89, set on Jan. 24, 2007.
http://jlne.ws/WISvuf

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