JLN Options: CBOE Reopens After Malfunction Shuts Options Exchange

Apr 25, 2013

Lead Stories CBOE Reopens After Malfunction Shuts Options Exchange
Nikolaj Gammeltoft, Nina Mehta & Lu Wang, Bloomberg
The Chicago Board Options Exchange opened for trading three-and-a-half hours late today after a software malfunction shut the derivatives market as its top executives were away at an industry event in Las Vegas.
http://jlne.ws/14T3jyj CBOE Holdings Statement on Today’s Trading Issue
Press Release (CBOE – full text)
CHICAGO, IL, April 25, 2013 — CBOE Holdings, Inc. (NASDAQ: CBOE) statement regarding this morning’s trading issue: This morning, a system issue delayed the opening of options trading at Chicago Board Options Exchange (CBOE) from 8:30 a.m. until 11:50 a.m. CT. Trading at C2 Options Exchange (C2), CBOE Futures Exchange (CFE) and CBOE Stock Exchange (CBSX) opened as scheduled. The malfunction that impacted CBOE was an internal systems issue and not the result of any outside influence. The issue, which affected validation of certain orders and the communication of cancel/fill reports, has been corrected.
(via email) Options industry targets tax proposal seen as undermining market
Angela Moon, Reuters
The options industry is making efforts to defeat a proposal that would tax most financial derivatives on a “mark-to-market” basis by valuing positions based on their fair value.
http://jlne.ws/14T8IoT Derivatives tax proposal ‘would punish risk management’
The Trade
A US budget proposal that would change how derivatives are taxed could, if agreed, increase portfolio risk and damage both the derivatives and underlying markets, investor bodies and analysts claim.
http://jlne.ws/14T6lmb Liffe’s battle with TOM has bigger implications  
William Mitting, FOW
When the Chicago Mercantile Exchange launched its first equity index futures contract (and the world’s second, by a matter of weeks) on the Standard & Poor’s 500 index back in April 1982, S&P was not going to charge the exchange for the licence.
http://jlne.ws/14T8T3H Not Enough Help for VIX on Wednesday
Wall Street Sector Selector
After crossing below its 50-day moving average on Tuesday, the VIX did not make a significantly robust advance on Wednesday to get out of its current rut.
http://jlne.ws/14T7l9L

Exchanges

ISE’s Gemini to Blend Maker-Taker with Pro-Rata
Peter Chapman, Traders Magazine
The International Securities Exchange will launch its ISE Gemini options exchange at the end of June, pending Securities and Exchange Commission approval.
“We are ready to go,” Gary Katz, ISE president and chief executive officer, told Traders Magazine during the options industry’s annual conference in Las Vegas. “Everything is in place.”
http://jlne.ws/14T4ihR

Regulation

Derivatives Revisions Blocked by Dodd-Frank Backers, Himes Says
Cheyenne Hopkins, Bloomberg
U.S. House derivatives legislation designed to roll back some Dodd-Frank Act requirements won’t gain passage because Senate Democrats will resist reopening the 2010 regulatory law, Representative Jim Himes said today.
http://jlne.ws/14T2PrW UK supervisor warns derivatives clearers of tough fee policing
Huw Jones, Reuters
Britain’s new regulator for market operators warned clearers of tougher policing of fees to stamp out cut-throat competition that risks undermining financial stability.
http://jlne.ws/14T6dmw FINRA withdraws plan requiring broker disclosure link
Suzanne Barlyn, Reuters
The Financial Industry Regulatory Authority (FINRA) has withdrawn a proposal designed to make it easier for investors to research the backgrounds of brokerage firms and brokers, but said it would refile the planned rule.
http://jlne.ws/14T6Hcl

Strategy

Here’s Why Your Apple Options Trade Got Crushed Wednesday
Tim Parker, Benzinga
At Wednesday’s open, Apple started the day in the red and for most of the day, it stayed there.
Since the stock fell in value, options traders who had purchased calls or sold puts lost money. In other words, if you held a long options position, it wasn’t a great day for you.
http://jlne.ws/14T7OZB Mini-Options Can Maximize Gains for Little Guys
Mark Sebastian, Barron’s
Mini-options might be one of the most successful new financial products in the past five years. By shrinking the standard options contract to cover 10 shares of an associated stock, rather than the standard 100 shares, they allow individual investors to trade options on big stocks that are otherwise too expensive to own or trade in quantity.
http://jlne.ws/10Dnf6G

Events

The Options Industry Council Announces Investor Education Day in the Chicagoland Area May 11
Press Release
The Options Industry Council (OIC) today announced that its second Investor Education Day (IED) for 2013 is taking place in Schaumburg, IL on May 11.
http://jlne.ws/14T80rY

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