JLN Options: CBOE Stock Exchange Completes Acquisition of National Stock Exchange

Jan 9, 2012

Lead Stories

CBOE Stock Exchange Completes Acquisition of National Stock Exchange
CHICAGO, January 9, 2012 – CBOE Stock Exchange (CBSX) announced today that it completed the acquisition of all-electronic National Stock Exchange (NSX) on December 30. The acquisition, approved by the Securities and Exchange Commission, allows CBSX to expand its footprint in the securities exchange space by wholly owning and operating a second separate exchange.
Both exchanges will continue to operate separately under their current names and will integrate teams in Chicago and Jersey City, NJ.
http://jlne.ws/dqtww6

CBOE Stock Exchange Buys Market in Bid to Diversify Trading Client Roster
New York Investment
Posted on January 9, 2012 by admin
A marketplace partly owned by CBOE Holdings Inc. (CBOE), that runs a largest U.S. options exchange, acquired a 127-year-old National Stock Exchange to get access to new forms of customers. CBOE Stock Exchange, owned by Chicago-based CBOE Holdings and 9 companies including Interactive Brokers Group Inc. (IBKR) and Susquehanna International Group LLP, finished a squeeze of NSX on Dec. 30, according to David Harris, boss and chief executive officer of CBSX. Terms of a understanding weren’t disclosed. Harris is now also authority and CEO of Jersey City, New Jersey-based NSX, founded in 1885 as a Cincinnati Stock Exchange.
http://jlne.ws/zUJCpW

Ed Knight of Nasdaq OMX Discusses ….
Traders Magazine Online News, January 9, 2012
Ed Knight, general counsel and executive vice president at Nasdaq OMX, testified before the Senate Banking Committee in December during a hearing on the status of capital formation and job creation. Knight argued that the marketplace was overly fragmented and that exchanges needed government help in supporting the trading of small company stocks.
>>On the need for government help
We should also deal with structural issues that make our public markets less attractive today. We ask for your help in reshaping the rules driving the public markets so that investors and entrepreneurs will continue to view the U.S. capital markets as the most efficient and best regulated markets in the world. The United States used to be the market of choice for global IPOs. From 1995 to 2010, listings on U.S. exchanges shrank from 8,000 to 5,000, while listings on non-U.S. exchanges grew from 23,000 to 40,000.
>>On the “problem” of fragmentation
Today’s U.S. markets are increasingly fragmented and volatile. Liquidity in U.S. stocks is dispersed across 13 exchanges, over 40 other registered execution venues, and uncounted other trading facilities.
http://jlne.ws/wB6El5

VIX ETFs Creep Lower as Euro Fears Recede
ETF Trends
January 9th at 10:18am by Tom Lydon
Exchange traded funds that follow futures contracts based on the CBOE Volatility Index are trading lower with markets apparently growing more confident that the euro can survive the debt crisis. According to a recent press release, the CBOE said that annual trading volume in 2011 surpassed twelve million contracts for the first time, with the VIX setting new trading records for annual, quarterly, monthly, weekly and single-day volumes.
However, volatility is beginning to wind down. The VIX has dropped more than 30% since mid-November, falling close to 20, report Chris Dieterich and Brendan Conway for The Wall Street Journal.
http://jlne.ws/zjhjj1

Exchanges

CBOE Lists Futures On Emerging-Markets Volatility
–CBOE lists futures tied to volatility in the iShares MSCI Emerging Markets Index ETF
–Emerging markets “VIX” measures options prices and expected swings in the emerging-market ETF
–CBOE to list futures on 10 additional sector and single-stock “fear” gauges through 2012
By Chris Dieterich, WSJ.com
NEW YORK -(Dow Jones)- The Chicago Board Options Exchange on Monday launched futures tied to the volatility of emerging-market stocks, the latest move by the exchange to broaden offerings tied to its “fear” franchise.
The futures are linked to volatility in the iShares MSCI Emerging Markets Index exchange-traded fund (EEM). Similar to CBOE’s Volatility Index, which uses options prices to gauge anticipated swings in the Standard & Poor’s 500, CBOE’s Emerging Markets ETF Volatility Index measures expected swings in the EEM.
http://jlne.ws/y8EXHC

Successful Start for Seoul Options and Futures Exchange, SOFX New Trading Platform
Press Release Published on: January 9th, 2012
Seoul (OPENPRESS) January 8, 2012 – SOFX this week successfully introduced its new products onto its new trading platform, representing the first milestone of importance in the platform’s release. Recently, thousands of products were migrated from the SOFX’s platform to the new trading platform, involving approximately a majority of SOFX customers.
Having started with the organization’s new indexes markets a few years back, the new trading platform will be rolled out to all of SOFX markets as soon as possible. When the rollout is completed, clients will require only one connection through the SOFX network to access all its cash and derivatives markets in the country and its new initiatives.
http://jlne.ws/xuRPN2
Platinum options traded on JSE for first time
Business LIVE
The Johannesburg Stock Exchange (JSE) has seen 800 platinum option contracts traded on the Safex commodity derivative’s global market late last week, the first time that the JSE has seen this trading strategy used by market participants. Chris Sturgess, general manager of the commodities division at the JSE, says: “To date the trade has been solely in futures, but I’m pleased to see the first interest in using options by a hedge fund. Options are versatile instruments that in their simplest form enable traders to acquire a type of insurance. Buyers pay a premium to reduce their risk and have access to upside potential. This is a trend we are optimistic will increase.”
http://jlne.ws/wGz5z8

Warsaw Stock Exchange Derivatives Market In 2011
MondoVisione
The total volume of trading in all derivatives was 15.6 million instruments in 2011, an increase of 5.7% year on year.
WIG20 options
* The volume of trading in WIG20 index options was 897.8 thousand options in 2011, an increase of 33% year on year;
* The monthly volume of trading in WIG20 index options was the highest in WSE history in August 2011 at 135.3 thousand options. The daily volume of trading in WIG20 options was historically the highest on 4 August at 19,372 options;
* The number of open interest in options was 17.5 thousand options at the end of the year. The month-end number of open interest was historically the highest at the end of May 2011 at 144.9 thousand options.”
http://jlne.ws/zQt3Co

CME to Raise Stake in Dubai Mercantile Exchange, Sharaf Says
Bloomberg
By Anthony DiPaola – Jan 9, 2012
CME Group Inc. (CME), the world’s largest futures exchange owner, is set to increase its holding in the Dubai Mercantile Exchange, according to Ahmad Sharaf, chairman of that Persian Gulf oil bourse. The DME plans to raise money by offering more shares to existing investors this year, Sharaf said while attending a confe
rence in Abu Dhabi today. The current roster of shareholders, which includes CME, a Dubai investment fund and the state of Oman, will remain the same, with only the size of their stakes changing, he said.
http://jlne.ws/y3ZxU0

Regulation

Transaction Tax, CME’s MF Global Audit, EU Capital Rules: Compliance
By Carla Main, Bloomberg – Jan 9, 2012
French President Nicolas Sarkozy said it is “unacceptable” that there’s no tax on financial transactions and said France “won’t wait for everyone to be agreed” before imposing the tax.
“How can you explain that when you buy an apartment or go to the supermarket you pay tax, but that financial transactions are the only sort of purchase where you don’t pay,” he said.
Sarkozy, adding that the euro zone “must take its responsibilities,” made the remarks to the closing session of the “New Worlds” conference in Paris Jan. 6. A European Union financial-transaction tax would drive away investment and weaken employment unless a levy was accepted worldwide, said Margrethe Vestager, Denmark’s economy minister.
http://jlne.ws/xDuAS6

Strategy

Using Options To Hedge Against a GLD Collapse
NASDAQ.com
Posted by Trefis Team
At SK Options Trading , we primarily use the SPDR gold trust (NYSEARCA:GLD) for exposure to the gold price. GLD is an exchange traded fund, designed to track the price of one tenth of an ounce of gold. GLD currently holds around 1280 tonnes of physical bullion, the sixth largest holding in the world, preceded only by the U.S. Germany, the IMF, Italy and France. The major benefit of using an ETF such as GLD is that one can gain exposure to the gold price as easily as buying a stock and one can effectively trade gold options as easily as trading stock options.
http://jlne.ws/yxzM09
Speculators Increase Bullish Wagers Most Since ’10: Commodities
By Elizabeth Campbell, Businessweek
Jan. 9 (Bloomberg) — Hedge funds raised their wagers on higher commodity prices by the most since July 2010 after signs of accelerating U.S. growth bolstered optimism that demand for raw materials will strengthen.
Money managers expanded their combined net-long positions across 18 U.S. futures and options by 25 percent to 671,915 contracts in the week ended Jan. 3, Commodity Futures Trading Commission data show. Bullish bets on cotton rose the most since April 2009 and those on coffee doubled. Crude-oil holdings reached a three-week high.
http://jlne.ws/wEYdgy

How About A High Volatility ETF? Do High Volatility Products Belong In Your Portfolio?
by Michael Johnston, ETF Database
January 9, 2012
One of the most noteworthy innovations in the ETF industry over the last several years has been the development of funds that deliver targeted exposure to investment “factors”, allowing for easy access to techniques that previously required extensive research and maintenance. From high momentum to low beta, there are now ETFs that slice and dice broad equity indexes in a number of different ways to deliver unique risk/return profiles. 
http://jlne.ws/A76atI

 VIX: Where Will It Trade?
By Mark Sebastian, The Street 01/09/12
Heading into the second week of January, traders need to prepare themselves for something we haven’t seen in some time. The possibility of the CBOE Volatility Index (VIX) falling below 20! I did not think we would get here as quickly as we have, but assuming there is no crazy news overnight, the VIX will be trading around 21.25 on Monday’s open with a strong bias to move lower. Lower? One might ask, how could the VIX possibly trade lower, IV is low…isn’t it?
http://jlne.ws/wz692K

Events

In observance of the Martin Luther King, Jr. holiday, NYSE Arca Equities, NYSE Arca Options, NYSE Amex Options, NYBX, and the NYSE Bonds market will be closed on Monday, January 16, 2012.http://jlne.ws/x5xDDe

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