Exchange Halt Shows Perils of Complexity Beyond Stocks: Options
Sam Mamudi & Nikolaj Gammeltoft – Bloomberg
The price-feed malfunction that briefly froze U.S. options exchanges yesterday shows the dangers of a fragmented market structure go beyond equities trading.
Rhetorical Questions on VIX-Piration Eve
Adam Warner – Schaeffer’s Investment Research
My, how the calendar flies. It’s already VIX-piration Day tomorrow!
If it seems pretty close to the last CBOE Volatility Index (VIX) expiration day, well, it was only four weeks ago. Just like regular expiration in everything else, monthly expiration cycles in VIX are either four or five weeks long.
**Do we get presents? -JB
Despite opposition, U.S.’s Barney Frank sees derivatives opening to competition
Karen Brettell – Reuters
When Barney Frank, former U.S. Democratic Congressman and co-author of the Dodd-Frank 2010 banking legislation, set about reforming the U.S. $300 trillion derivatives markets, he felt the key was to foster competition.
OPRA’s Outage Traced to Software Upgrade, Raising Questions About Back Up
Ivy Schmerken – Wall Street & Technology
The consolidated data feed for options markets had an outage yesterday, leading to a brief shutdown of trading across 12 options exchanges in the latest technical malfunction.
Exchanges Repeated Software Errors Could Weigh On Investor Confidence
Securities exchanges seem to have become more vulnerable to technology glitches than ever. Within a month of the ‘flash freeze’ that caused U.S. stock trading to halt for over three hours on August 22, another bug caused the markets to come to a standstill this week.
Videocast: VIX on eve of settlement
Options strangulate futures in equity F&O; trading on NSE [India]
Rajesh Gajra – mydigitalfc.com
Equity derivatives market on the NSE is now almost an options market. From an existing dominant position, options trading in the equity derivatives segment of the National Stock Exchange (NSE) has almost overwhelmed futures trading with turnover in options trades accounting for 80.4 per cent of total turnover in all equity derivatives trades in the current financial year (FY14) as of September 16.
**Not usually what I think about when considering an options strangle but I can go with it. -JB
High-frequency trading: Business gets tough for Wall Street gunslingers
Arash Massoudi – Financial Times
Nearly five years have passed since cumulative profits peaked for high-frequency trading (HFT) companies that buy and sell stocks at millisecond speeds on the US market, according to industry estimates.
As competition has stiffened between those that survived the downturn, the conditions that allow companies to thrive have deteriorated since HFT’s most profitable days.
NYSE Technologies Obtains License to Distribute Market Data in China
Press Release (NYSE)
NYSE Technologies, the commercial technology division of NYSE Euronext (NYX), today announced that it has obtained approval from the Chinese State Council Information Office (SCIO) to distribute market data in China.
With the license from the SCIO, NYSE Technologies will disseminate financial information including NYSE Euronext’s real-time and historical market data, as well as SuperFeed services to market participants in mainland China.
REGULATION & ENFORCEMENT
Chicago trading firm DRW sues CFTC to block expected action
Lynn Marek – Crain’s Chicago Business
DRW Investments LLC, which operates a major Chicago trading firm led by Don Wilson, filed a lawsuit against the Commodity Futures Trading Commission, seeking to head off an expected enforcement action by the agency.
**I’m going to have to remember this tactic. If the government is coming after me I need to pre-emptively go after them first. Brilliant! -JB
Wielding Broader Powers, S.E.C. Visits Hedge Funds in London
Anita Raghavan – Dealbook
The Securities and Exchange Commission, which has actively pursued actions by American banks and other financial institutions overseas, is broadening its reach by asserting its purview to foreign hedge fund managers.
U.S. indicts ex-traders in JPMorgan ‘London Whale’ scandal
Jonathan Stempel -Reuters
A U.S. grand jury has indicted two former JPMorgan Chase & Co (JPM.N) traders at the center of the bank’s “London Whale” scandal, court papers made public on Monday show.
JPMorgan Chase Is Said to Admit Fault in Settlement of Trade Loss
Ben Protess and Jessica Silver-Greenberg – Dealbook
JPMorgan Chase has agreed to pay about $800 million to a host of government agencies in Washington and London — and make a groundbreaking admission of wrongdoing — to settle allegations stemming from a multibillion-dollar trading loss, people briefed on the matter said.
**Admitting fault? That’s new. Senior executives avoiding charges…not new. -JB
U.S. SEC charges 23 firms in short-sale crackdown; 22 settle
Sarah N. Lynch – Reuters
Twenty-two investment firms will collectively pay more than $14.4 million in sanctions to settle civil charges in connection with a broad crackdown by federal regulators into illegal short-selling practices, the U.S. Securities and Exchange Commission said on Tuesday.
**And not admitting fault. One step forward (see comment just above) and 22 back. -JB
Insider Trading Nightmare, The IBM Trade That Went Bad
Walter Pavlo – Forbes
Last week’s guilty plea of Trent Martin on charges related to insider trading seemed like another case in a string of similar cases prosecuted by the U.S. Attorney in the Southern District of New York, Preet Bharara. A reckless young man gets a hot stock tip, buys some shares, cashes in and then, some months later, is busted. However, what caught my attention was the amount of money that the Feds claimed Martin made on the hot tip when IBM was going to buy SPSS, Inc. in July 2009 …. $7,900.