Commentary & Insight
Compliance Advice on SEC’s Market Access Rule from Julie Dixon of Titan Regulation
SEC Rule 15c3-5 (“Market Access Rule”), finalized in November 2010, is the commission’s response to the May 6, 2010 “flash crash” in which the U.S. equity market plunged nearly ten percent in a matter of minutes, then quickly rebounded. Compliance with the rule, which places risk management controls on any broker-dealer that offers direct trading access, has been required since November 2011, yet firms still have lingering questions about the adequacy of their self-policing programs. Julie Dixon, managing principal at Titan Regulation, discusses the origins of the Market Access Rule and how it affects buy side firms and their trading activity. She also offers advice on how hedge funds and broker-dealers can be sure their programs are compliant, and what a firm may expect during a regulatory audit of its risk systems.
Fed Would Like You to Stop Overreacting, Please: Volatility Fund Slumps
Brendan Conway, Barron’s
Stock indexes surged Thursday and worry gauges plummeted. In related news, the Wall Street Journal’s Jon Hilsenrath carried a message from the Federal Reserve: Stop worrying so much about the end of quantitative easing.
Option players step up portfolio insurance in emerging market ETFs
Doris Frankel – Reuters
Many participants in the U.S. options market appear to be stepping up their portfolio insurance in some international exchange-traded funds to offset concerns about the short-term outlook for global markets.
VIX About To go Backward
Mark Sebastian, The Options Insider
The VIX cash has been backward over the VIX futures for a surprisingly large portion of this month so far. The same cannot be true for the VIX futures themselves.
A Big Bounce?
Andrew Giovinazzi, The Options Insider
The last few days are if anything a sign that all good things must come to an end. The market has now gone from the proposition the Fed will stop buying paper to the realization that the Fed is going to stop buying paper.
Big Dow Dips Overstate Stocks’ Weakness
Murray Coleman – The Wall Street Journal
Big daily swings in stocks aren’t stirring major concerns by advisers, who see recent moves as relatively small in terms of market benchmarks’ new robust heights.
What are Chicago’s financial exchanges selling at Blackhawks games?
Bruce Blythe – Chicago Grid
CBOE and CME Group don’t sell burgers or car insurance, so what are they getting out of their rink-side ads?
NYSE program to boost liquidity of exchange-traded products
Trevor Hunnicutt – Reuters
NYSE Arca, a major U.S. market for exchange-traded products (ETPs), will launch an initiative this year to help issuers of some lightly-traded securities to boost their liquidity.
The Race to Zero Latency Is a Race to Nowhere
Emmanuel Carjat – TMX Atrium (via TABB Forum)
If fast trading is your only strategy, you don’t have a strategy.
Until recently, the mantra has been that milliseconds (now microseconds) count. However, trading volumes continue to decline, and it is becoming increasingly harder for high-frequency trading firms and those favoring ultra-low-latency strategies to take a profitable slice of the diminishing pie.
Disclosing Dark Pool Volumes, Only A Matter of Time
Ivy Schmerken – Advanced Trading
A panel of Wall Street executives warmed up to the idea of reporting dark pool volumes on a monthly basis, but they rejected dark pool rules implemented in Canada and Australia.
Derivatives Are Weapons Of Slow Economic Destruction: Study
Mark Gongloff – Huffington Post
We have learned, painfully, of the damage derivatives can do to an economy in a financial crisis. But derivatives are hurting the economy even on its best days, according to a new study.
Morgan Stanley to Tiny Exchanges: Justify Your Existence
Jacob Bunge – The Wall Street Journal
Forget too big to fail, some stock exchanges may be too small to justify their status, according to Morgan Stanley.
A boom in electronic trading over the past decade has multiplied the number of registered stock exchanges to 13, drawing grumbles from banks and brokers that are obligated to hook up to each market.
Exchanges Said to Prepare Pilot Programs for Changing Tick Sizes
Sam Mamudi and Dave Michaels – Bloomberg
Proposals to study changing the price increments at which some U.S. stocks change hands may be getting closer to implementation.
JPX Derivatives Trading Volume Passes 200 Million Mark
Press Release (Tokyo Stock Exchange)
JPX is proud to announce that today the combined year-to-date trading volume of derivatives products on Osaka Securities Exchange Co., Ltd. (OSE) and Tokyo Stock Exchange, Inc. (TSE) reached 202,335,793 contracts (preliminary figure).
IntercontinentalExchange Sets Daily Record for Combined Agriculture and Financial Product Set; New Daily Record for ICE Russell 1000 Growth Index
Press Release (ICE)
IntercontinentalExchange (NYSE: ICE), a leading operator of global markets and clearing houses, today reported a record daily volume in agriculture and financial contracts traded on ICE Futures U.S. of 889,193 contracts on June 13. The previous daily volume record was 851,852 on June 12, 2012.
ICE also reported a record daily volume in the ICE Russell 1000 Growth Index futures contract with 11,595 contracts traded on June 13. The previous daily volume record was 11,064 contracts on March 12, 2013.
FX Rates Said to Face Global Regulation in Libor Review
Lindsay Fortado, Ben Moshinsky & Jesse Hamilton – Bloomberg
Global regulators may start overseeing currency rates in a widening response to benchmark-rate setting scandals that began with revelations on the manipulation of Libor, according to two people familiar with the matter.
The ‘Intimidate the CTFC Act’
Alexis Goldstein – The Washington Post
Despite its formal name, H.R. 1256 should really be called the “Intimidate a Financial Regulator Act.” The bill seeks to change ho
w derivatives are regulated.
Plan for quashing broker complaints to meet resistance
Suzanne Barlyn – Reuters
Within the next few weeks, the Financial Industry Regulatory Authority (FINRA) expects to send the Securities and Exchange Commission a proposal to make it easier for securities brokers to erase certain black marks from their records.
Single dealer platforms poised to survive
Ralph Achkar – MarketPrizm (via FOW)
The advent of Single Dealer Platforms has provided numerous benefits to end users by integrating information and liquidity across asset classes and from multiple sources. By enabling trading across asset classes using web-based interfaces, sell-side firms that use SDPs provide their clients with a more comprehensive view into the market, a better opportunity to maximise profitability and the assurance of best execution. In recent months, we have seen more and more banks building an infrastructure to service a wider set of client needs.