First US ETF celebrates 20th birthday
By Chris Flood
The first US listed exchange traded fund marked its 20th birthday on Tuesday having developed into into a $125bn giant and becoming one of the world’s most widely traded securities over the past two decades.
The SPDR S&P 500 ETF, known as SPY, which is managed by State Street Global Advisors, has spearheaded the development of the ETF industry worldwide since its launch in 1993.
…SPY also generates a huge volume of turnover in derivatives markets with 585.7m contracts in 2012, around 16 per cent of US equity options volume last year.
http://jlne.ws/VnzCgI VIX Doomsayers Are Out Of Data
Options markets are confirming the recent strength in stocks, and to such an extent that we may be looking at a new, calmer volatility environment for quite some time. That’s the conclusion of a note published this week by Goldman Sachs analysts Krag Gregory and Jose Gonzalo Rangel, who argue that S&P 500 implied volatility is shifting into a new distinct regime
http://jlne.ws/14quxIu U.S. Equity Commissions and Volumes Seen Rebounding
John D’Antona Jr., Traders Magazine
Sometimes there is only one way to go when things hit rock bottom. Up.
That’s the view on U.S. equity trading commissions and volume this year, as one consultancy forecasts commissions will rise 9 percent and volume up 6 percent.
http://jlne.ws/14qteJI Gold sinks as traders unwind option contracts
Associated Press (via Yahoo Finance)
Gold prices are slipping to start the week, pressured lower by traders who made bets the precious metal would fall.
http://jlne.ws/14qtyrR New US rules to decide fate of noisy swap brokers
Douwe Miedema, Reuters
Twenty casually clad men crowd around a screen at derivatives broker GFI, shouting prices at each other and to clients on the phone.
It is one of the noisiest parts of a male-dominated trading floor where shoeshiners crouch in a corner, smells waft as caterers bring around food, and one man gets a back massage at his desk.
http://jlne.ws/14qu0Gy Why Investors Should Be Worried About Asia Volatility
Ben Levisohn, Barron’s
The market is pricing in more volatility in Asian currencies–and that could be bad news for investors.
In a note this morning, State Street’s Fred Goodwin worries that the volatility that’s shown up in Asian currencies could make its way into other assets–emerging-market stocks among them.
http://jlne.ws/WdwfuY VIX futures, Treasuries and tail hedging
Nicolae Cristea and Todd Groth, Pensions & Investments
This note outlines the main issues surrounding the use of volatility futures and U.S. Treasury bonds as part of a tail-hedging program. Each approach presents a unique set of challenges and deserves to be looked at separately.
Berkshire Hathaway, CME Eyed NYSE Deals Anupreeta Das, Jason Zweig and Jacob Bunge, The Wall Street Journal
Warren Buffett, the billionaire investor who has said he wouldn’t care if the stock market closed down for years, made a bid late last year for the iconic New York Stock Exchange.
Mr. Buffett’s Berkshire Hathaway Inc. participated in discussions to purchase NYSE Euronext, owner of the Big Board, according to people familiar with the talks. Ultimately, the two sides didn’t agree on price, one of the people said.
http://jlne.ws/WvuaKu NASDAQ OMX Announces Strategic Alignment of Global Data and Index Businesses
The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced the company will combine its Global Data Products and Global Index businesses. The combination will enable greater customer focus and leverage of NASDAQ OMX’s scalable technology, product innovation and robust distribution channels. The new business will be led by John L. Jacobs, Executive Vice President of NASDAQ OMX, and operate under the name Global Information Services.
Is S.E.C. Nominee Too Connected?
William Alden, Dealbook
In choosing Mary Jo White, a former prosecutor, to lead the Securities and Exchange Commission, President Obama seemed to signal a resolve to get tough on Wall Street. But the other section of Ms. White’s résumé — her years representing Wall Street names as a rainmaking partner at Debevoise & Plimpton — could prove troublesome.
http://jlne.ws/116XLc1 Survey finds industry underprepared for OTC derivatives trading regulation
As new regulations emerge to govern OTC derivatives trading and the market itself grows, a recent survey has found that financial institutions are underprepared to meet the requirements these regulations will place on them even as they plan to increase their trading activity in OTC derivatives.
http://jlne.ws/XI9WJs Swap-to-futures conversion prompting CFTC scrutiny
Silla Brush, Futures
The U.S. Commodity Futures Trading Commission is reviewing whether energy futures contracts that are replacing swaps on the largest exchanges have enough transparency before they are traded, Chairman Gary Gensler said.
http://jlne.ws/XIadfr CFTC regulation of swaps under Dodd-Frank – an update on recent developments for end-user counterparties
Since our September 28, 2012 corporate advisory (Project Planning for Swap End-Users under CFTC Dodd-Frank Rules), the Commodity Futures Trading Commission (“CFTC”) and other federal agencies have been busy issuing, modifying and sometimes deferring the compliance dates for a variety of rules affecting swaps under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”).