LEAD STORIES

Getting booted from Dow a blessing
MarketWatch
That’s because stocks deleted from the index often proceed to outperform those that replaced them — in the current case, Goldman Sachs, Visa, and Nike.
http://jlne.ws/16ibKBF

Alcoa, H-P and Bank of America to Be Dropped from Dow Industrials  
Matt Jarzemsky and Collin Barr – The Wall Street Journal
Alcoa Inc., Hewlett-Packard Co. and Bank of America Corp. will be dropped from the Dow Jones Industrial Average next week, in the biggest shake-up of the 30-stock index in almost a decade.
http://jlne.ws/16ibra4 

Videocast: Volatility levels ‘plummet’
optionMONSTER
http://jlne.ws/15OlGj7

What Is The Fear Index Showing About Volatility
Moe Zulfiqar – ETF Daily News
We have now entered into September, one of the most volatile weeks for the key stock indices in the U.S. economy. With this, there are questions as to where these key stock indices are going next. The bulls and the bears are at it again, adding to the noise already present.
http://jlne.ws/15Om0OJ

Wall Street extends rally on Syria solution hopes
Rodrigo Campos – Reuters
U.S. stocks rose on Tuesday, with the S&P; 500 up for a sixth straight day, as investors cheered the possibility of averting a Western military strike against Syria and China’s economy showed strength.
http://jlne.ws/15OoY5T 

CFTC learns HFT lessons from equities market
The Trade
The Commodity Futures Trading Commission (CFTC) will craft rules to meet greater automating of trading in derivatives and avoid some of the problems seen in equities markets caused by the industry’s push towards low-latency trading.
http://jlne.ws/16ib8fr

Traders: what does your in-tray hold?
Tim Cave – Financial News
With the bulk of the City’s traders and technologists back at their desks after the summer break, the rest of the year looks set to be dominated by regulatory discussions, new exchange launches, and the fallout from IntercontinentalExchange’s $10 billion acquisition of NYSE Euronext.
http://jlne.ws/13I1hyD

Banks Seen at Risk Five Years After Lehman Collapse
Yalman Onaran, Michael J. Moore and Max Abelson – BloombergBusinessweek
Ruth Porat didn’t see it coming.
The Morgan Stanley (MS:US) banker who advised the U.S. Treasury Department on its rescue of Fannie Mae and Freddie Mac in September 2008 and thought she understood the risks to the financial system had just spent a weekend trying to save Lehman Brothers Holdings Inc. when she got a message: Would she come back to deal with American International Group Inc.
http://jlne.ws/1eeavJu
**This is a very long article.  Get your coffee first. -JB

REGULATION

CFTC Announces Public Meeting of the Technology Advisory Committee
The Commodity Futures Trading Commission announces that on Thursday, September 12, 2013, the CFTC’s Technology Advisory Committee will hold a public meeting at the Commission’s headquarters in Washington, DC from 10:00 a.m. to 5:00 p.m. The meeting will focus primarily on issues related to swap data reporting, the Commission’s concept release on automated trading, and issues related to swap execution facilities.
http://jlne.ws/16hgfwe
**Doug Ashburn stayed up all night reading the 137-page automated trading concept release. It was so cool that he wrote a brand new MarketsReformWiki summary page for it, which you can read at http://jlne.ws/15OooLl -JM

CFTC Should Stick to Principles
Dan Collins – Dan Collins Report
In 2000 Congress passed the Commodity Futures Modernization Act (CFMA) which, in addition to lifting the ban on single stock futures, introduced the concept of principle based regulation. It was hugely popular but came during a different era. It was passed in a business friendly administration with a competitive threat pushing it —the London Financial Futures and Options Exchange (Liffe) was about to list single stock futures on U.S. equities— and with a much more business friendly administration about to take over.
http://jlne.ws/15OmXXr

TECHNOLOGY

Wall Street trading software not adequately tested, experts warn
Jessica Meek – Risk Magazine
Recent high-profile technical glitches within financial institutions are due to an aggressive culture of pushing through new technology without testing it first, industry experts warn. Failures in software at Goldman Sachs and the New York Nasdaq stock exchange in August have led to accusations that Wall Street is pushing through software that may not be ready for use – leaving compliance departments to catch up.
http://jlne.ws/14JpmlQ

OPTIONS EDUCATION

Revisiting the VIX ‘Life Cross’
Adam Warner – Schaeffer’s Investment Research
Way back on June 26, the 50-day moving average of the CBOE Volatility Index (VIX) crossed above the 200-day moving average. In theory, that put the VIX into an uptrend. We dubbed it the “life cross” — kind of a glass-half-full version of the “death cross” when an index’s 50-day crosses below its 200-day. In practice, it hasn’t provided much in the way of predictive value as to where the market is going.
http://jlne.ws/15Oq2Xf

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