LEAD STORIES

Investor Profits on Technology Error with Nasdaq OMX Stock Options
Kaitlyn Kiernan – The Wall Street Journal
Technology failed Thursday–but at least one human quickly used the options market to bet that shares of exchange-operator Nasdaq OMX Group (NDAQ) would take a hit due to the 3-hour shutdown of the Nasdaq Stock Market.
http://jlne.ws/14Ma53z

Bats, Direct Edge in Talks to Merge
Jacob Bunge – The Wall Street Journal
Electronic-exchange group BATS Global Markets Inc. is in advanced discussions to merge with rival stock-exchange company Direct Edge Holdings LLC, people familiar with the matter said, in a deal that would create the second-biggest U.S. stock-market operator ahead of Nasdaq OMX Group Inc.
http://jlne.ws/179sLw8

TABB report: Options trading volume could surge more than 5 percent in 2013  
FinCAD
The total volume of options contracts that are executed through derivatives trading could surge by more than 5 percent by the end of 2013, according to a report that was recently released by research firm TABB Group.
http://jlne.ws/14LWnO4

OPTIONS REPORT: Industry Commissions Stagnant, Tabb Says
Peter Chapman – Traders Magazine
Despite healthy growth in volume, commissions paid to brokers for options trades are expected to remain flat for the next two years. That’s the prognosis from a new report by Tabb Group.
http://jlne.ws/1d9ASjp

Goldman Is a Victor in Ruling on Options Trades  
Kaitlyn Kiernan – The Wall Street Journal
Goldman Sachs Group Inc. won a decisive victory Thursday when the NYSE Euronext’s Amex options exchange canceled most of the errant trades that buffeted markets Tuesday morning.
http://jlne.ws/18Pp6Vz
**It’s good to be king. -JB

Goldman should take the hit on tech-glitch losses, says Scholes
Neil Munshi – Financial Times
Myron Scholes, one of the founding fathers of modern options trading, has said Goldman Sachs and others should be forced to incur huge losses if they make mistaken trades, instead of being able to cancel them.
http://jlne.ws/1daZQxP
**If it was me submitting errant trades I am pretty sure at the end of the day Moose and Rocco would be knocking on my door offering to help me find my checkbook. -JB

Nasdaq Chief Defends Handling of Trading Halt
Nathaniel Popper – The New York Times
The chief executive of the Nasdaq stock exchange, Robert Greifeld, on Friday shot back at criticism of how his exchange handled a three-hour halt in trading on Thursday afternoon.
http://jlne.ws/14LWFo5
**Sounds like patting yourself on the back for closing the barn door after the horses have left. -JB

Paralyzed Nasdaq opted for caution over speed in restoring trade
Jed Horowitz, Lauren Tara LaCapra and Herbert Lash – Reuters
Thirty minutes into the crippling outage that hobbled the Nasdaq stock market on Thursday afternoon and halted all trading in $5.9 trillion worth of U.S. equities, exchange officials had the problem fixed.
http://jlne.ws/14LXTjc
**Hat tip to the team at NASDAQ for that.  I am sure there was a lot of pressure to get things back up ASAP.  To weather that and do it properly is not easy. -JB

In Markets’ Tuned-Up Machinery, Stubborn Ghosts Remain
Floyd Norris – Dealbook
A generation ago, when the stock market crashed on Oct. 19, 1987, the Nasdaq stock market appeared to have done much better than the New York Stock Exchange. While the Dow Jones industrial average fell 23 percent that day, the Nasdaq composite index was off just 11 percent.
http://jlne.ws/1ayjnHH 

FIA, FOA And FIA Asia Complete Formation Of FIA Global And Name Initial Board Members
Press Release
The Futures Industry Association, the Futures and Options Association and FIA Asia are pleased to announce the completion of the final bylaw changes needed to form FIA Global, the confederation of associations that will enhance their combined global voice and reach. Members of the FOA approved the proposed affiliation in July along with its name change to FIA Europe. This week FIA Asia and FIA announced the completion of the necessary changes to their bylaws, the final steps in the process for forming FIA Global.
http://jlne.ws/1ayjlzm

REGULATION & ENFORCEMENT

SEC chair to convene meeting with exchanges following Nasdaq problems
Reuters
U.S. Securities and Exchange Commission Chair Mary Jo White said late Thursday she plans to convene a meeting with exchange executives and other market players to discuss regulatory practices after a technical problem forced Nasdaq OMX’s Nasdaq exchange to halt trading for much of the day.
http://jlne.ws/14M6LVW

After Nasdaq Shutdown, It’s Time for Electronic Markets to Shape Up or Face Regulators
Matthew Philips – BloombergBusinessweek
We still don’t know the exact source of Nasdaq’s problem, but reports indicate that the exchange was having trouble printing data to the public tape. Which is as basic a function as there is for an exchange. Nasdaq, in a statement posted to its website, said trading would resume at 3:25 p.m. Once it did, the resumption was fairly smooth, to Nasdaq’s credit.
http://jlne.ws/14LYscO

CFTC Moves to Rein In High-Speed Traders 
Scott Patterson – The Wall Street Journal
Federal commodities regulators are preparing to take their first big step toward reining in high-speed computer trading and subjecting it to tougher oversight.
http://jlne.ws/12wufAM

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