JLN Options: ISE Elects New Member to Board of Directors

May 11, 2012

Lead Stories

ISE Elects New Member to Board of Directors
NEW YORK, May 11, 2012 – The International Securities Exchange (ISE) today announced that Sylvain Mirochnikoff was elected by the Board of Directors for a one-year term to fill a vacancy. Mr. Mirochnikoff, who is Managing Director of the Institutional Equity Division for Morgan Stanley, will serve as an industry director representing ISE’s Primary Market Makers (PMMs). In addition, Michael Juneman, a Managing Director at Citadel Derivatives Group LLC, was re-elected as the other PMM representative on ISE’s Board. Timothy Brennan, the Head of Automated Market Making at Ronin Capital, was re-elected to ISE’s Board as a Competitive Market Maker (CMM) representative, and Joseph Sellito, Chief Executive Officer of Global Execution Brokers, an affiliate of Susquehanna International Group (SIG), was re-elected as representative of ISE’s Electronic Access Members (EAMs).

China tests out commodity options trading
Rebecca Hampson
China has started its first mock trials of commodity options trading after the Chinese regulator gave its approval this week.
The first exchange to run the simulated options trading on its commodity futures is the Dalian commodity exchange, which launched the internal trials this week after it gained approval from the Chinese regulator, China Securities Regulatory Commission.
http://jlne.ws/JFXish

JPMorgan’s Spectacular Whale Fail Was Preceded By Unusual Options Trading Activity
By Steve Smith, Minyanville.com (opinion)
Put options on JPMorgan were unusually active ahead of yesterday’s announcement of credit-trading losses.
MINYANVILLE ORIGINAL It appears that once again someone’s bunny had a good nose and they dug into the option patch to bring home a bunch of tasty carrots just in time for Mother’s Day. Yesterday afternoon following the close, JPMorgan (JPM) held a surprise conference call to announce significant losses in structured-credit trading.
http://jlne.ws/IJ8Ecj

Exchanges

Hong Kong Exchanges Puts Rising Fastest in 14 Months: Options
By Jonathan Burgos and Kana Nishizawa, Bloomberg — Options dealers are charging the most in 14 months for bearish contracts on Hong Kong Exchanges & Clearing Ltd., concerned its bid for the London Metal Exchange may succeed and falling profits will drive down the shares. Puts protecting against a 10 percent decline in Asia’s largest exchange operator cost 1.01 times more than calls betting on a 10 percent gain, according to data on three-month options compiled by Bloomberg. The price relationship known as skew has jumped 5.7 percent since its one-year low on April 19.
The shares have lost 5.6 percent this year.
Closing Bell Rings For Exchange’s Name
Storied Stock Exchange Will Be Known as the NYSE MKT
By MATT JARZEMSKY And JACOB BUNGE, WSJ.com
The name of the American Stock Exchange, once among the most prominent stock markets in the world, is going the way of ticker tape. NYSE Euronext, NYX +0.55% which bought the trading venue in 2008, said Thursday it will change the name to NYSE MKT from NYSE Amex. For the first time in decades, daily stock tables in The Wall Street Journal and elsewhere will no longer list shares under an Amex moniker…The exchange’s business of listing companies has struggled with declining market share since peaking decades ago. It became better-known as an options-trading venue and is currently the No. 4 equity-options exchange by market share. That business was a key draw when NYSE Euronext acquired Amex for $260 million. NYSE Amex Options will continue to operate under that name.
http://jlne.ws/JmKaq5

Phillip CFD Launches AMEX Market
PRESS RELEASE
Phillip Securities Pte Ltd, one of Singapore’s largest brokers, is proud to extend its number of markets by providing Contracts For Difference (CFD) trading opportunities in the American Stock Exchange (AMEX). With this additional market, Phillip CFD clients will now have access to the third largest options marketplace, which is also the leader in providing Exchange Traded Fund (ETF), closed-end funds, structured products and small and micro capitalization stocks.
http://jlne.ws/JjtDHe

US Recovery ‘Ahead of Schedule’: Larry Summers
CNBC.com
The U.S. economic recovery was “ahead of schedule,” even as insufficient consumer demand continues to pose a risk, former Treasury Secretary Larry Summers said Thursday.
Summers noted that the CBOE Volatility Index, widely considered one of the best gauges of fear in the market, was below normal from a historical standpoint — “and that it has fallen by more than two-thirds since the president came into office — hardly consistent with the kinds of arguments that a number of the critics are making.”
http://jlne.ws/IRtGcv

Chicago Bd Options Exch, Inc v Int’l Secs Exch, LLC
Lexology
“Where the specification makes clear that the invention does not include a particular feature, that feature is deemed to be outside the reach of the claims of the patent, even though the language of the claims, read without reference to the specification, might be considered broad enough to encompass the feature in question.”
On May 7, 2012, in Chicago Bd. Options Exch., Inc. v. Int’l Secs. Exch., LLC (Rader, Wallach, Fogel) affirmed-in-part, reversed-in-part, vacated-in-part and remanded the district court’s summary judgment that CBOE did not infringe U.S. Patent No. 6,618,707, which related to an automated exchange for the trading of options contracts that allocates trades among market professionals and that assures liquidity.
http://jlne.ws/JJvAsf

CBOE vs. ISE re a patent for an automated trading system. See lead stories in the May 7th options blog: http://jlne.ws/LxYW0G

Options on Futures

CME Group Announces the Launch of Short-Dated New Crop Options on Grain and Oilseed Futures
Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the launch of Short-Dated New Crop Options on CBOT Corn and Soybeans futures to begin trading Monday, June 4. Short-Dated New Crop Options on CBOT Wheat futures will be listed for trading beginning Tuesday, September 4. These contracts are listed with, and subject to, the rules and regulations of CBOT.
“An increasing number of our producer customers use options to manage risk during the growing season,” said Tim Andriesen, Managing Director, Agricultural Commodities and Alternative Investments, CME Group.
http://jlne.ws/IYJbyY

Regulation

CFTC drops 85% exchange-trading limit
Risk.net
Final rule scraps controversial requirement that 85% of any contract must trade on exchanges
A controversial Commodity Futures Trading Commission (CFTC) rule, which would have forced US over-the-counter market participants to trade an overwhelming majority of futures and options on derivatives exchanges, has been dropped from final rules for designated contract markets (DCMs).
http://jlne.ws/J3Tsvc

Dimon’s $2 Billion
Bet Proves the Volcker Rule

By Phil Albinus, Advanced Trading
As Wall Street firms were making a case against Dodd-Frank and The Volcker Rule, JPMorgan loses big on a prop trading bet that blew up in their face.
Jamie Dimon just handed regulators and legislators one more reason to continue with the Volcker Rule. And it only cost him $2 billion. The CEO of JPMorgan Chase had to call in a bet from one of his top traders – known as the London Whale – for a spectacular bet on credit default swap indexes that went terribly wrong. Not only is the current loss $2 billion but there could be further fallout of $1 billion if, as one commentator says, “the market does not cooperate.”
http://jlne.ws/Js0TXy

Strategy

What’s behind call selling in Royal Gold
optionMONSTER
Royal Gold is bouncing today, but one investor remains a seller. optionMONSTER’s tracking programs detected the purchase of 2,273 July 77.50 calls for $0.50 and the sale of an equal number of October 70 calls by $3.30. Volume was below open interest in July but not October, which suggests that an existing position was rolled from one strike to the other.
http://jlne.ws/Kuf6WI

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