Lead Stories

ISE Moves Ahead With Plan For New Options Exchange
WSJ.com
By Jacob Bunge Of DOW JONES NEWSWIRES
The International Securities Exchange is drafting rules and legal documents as it seeks to launch the company’s second stock-options exchange by the end of 2012, according to its chief executive. A junior options market is a chief goal for the ISE as the firm has ceded trading business to rivals running multiple venues, such as CBOE Holdings Inc. (CBOE), NYSE Euronext (NYX) and Nasdaq OMX Group Inc. (NDAQ).
“It is a very high priority at the ISE to get this done,” said Chief Executive Gary Katz in an interview.
The fiercely competitive U.S. options exchange market is already split between nine platforms, with two others set to be added as well as ISE’s planned launch. Market leader CBOE Holdings Inc. (CBOE) and NYSE Euronext (NYX) each run two exchanges, while Nasdaq OMX Group Inc. (NDAQ) plans to add a third platform this year. Miami International Holdings Inc., a start-up staffed by former Philadelphia Stock Exchange officials, is also working on a new options exchange.
http://jlne.ws/IKgcfD

ISE Premium Hosted Database Launches with Comprehensive Tick Data and AnalyticsHosted Solution Provides Straightforward Access to over 200 Terabytes of Data
NEW YORK, April 30, 2012 – The International Securities Exchange (ISE) announced today that it has launched the ISE Premium Hosted Database (ISE PhD). ISE PhD is a fully managed historical tick database that offers full OPRA data including all quotes and trades from all exchanges, U.S. equities level one data, pre-computed implied volatilities and Greeks, full corporate action histories, and ISE Open/Close trade data.
http://jlne.ws/IPpmJh (PDF)

BOX Options Exchange gets approval to self-regulate
Reuters
* BOX expects to start using exchange license in mid-May
* New self-regulatory organization board to be elected
* BOX, as SRO, eliminates need to be regulated by rival
The BOX Options Exchange said on Monday that it has won approval from U.S. security regulators to act as its own self-regulatory organization, freeing it from the need to pay a rival to provide key regulatory services.
BOX, which has been seeking its SRO status with the U.S. Securities and Exchange Commission since at least 2008, expects to start using its own exchange license in mid-May. Being an SRO eliminates the need for BOX to be regulated by rival exchange operator Nasdaq OMX Group Inc, which has been providing regulatory oversight of its options market.
http://jlne.ws/ICRZsy

U.S. Stock Options With Biggest Changes in Implied Volatility
Bloomberg
http://jlne.ws/IhtmyA

Exchanges

SEC approves BOX as national securities exchange
Automated Trader
BOX granted self-regulatory organization (SRO) approval from U.S. Securities and Exchange Commission
“After years of hard work, we are excited to act as our own SRO and no longer be regulated by a competitor.”
Boston – BOX Options Exchange has announced that it has received SEC approval of its application for registration as a national securities exchange and thus, act as its own self-regulatory organization (SRO). BOX expects to start using its own exchange license in mid-May. Being an SRO eliminates the need for BOX to rely on Nasdaq OMX Group Inc., which has been conducting the regulatory oversight of its options market.
http://jlne.ws/KmN4Ji

BOX GRANTED SRO APPROVAL FROM U.S. SECURITIES AND EXCHANGE COMMISSION
Boston, April 30, 2012 – BOX Options Exchange announces it has received SEC approval of its application for registration as a national securities exchange and thus, act as its own self-regulatory organization (SRO). BOX expects to start using its own exchange license in mid-May. Being an SRO eliminates the need for BOX to rely on Nasdaq OMX Group Inc., which has been conducting the regulatory oversight of its options market.“After years of hard work, we are excited to act as our own SRO and no longer be regulated by a competitor,” said Tony McCormick, BOX CEO. “We are anticipating greater efficiencies, and the ability to directly file for new products and contracts that will enhance the experience for our customers.”

UPDATE: NYSE Euronext Profit Hit By Trading Slump, Failed Merger 
–Net profit down 44% amid slower trading, merger-related expenses
–Transaction revenue down 25% as investors keep to sidelines
–4.3 million shares repurchased during first quarter 2012
By Noemie Bisserbe and Jacob Bunge Of DOW JONES NEWSWIRES
NYSE Euronext (NYX) said Monday that tough economic conditions will keep the exchange operator under pressure as it reported a 44% net profit decline in the first quarter, driven by a drought in trading.Revenue from trading fees fell by one-quarter from the year-earlier period as investors remain on the sidelines of stock markets in the U.S. and Europe, while currency losses and charges from the failed merger with Germany’s Deutsche Boerse AG (DB1.XE) also weighed on results.
“We knew and expected this would be a challenging quarter for us, given the difficult environment,” said Duncan Niederauer, chief executive of NYSE Euronext, on a conference call Monday.
http://jlne.ws/IlD9pq
Chicago aims for share of OTC derivatives
By Hal Weitzman in Chicago and Telis Demos in New York, The Financial Times
Chicago’s trading community is stepping up its attempt to wrest control of over-the-counter derivatives markets from New York-based dealer banks.
New York’s vice-like grip on over-the-counter derivatives may loosen with the implementation of rules stemming from the Dodd-Frank Act, which overhauled US markets in the wake of the financial crisis. Stricter capital requirements are also making it harder for big banks to take on customers’ risk. That could give an edge to the already highly regulated market for exchange-traded futures, which is primarily based in Chicago, to take share from privately negotiated swaps, which the dealers in New York control.
http://jlne.ws/IoxClB

INSTITUTIONS

GFI Group to provide FENICS Professional to Union Bank
(Press Release)
Leading US commercial bank chooses GFI FENICSSM for FX Options business
New York, April 30, 2012 – GFI Group Inc. (NYSE: “GFIG”) announced today that California based Union Bank has upgraded their existing agreement with GFI FENICSSM to include the full suite of FENICS Professional™ Pricing and Analytic tools.
Union Bank will utilize FENICS Professional for FX options price discovery, portfolio management and downstream STP (straight-through processing) of trades into its back office system. Union Bank traders and sales team will have access to FENICS Professional’s Sales Module allowing them to build, price, and communicate the details of FX Options structures with speed and efficiency.
http://jlne.ws/IAFTlm

Technology

Neutrinos to Give High-Frequency Traders the Millisecond Edge
Forbes
Eighty some years after Wolfgang Pauli first postulated its existence, the
lowly neutrino is now on the cusp of being harnessed to facilitate automated high-frequency trading through earth itself. That is, if this weakly-interacting, electrically-neutral subatomic particle can be successfully time-encoded and pointed from one financial center to another. The idea is that by sending neutrino-based buy-and-sell messages via a 10,000 km shortcut through earth; high-velocity traders could handily beat their competitors.
Most neutrinos are leftover relics of thermal reactions that took place during the Big Bang, some 13.7 billion year ago. Today, however, they’re artificially generated inside nuclear reactors, or in particle accelerators like those at Europe’s CERN outside Geneva, or the U.S.’ Fermilab, near Chicago…
In theory, options trading would provide the most leverage with this neutrino technology, says Haug.
http://jlne.ws/IoGR39

SunGard’s Valdi Adds Support for International Options Exchanges
With options trading volumes increasing, SunGard’s Valdi Options Risk Manager now offers firms the ability to manage their overall position risk on options exchanges globally,
By Ivy Schmerken, Wall Street & Technology
For firms looking to manage overall position risk on options exchanges worldwide, SunGard’s Valdi Options Risk Manager, now supports options traded on international exchanges, the company announced today.  According to Russ Chrusciel, head of Valdi Options U.S. for SunGard’s Capital Markets business, in today’s release, “Valdi Options Risk Manager offers a cost-effective, easy-to-deploy solution to help options traders expand their global footprint and focus on their core options trading activities.”
http://jlne.ws/IEpyXN
Azul Systems Announces OEM Agreement with OptionsCity for High-Performance Trading and Market-Making Platforms
Press Release
Azul Systems, Inc., the award-winning leader in Java runtime scalability, announced today that it has signed an OEM agreement with Chicago, IL-based OptionsCity Software, a financial technology company that provides real-time electronic trading solutions on the world’s leading derivatives markets. OptionsCity will integrate Azul’s Zing into Freeway, its server-based, multi-asset algorithmic trading platform, as well as Metro, its fully-configurable, high-performance market making and electronic trading platform. This agreement aligns with OptionsCity’s goal to deliver the lowest latency across its trading platforms, which recently broke the 100 micro-second barrier for round trip execution. http://jlne.ws/JlNBu4

Strategy

Why Options Get a Bad Rap
By Fred Ruffy, TheStreet
Barron’s options reporter Steven Sears made a bold trade recommendation to the masses. In the latest issue, Sears’ Striking Price column suggested that bullish investors sell put spreads on the SPDR 500 Trust (SPY). The idea is to collect a bit of premium by writing puts on the “Spiders”, but also hedge the bet by buying a lower-strike put. It’s a position that has a high probability of success, but could also wipe an investor out if market conditions suddenly change.
http://jlne.ws/ICMLg9

Shopping at the Stock Dog House
By STEVEN M. SEARS, Barrons.com
Here are some bullish options trades on companies that have underperformed ahead of earnings results.
Corporate earnings reports are supposed to provide investors with a window into a stock. So far, not much has happened based on the results of the first-quarter earnings season. The option seems to be overpricing puts and calls, perhaps in anticipation that stocks will react strongly to financial results and management guidance. But many stocks still seem stuck in trading ranges despite the anticipation in the options market of a new leg to the journey.
http://jlne.ws/IhsQAt

Events

2012 NASDAQ OMX Analyst/Investor Day
NEW YORK, Apr 30, 2012 (GlobeNewswire via COMTEX) — The NASDAQ OMX Group, Inc. (“NASDAQ OMX(R)”) NDAQ -2.03% will hold its 2012 Analyst/Investor Day on Thursday, May 10, 2012. NASDAQ’s senior executive team will conduct an in-depth discussion of the company’s operations, objectives, and strategy. Analysts and investors who wish to attend should RSVP to investor.relations@nasdaqomx.com
Analysts and investors not attending the event in person are invited to view the live webcast at http://ir.nasdaqomx.com/events.cfm
What: NASDAQ OMX Analyst/Investor Day
When: Thursday, May 10, 2012 from 8:00 a.m. to 1:00 p.m. Eastern Time
Where: The Grand Hyatt New York Hotel, 109 East 42nd Street at Grand Central Terminal, New York City.
http://jlne.ws/JZ4y4u

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