Lead Stories

ISE, Nasdaq wary of planned Miami options exchange
Jacob Bunge, MarketWatch
The planned launch of a new U.S. stock-options platform has drawn criticism from two established operators, which asked regulators to scrutinize the transparency of the proposed market.
The Miami International Securities Exchange LLC plans to launch later this month into an already crowded market of 10 platforms competing for stock-options trading volume that has shrunk by 14% so far this year. 
http://jlne.ws/QVrUIn

Markets are up. Earnings are down. Here’s what’s really going on.
Neil Irwin, The Washington Post
Earnings season is underway, and it’s looking to be a doozy. The Standard & Poor’s 500 stocks are forecast to have suffered a cumulative 2.7 percent drop in profits, according to Factset, the first decline in 11 quarters.
But there is a mystery hanging over the markets: During the quarter, the S&P 500 actually rose 5.8 percent.
http://jlne.ws/QVtDxp

Is Market Complacency Really That High?
Cullen Roche, Pragmatic Capitalism (via Business Insider)
One thing we keep seeing all over the place is how the VIX (volatility index) is so low and that this means the market is extremely complacent and therefore on the verge of a decline.  This might be true, but I think it’s important to provide some perspective when using an indicator like the VIX.
http://jlne.ws/SLU6zC

Regulation

Regulator Prepares to Appeal Dodd-Frank Court Ruling
Ben Protess, Dealbook
Regulators are preparing to appeal a recent court ruling that struck down new curbs on Wall Street trading.
The Commodity Futures Trading Commission has drafted a plan to challenge the ruling handed down this month by a federal judge in Washington. The court decision, cheered by Wall Street, halted the agency’s so-called position limits rule, a plan that would cap speculative commodities trading.
http://jlne.ws/QVrrGb

Technology

Can Industry Collaboration on a Kill Switch at the Exchange Level Help Prevent Technology Glitches?
Ivy Schmerken, Advanced Trading
Market participants are rallying to come to grips with three technology glitches that nearly destabilized the markets. I’m talking about a software error that forced BATS to pull its initial public offering in March, technical problems at Nasdaq that messed up Facebook’s IPO in May, and Knight Trading’s $440 million loss tied to errant software code in August. Altogether, these incidents have raised doubts about how market participants design, test and implement new automated trading systems before they go into production.
http://jlne.ws/SLTYjy

DTCC Could Help Control Market Glitches
Gregory Bresiger, Traders Magazine
The utility that provides clearing services for the equities trading industry could be asked to produce the “control mechanism” that keeps brokerages, market makers and other trading participants from imploding due to flawed technology.
An industry working group that includes all four major national stock exchange operators, broker-dealers, buyside firms and the Financial Industry Regulatory Authority suggested in its September 28 letter to the Securities and Exchange Commission that the Depository Trust and Clearing Corporation (DTCC) and its clearing agencies might provide a “consolidated control mechanism” that could help keep trading from running wild, as occurred in the August 1 flood of erroneous orders that nearly swamped market maker Knight Capital.
http://jlne.ws/QVswh3

Strategy

Energizing Options Ideas That Will Give Your Holdings A Boost
David Sims, Seeking Alpha
It might sound crazy to get excited about a stock trade that will potentially cap your gains and leave you with plenty of downside losses. After all the reason most people get into investing is to get rich and grow their money. However, seasoned investors will tell you that patience is a virtue. After all, Wall Street wasn’t built in a day (that goes for Main Street too). So, sometimes it pays to be patient and take the profits that are put in front of you, instead of just hoping for that big once in a lifetime gain.
http://jlne.ws/SLUdLv

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