JLN Options: Data Fees Kick CTAs and IBs When They're Down; VIX Hits Multiyear Low; Discounting the Dreaded Taper

Dec 10, 2013

Lead Stories

Data Fees Kick CTAs and IBs When They’re Down
Daniel P. Collins – The Huffington Post
I reported on the poor timing of the increase in exchange and data fees by CME Group two weeks ago but the full impact, particularly of the data fees, is just coming into focus and market participants are seeing sticker shock.

VIX Hits Multiyear Low
George Leong – ETF Daily News
Let me begin by first stating this: I’m not going to talk about the Federal Reserve in any detail, or about the holiday shopping season and how it’s so important to the retail sector and the economy because these don’t seem to be of any great concern to the markets.
The reality is that both traders and investors appear to be really comfortable at this moment with the record-high levels in the stock market.

Discounting the Dreaded Taper
Adam Warner – Schaeffer’s Investment Research
Rumor has it that the Federal Reserve might taper their bond-purchase program some day. You’d think the financial networks would cover it at some point, no?
… Okay, I kid. If you’ve flipped on the business channels, or followed anyone in the financial Twittersphere, you’ve probably heard it mentioned quite often.
To me, the question is more about to what extent the dreaded taper is discounted.

Videocast: Quiet holidays for VIX?

Will Stocks Enjoy Another Happy New Year?
John Kimelman – Barron’s
In the world of financial journalism, ’tis the season of the “review-preview” story.
This year, looking backward has been quite a joy, unless you’re heavily invested in Treasuries, munis and other bond categories, in which case envy is the operative emotion.

Higher Interest Rates Won’t Slay This Bull Market
Martin Sosnoff – Forbes
Not only am I afraid to go out to lunch because I could miss the start of a new bear market, but the volatility of stocks and bonds is an emotional strain.  No problem with oil futures, gold and currencies. Not a player.


ISE Receives “Best Risk Management Initiative” Award at  
2013 American Financial Technology Awards  
NEW YORK, December 10, 2013 – The International Securities Exchange (ISE) announced today that it received the “Best Risk Management Initiative” Award at the 2013 American Financial Technology Awards (AFTAs), hosted by Waters Technology. Winners were determined by a panel of independent industry judges and Waters editorial staff.
(via email)

•    U.S. Options Exchange of the Year
•    Most Innovative New Product, Index and Equities
•    Best Technology Innovation by an Exchange, The Americas
CHICAGO, IL — December 10, 2013 — The Chicago Board Options Exchange® (CBOE®) today was named “U.S. Options Exchange of the Year” for the second consecutive year at an awards ceremony during Futures and Options World magazine’s Derivatives World London Conference. CBOE also claimed top honors for “Most Innovative New Contract, Index and Equities” for its S&P 500® Variance futures product, and “Best Technology Innovation by an Exchange, The Americas” for its new London Trading Hub.
(via email)

ICE Futures Europe Announces Successful Transition Of Brent Crude Oil Futures And Options To New Expiry Calendar
ICE Futures Europe, a wholly owned subsidiary of IntercontinentalExchange Group, the leading global network of exchanges and clearing houses today announced the successful completion of the transition of ICE Brent futures, options and related derivatives instruments to a new, ‘month-ahead’ expiry calendar.

CME Market Data Fee Increase Discussion With CME Group
Press Release (NIBA)
Thank you for your comments and suggestions regarding the CME market data fee increase announced Nov. 12. Here is a summary of the Dec. 2 meeting with the CME market data team.

Euronext introduces equity options on OCI N.V.
Press Release
Amsterdam – 9 December 2013 –   Euronext N.V., a wholly owned subsidiary of IntercontinentalExchange Group, Inc. (NYSE: ICE), will introduce options on the shares of OCI N.V. (“OCI”). The options will be available as of Friday 13 December on the derivatives market of Euronext Amsterdam.

Regulation and Enforcement

Regulators seek to curb Wall St. trades with Volcker rule
Emily Stephenson and Douwe Miedema – Reuters
U.S. banks will no longer be able to make big trading bets with their own money after regulators on Tuesday finalized the Volcker rule and shut down what was a hugely profitable business for Wall Street before the credit crisis.

While Regulators Drew Map, Street Changed
Francesco Guerrera – The Wall Street Journal
The first eight minutes of the Volcker rule’s life were the easiest.
That is how long it took President Barack Obama to announce the surprise new ban on Wall Street banks’ trading with their own capital and owning hedge funds. That was back in January 2010. The ensuing three-plus years of industry lobbying, intra-governmental infighting and regulatory uncertainty took the “devil-is-in-the-details” cliché’ to a new level.

Volcker Rule Said to Have Narrow Hedge Exemption After Whale
Silla Brush – BloombergBusinessweek
Wall Street banks will need to demonstrate on an ongoing basis that their trades hedge specific risks in order to win an exemption from the Volcker rule ban on proprietary trading, according to a text of the final measure.

Financial regulators warn of cyber-threat
Ben Goad – The Hill
More must be done to protect the U.S. financial system against the growing threat of cyber-attacks, government and industry officials warned an interagency panel of regulators Monday.
The Financial Stability Oversight Council (FSOC), created three years ago to help shore up weaknesses in the economy that led to the 2008 crisis, identified cybersecurity as a major priority earlier this year.

Options Education

Picturing Option Profits – Volatility Part 2
Russ Allen – The Options Insider
For the last several weeks, I’ve been using a bearish vertical call spread on GLD as an example to demonstrate how option payoff diagrams help us visualize option profits. Today we’ll wrap up that example, finishing our discussion of volatility.

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