Lead Stories

Emanuel shoots down transaction tax on LaSalle Street exchanges
Fran Spielman – Chicago Sun-Times
Mayor Rahm Emanuel on Wednesday shot down a tax on LaSalle Street exchanges championed by his political nemesis, Chicago Teachers Union President Karen Lewis, as a solution to the teacher pension crisis.

Options Traders Scan Brains in Search for Profit-Enlarging Supplements
Michael P. Regan and Sam Mamudi – BloombergBusinessweek
The second-floor loft on William Street in lower Manhattan, normally abuzz with young equity-options traders connected to Sang Lucci Capital Partners, was quiet for a week last month.
The Sang Lucci crew went to Los Angeles in a quest to find an upgrade for a piece of trading software they say others in the profession have neglected: the human brain.
***JB:  This really speaks to my inner nerd.  I for one welcome our robot overlords (I think I am getting ahead of things here…baby steps).

ECB, Draghi Feel the Pinch as Euro Edges Higher
Dean Popplewell – Forbes
Despite rising pressure on the European Central Bank (ECB) and President Mario Draghi to react to the euro’s continuing climb against the greenback and persistently low inflation, investors should expect little more than talk from the central bank at its policy rate-setting meeting today.

Social-Media Rout Crushing ETF That Rallied 64% in 2013
Joseph Ciolli and Trista Kelley – Bloomberg
The rout in social media stocks is burning investors who piled into one of last year’s most popular exchange-traded funds.
The Global X Social Media ETF, which saw assets rise 10-fold last year, sank 2.7 percent yesterday, bringing its decline from April 23 to 12 percent. Among its holdings, Twitter Inc. (TWTR) is down 33 percent over the period, while Yelp Inc. (YELP) lost 18 percent and Pandora Media Inc. (P) slipped 21 percent. Almost 400,000 Twitter options changed hands yesterday and about 600,000 the day before as traders rushed to hedge against more losses.

Barclays axes 19,000 jobs, reins in Wall Street ambitions
Steve Slater – Reuters
Britain’s Barclays (BARC.L) reined in its ambitions to be a Wall Street powerhouse on Thursday and signaled a return to its retail roots with a plan to hive off much of its investment bank and ax one in four jobs at the division.
Chief Executive Antony Jenkins, in his second strategic review in as many years, will cut 19,000 jobs in the next three years, 7,000 of them at the investment bank, and park 400 billion pounds of assets in a new “bad bank”.

Videocast: Downside bets on VIX

CBOE Holdings, Inc (CBOE) Would Like to Thank the VIX…
Why the VIX got a prominent mention as part of the CBOE earnings report
Adam Warner – Schaeffer’s Investment Research
As we noted recently, there’s evidence that credit market players are behind the growing VIX paper volume. If that’s true, and that trend gains steam, yowza. The size there will dwarf equity-related demand.
And on the plus side for the CBOE, these relatively new players must take both sides of the trade. VVIX, the volatility of the VIX, continues to look pretty punk. We know John Q. Public and Joe Q. Portfolio Insurer love to own cheap dollar VIX paper. But someone’s in there selling to them, because prices keep trending lower despite volume trending higher.
It all sounds good for anyone booking a commission on all these transactions.


NYSE to Curtail Order Types Amid Debate Over Their Fairness
Sam Mamudi and Matthew Leising – Bloomberg
The New York Stock Exchange is paring back the types of orders customers can place, potentially quieting critics who say their proliferation gives high-frequency traders an unfair edge.
NYSE staff have identified more than a dozen to abolish, pending regulatory approval, IntercontinentalExchange Group (ICE) Chief Executive Officer Jeffrey Sprecher said today. Shares of Atlanta-based ICE, which bought NYSE last year, fell the most since 2011 today after the company released quarterly results.

Exchange’s Dark Pool Reflection
Robert Stowsky – Traders Magazine
This April saw two very different takes on the future of the National Market System and dark pools in particular. In an interview with Bloomberg News, Terrence Duffy, Chairman of the CME, called for eliminating dark pools in an effort to have all equity trading occur on exchanges. “Fix the fragmentation issue, and you’ll fix the problem,” Duffy said. “We need to have 100 percent of that liquidity on exchanges.”

BOX Tops Half Billion Dollars in Cumulative Savings for Investors
Press Release (Yahoo Finance)
The BOX Options Exchange (BOX) announced today it has achieved half a billion dollars in savings for investors through its price improvement period (PIP). April was also an impressive month in BOX’s history with price improved contracts averaging 300,510 per day, which represented a 38% increase over the same period last year.

Regulation and Enforcement

EU watchdog proposes breathing space on derivatives clearing
Banks would not have to clear some of their derivatives transactions during the roll out of new rules aimed at making markets safer under a proposal put forth by a top European Union regulator on Thursday.

CFTC commissioner: Agency needs to invest in derivatives trading oversight
Rick Baert – Pensions & Investments
A CFTC commissioner said the agency needs to invest more in technology to improve its surveillance of derivatives trading and plans to go to the traders themselves to seek their input.

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