Lead Stories

Investors Show Confidence That New Stock Market Calm Will Linger
Kaitlyn Kiernan – The Wall Street Journal
With the stock market resuming its rally after a bout of indigestion caused by worries about the outlook for Federal Reserve policy, options investors appear to be thinking the calm will last.
As stocks have pushed back into record territory and the Chicago Board Options Exchange’s Volatility Index has declined over the last three weeks, far fewer investors are placing bets that the quiet will be short-lived and the VIX will spike higher.
**At last glance the VIX was down 4.3% today. -JB

U.S. Stocks Rise as Bernanke Says Data Will Determine Stimulus
Alex Barinka and Nikolaj Gammeltoft – BloombergBusinessweek
U.S. stocks rose, after the Standard & Poor’s 500 Index snapped an eight-day rally yesterday, as Federal Reserve Chairman Ben S. Bernanke said the central bank’s asset purchases are not on a preset course.

Derivatives and the Danger Myth
Matthew C. Klein – Bloomberg
There is a myth that derivatives trading is more dangerous than bank lending. For the most part, these products are benign. Mostly they allow people to recreate the same risks they would take by lending money without actually extending credit. Derivatives can, however, create problems insofar as they let financial firms increase leverage more than they otherwise should.

Melamed Tells Interns Competition is Key to Success
Dan Collins – Dan Collins Report
CME Group Chairman Emeritus Leo Melamed stressed the importance of competition for success in addressing an audience of mostly college interns at the Marketswiki World of Opportunity Summer Intern Education Series, as well as providing some fascinating and amusing anecdotes from the salad days of the Chicago Mercantile Exchange (CME).
**The event was a great success. More are on the way.  You can get more information on the program here. -JB

Videocast: VIX traders turn to August

High Frequency Traders Make The Markets Much More Liquid, Transparent, And Fair
John Tamny – Forbes
Several years ago, when ‘high frequency’ trading first captured the imagination of the commentariat, I was on a radio show panel on which the health of the stock market was discussed. One participant, a fairly well known columnist for a major market publication, opined that the existence of computerized, high speed trading was a barrier to the retail investor returning to the market and boosting it.
As one can imagine, ‘fairness’ was brought up.
**Last Friday Jon Najarian of optionMONSTER took the other side of this argument.  There is certainly no shortage of conflict on this topic (see the following article). -JB

Market Microstructure and High-Frequency Market Manipulation
Irene Aldridge – ABLE Alpha Trading, LTD. (via Advanced Trading)
Normal exchanges tend to be more volatile and prone to market crashes than their inverted and pro-rata counterparts, contends algorithmic trading consultant Irene Aldridge.

Deutsche Bank Among Lenders Given Two-Year U.S. Swaps Phase-Out
Jesse Hamilton – BloombergBusinessweek
Deutsche Bank AG (DBK), the European continent’s biggest bank, is among lenders given an extra two years by the Federal Reserve to separate derivatives trading from U.S. units that get government backing.

TradeStation Announces New Pricing Policies Designed to Deliver More Flexibility, Greater Value
Press Release (via Globe Newswire)
TradeStation, a Monex Group company (TSE: 8698) and award-winning broker-dealer and futures commission merchant, today announced new pricing policies designed to give equities and options traders greater flexibility and better value in choosing the commission plan that best suits their trading frequency and style.


NASDAQ OMX Group Conducts Annual Election for Subsidiary Board Directors
Press Release (via Yahoo Finance)
The NASDAQ OMX Group, Inc.SM (NDAQ) announces the appointment of nine directors to The NASDAQ Stock Market LLC, NASDAQ OMX PHLX LLC, and NASDAQ OMX BX, Inc. Boards. Directors serve a one-year term.
The name and title of directors appointed to the Boards of The NASDAQ Stock Market LLC, NASDAQ OMX PHLX LLC and NASDAQ OMX BX, Inc. are highlighted below:


CME Group’s Duffy to Appear before U.S. Senate Committee on Agriculture
The Options Insider
On Wednesday, CME Group (NASDAQ:CME) Executive Chairman and President Terry Duffy will appear before the U.S. Senate Committee on Agriculture, Nutrition & Forestry to discuss the Commodities Futures Trading Commission (CFTC) reauthorization.

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