Options Clearing Corp raises fees, cites regulatory scrutiny
Tom Polansek – Reuters
The clearinghouse that handles all U.S. options trades said it has raised fees to cover the costs of increased regulatory requirements and warned members that any refund to them will likely be much smaller than in years past.
Is GM in trouble? Not according to options market
Andrew Wilkinson – Futures Magazine
Despite grilling in Congress, GM investors retain bullish option bias
How much damage the GM recall has on its future remains an open-ended question? Given the pre-bankruptcy nature of management’s apparent failure to deal with the situation, one hopes that CEO Mary Barra will learn from the mistakes of her predecessors and galvanize safety procedures over the coming years.
Michael Lewis Book Flash Boys Continues to Move Market
Steven M. Sears – Barron’s
Michael Lewis’ new book, Flash Boys, has not only ignited a debate about high-frequency trading, it has prompted a few traders to put their money where their opinions are. They are betting against shares of the Nasdaq OMX Group . As Barron’s reported Tuesday, that trading pattern began, suspiciously, even before the book was launched.
Checking on New Global Volatility Markets
Russell Rhoads – CBOE
Over the past few months VIX related trading has expanded globally with the Australia Securities Exchange (ASX) and National Stock Exchange of India (NSE) listing volatility futures contracts. On October 21, 2013 ASX launched futures trading based on the S&P/ASX 200 VIX (A-VIX) with two consecutive monthly expirations being listed. Currently A-VIX futures that expire in April and May are on the board. The closing prices for Wednesday April 2 appear in the table below –
Mainstream and Overlooked India ETF Options
Todd Shriber – ETF Trends
Buoyed by hopes a new government will take power following elections later this year, India exchange traded funds have dominated their BRIC rivals in 2014. A firming rupee has also helped send the benchmark Sensex to a series of record highs after sapping Indian equities last year.
Derivatives of Derivatives: A Closer Look
Adam Warner – Schaeffer’s Investment Research
All is right in volatility ETF/ETN world! Or all is wrong … it depends upon your opinions on volatility derivatives.
After 2.5 months or so of persistently decent volatility sentiment in the face of a market that has barely moved, we have a new all-time low to report. It took place in the ProShares Trust Ultra VIX Short-Term Futures ETF (UVXY) on Tuesday.
Schwab on HFT: ‘Growing Cancer’ That Must Be Addressed
Steven Russolillo – The Wall Street Journal
Charles Schwab minced few words in a statement about high-frequency trading Thursday.
“High-frequency traders are gaming the system, reaping billions in the process and undermining investor confidence in the fairness of the markets,” Mr. Schwab, founder and chairman of the discount brokerage firm that bears his name, said in the statement. “It’s a growing cancer and needs to be addressed. If confidence erodes further, the fuel of our free-enterprise system, capital formation, is at risk. We can’t allow that to happen.”
Commodity Chief Blythe Masters to Leave JPMorgan Chase
Jessica Silver-Greenberg – The New York Times
A prominent executive is leaving JPMorgan Chase as her powerful trading operation has stopped performing up to expectations, underscoring that Chase, the nation’s largest bank, is not immune to the boom and bust cycles that periodically sweep through Wall Street.
Videocast: VIX 14 line is in play
Hedge Funds Are the Real Losers From High-Speed Trading
Brendan Conway – Barron’s
Traders and specialists on the floor of the New York Stock Exchange were the first casualties of high-frequency trading. Next were independent risk-takers and day traders like colleague Ben Levisohn in his pre-journalism days.
These days, the biggest losers may be hedge funds — not the smalltime investor.
Interactive Brokers Adds IEX as an Electronic Trading Venue
Press Release (via Businesswire)
Interactive Brokers Group, Inc. (NASDAQ GS:IBKR) is the first online broker to offer direct access to IEX to its investors, traders and institutions. IEX is an ATS designed to focus on investor protection and performance…
Based on independent measurements, the Transaction Auditing Group, Inc. (TAG), a third-party provider of transaction analysis, has determined that Interactive Brokers’ US stock and options price executions were significantly better than the industry3 during the second half of 2013. The IB price advantage is better than the industry by $0.23 per 100 shares of US stock and $0.20 per US option contract.
Euronext announces three new senior appointments
Press Release (NYSE)
Euronext, a wholly owned subsidiary of IntercontinentalExchange Group (NYSE: ICE), today announced the appointment of three leaders for its financial derivatives, commodities and cash businesses with effect from 1st April 2014.
ICE Reports March and First Quarter 2014 Volumes; Record CDS Clearing Revenue
Press Release (via BusinessWire)
IntercontinentalExchange Group (NYSE: ICE), the leading global network of exchanges and clearing houses, today reported exchange traded volumes for March and the first quarter of 2014.
ICE’s March 2014 and first quarter of 2014 average daily volume (ADV) decreased 16% and 13%, respectively, compared to prior year periods.
– Commodity futures and options ADV decreased 15% year to year in March on lower natural gas and Brent volume. First quarter 2014 commodity ADV increased 2% on a 25% increase in sugar volume while energy volume was flat due to lower price volatility in the quarter.
– Financial futures and options ADV declined 17% in March and 26% in the first quarter of 2014 compared to the prior year, driven by short-term interest rate products due to continued low volatility. March medium & long-term interest rate ADV increased 10% year to year.
– In March, NYSE’s U.S. cash equities ADV increased 5% and Euronext’s European cash equities ADV increased 13%, and U.S. options volume declined 2% year to year.
BATS Global Markets Reports March Volume and Activity
Press Release (BATS)
BATS Global Markets (BATS) today reported March volume, market share, and monthly highlights:
– BATS reported 19.9% U.S. equities market share in March, up from 10.6% a year ago.
– BATS Options reported 4.1% market share, up from 3.8% one year ago.
– In Europe, BATS Chi-X Europe reported overall market share of 20.4%. BATS’ pan-European trade reporting facility, BXTR, set a new monthly market share record of 57.0% in March, according to BATS and Thomson Reuters. Additionally, BXTR posted a one day record in excess of EUR19 billion of transactions on 26th March.
BOX Price Improvement Activity for March
Press Release (BOX)
In the month of March, price improved contracts on BOX Options Exchange (“BOX”) averaged 312,692 per day, which represented a 292% increase over the previous month. Price improvement versus the prevailing NBBO for contracts submitted via BOX’s price improvement auction, PIP, averaged $479,117 per day, while total savings to investors this month was $10.1MM.
Regulation and Enforcement
SEC commissioner calls for review of exchange rebate model
The U.S. Securities and Exchange Commission should consider a temporary program to test the effects of banning the most common method of pricing used by stock exchanges, as it may cause conflicts of interest, a commissioner at the regulator said on Wednesday.
Options Announces Hosting and Connectivity Upgrades Ahead Of eSpeed Migration
Press Release (via Sys-Con Media)
Options, the leading private financial cloud provider for the global capital markets industry, has today announced upgrades and expansions to its managed server hosting and connectivity in Carteret, New Jersey. The announcement comes ahead of this month’s eSpeed migration to the main Nasdaq data center in Carteret, which follows the stock exchange’s July 2013 acquisition of the U.S. Treasuries-trading platform. The migration will see eSpeed move from the market’s current location in Rochelle Park, New Jersey and is planned for April 7th.
Stop Shorting Volatility Right Now
The old saying goes, “You can shear a sheep many times, but skin him only once.”
I’m starting to think that we’re approaching “skinning” territory for those who have been shorting volatility and likely been making a pretty penny on it over the last couple of years.