Lead Stories

Safe Haven Assets: Can the VIX Be a Substitute for Gold?
Minyanville (via NASDAQ)
No, it can’t. I’ve read a very interesting essay on gold, VIX (the volatility index), and the safe-haven status entitled Forget Gold, the VIX Is the New Safe Haven and we would like to share our thoughts about it.
**Don’t think my girlfriend would be happy with a VIX necklace. -JB

Emerging markets think the Fed is causing bubbles. The Fed disagrees!
Neil Irwin – The Washington Post
When the financial world seems about to implode, like in the fall of 2008, they pull money out of the “risky” emerging markets, and when things seem benign, they’re more likely to pour money in.
That’s what the chart below shows. The Vix is a measure of expected U.S. stock market volatility in options markets. It correlates remarkably well with emerging market capital inflows.
**Are too!  Are not! Are too! Are not! -JB

Videocast: What does the VIX say?

ICAP currency trading touches six-year low
Philip Stafford – Financial Times
Currency trading at ICAP, the world’s largest interdealer broker, fell to its lowest monthly level in more than six years as a drop off in volatility and uncertainty over the trajectory of US monetary policy led to a slump in foreign exchange markets.

Debt Limit Watch: Analyst-Default Fumble More Likely, Not Less
MNI News
A clinical examination of the factors surrounding next year’s debt-limit dynamics suggest the risk of default will be greater, a capital markets analyst said, a view opposite to the reassuring picture some others have been describing.


CBOT Pit Traders Testify Volume, Profits Fell After Rule
Andrew Harris – Bloomberg
Three Chicago Board of Trade corn pit traders told an Illinois judge that their trading volume and profits have fallen since a change in end-of-day settlement pricing was imposed last year.

Interest rate volatility boosts CME Group’s volume, third quarter profit
Alexis Prousis – Medill Reports Chicago
CME Group Inc. said third quarter profit jumped as growing speculation over the U.S. Federal Reserve’s monetary policy led to more swings in interest rates and boosted average daily volume in interest rate futures and options contracts by nearly one-third.

CME Group wins designation as electronic swaps market
CME Group Inc received regulatory approval to operate a swap execution facility that will initially focus on commodity swaps, the biggest U.S. futures market operator said on Monday.

NYSE Euronext Announces Third Quarter 2013 Financial Results
Press Release (NYSE)
NYSE Euronext (NYX) today reported net income of $178 million, or $0.73 per diluted share on a GAAP basis, for the third quarter of 2013, compared to net income of $108 million, or $0.44 per diluted share, for the third quarter of 2012. Results for the third quarter of 2013 and 2012 included $24 million and $18 million, respectively, of pre-tax merger expenses and exit costs. Third quarter 2013 results included a $5 million pre-tax gain on the sale of our 12% stake in the Qatar Exchange. Our third quarter 2013 and 2012 GAAP effective tax rate both included a discrete net deferred tax benefit, principally related to the enacted reduction in the corporate tax rate in the United Kingdom. Excluding merger expenses, exit costs, disposal activity and discrete tax items, net income in the third quarter of 2013 was $131 million, or $0.53 per diluted share on a non-GAAP basis, compared to $108 million, or $0.44 per diluted share on a non-GAAP basis, in the third quarter of 2012.

MIAX Options Exchange Announces Information Sharing Agreement with the Johannesburg Stock Exchange
Press Release (MIAX)
MIAX Options Exchange (MIAX) announced today that it has recently entered into an agreement to share market surveillance information with the JSE Limited (JSE) of South Africa…
Cooperation on information sharing will facilitate the listing and trading of options on certain Exchange Traded Funds (ETFs), such as the Vanguard FTSE Emerging Markets ETF, a highly traded ETF offering customers exposure to both South African companies and those in other emerging markets.
http://jlne.ws/1a5U1OJ (PDF)

Regulation and Enforcement

U.S. regulator revives plan to limit excessive commodity bets
Douwe Miedema – Reuters
The U.S. derivatives regulator on Tuesday reintroduced a plan to curb commodity market speculation, reviving a crucial Wall Street reform after a judge knocked down an earlier version of its rule on position limits.

Regulators to Review Final Draft of Volcker Rule as Soon as This Week
Andrew Ackerman – The Wall Street Journal
Regulators are expected to receive a final draft of the so-called Volcker rule as early as this week and could vote on the regulation next month, according to government officials and other people familiar with the matter.

Alphametrix Accused by CFTC of Misappropriating $2.8 Million (1)
Andrew Harris – BloombergBusinessweek
Alphametrix LLC, a Chicago-based commodity pool operator, was accused of misappropriating $2.8 million belonging to pool participants in a lawsuit filed by the Commodity Futures Trading Commission.


ICAP’s Futures and Options Business Selects Traiana’s Harmony Network for Client Connectivity
Steven Hatzakis – Forex Magnates
A key infrastructure provider within the global FX industry, Traiana announced that ICAP Futures and Options (a business of ICAP Plc) has chosen the Traiana Harmony Network for connecting their client connectivity layer. This brings the total number of Futures Commission Merchants (FCMs) on the Harmony Network, as it relates to Exchange Traded Derivatives (ETDs) to 13 and up from the previous announcement.


Forget the Twitter IPO – Trade Tech Volatility
Michael Shulman – Options Income Blueprint(via InvestorPlace)
Many tech names — across sectors — tend to be more volatile than the market. Traders love the stocks and earnings can be wildly uneven. This creates great income opportunities for investors looking for income well above the paltry yields on traditional income stocks.

Volatility Index ventures to caution-zone territory
Michael Ashbaugh – MarketWatch
 Against this backdrop, market sentiment, as measured by the Volatility Index, has approached levels signaling excessive complacency, suggesting a more guarded near-term market view is warranted.

Options Education

Risk Management: An Ounce Of Prevention
Seeking Alpha
They say an ounce of prevention is worth a pound of cure. But if the sickness is excessive portfolio volatility, “prevention” can entail more than one step.
Let’s start at the beginning and illustrate why managing investment risk is so important.


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