Lead Stories

The Wilting Flower of VIX
Andrew Giovinazzi – The Options Insider
Wither the VIX
The market for volatility seems to be giving up its final breaths today.  If underwhelming earnings in GOOG and MSFT cannot push things lower I am running out of things to think of.
http://jlne.ws/1bGyUW2

Everyone’s Talking About This Huge Stampede Of Cash Rushing Into The Stock Market
Joe Weisenthal – Business Insider
As the market sails to new highs, the floodgates have broken open.
Money is pouring like crazy into stocks, which is of course classic investor psychology. Nobody buys low. People like to buy high.
http://jlne.ws/161DBmX
**All I kept hearing people talk about is whether the royal baby will be a boy or a girl (for the record it is a boy).  I think I need to meet different people. -JB

Dealers losing battle over uncleared swaps
Christopher Whittall – Reuters
The derivatives industry looks set to lose to regulators one of its most crucial lobbying battles, which could effectively kill off the market for bespoke OTC swaps.
http://jlne.ws/1bGAbMJ

As Taper Talk Recedes, Traders See the Dollar Settling Down
Matthew Walter – The Wall Street Journal
Investors have started shedding hedges against a big surprise swing in the dollar, providing a clear sign that currency traders are feeling less anxious about market volatility surrounding the Federal Reserve’s next move.
http://jlne.ws/161CJPi

The lies active managers tell
Larry Swedroe – CBS News
I was doing research on an article about active management when I came across an Investment News article from earlier this year titled “Active Managers Can Add Value.”…The more I read, the more upset I became.
http://jlne.ws/161E7Bm

How Smart Are ‘Smart Beta’ Funds?
Aaron Levitt – InvestorPlace
As it turns out, that low-cost traditional market cap-weighted index fund might be letting you down — or at least, that’s the story according to the growing group of supporters of “smart beta” or “enhanced” indices, which try to mimic strategies used by active management.
http://jlne.ws/161EkEF

Exchanges

ISE ETF Ventures and SecuredGrowth Quantitative Research Announce Partnership and Launch of Innovative Indices
Press Release (ISE)
The International Securities Exchange (ISE), a leading U.S. options exchange, and SecuredGrowth Quantitative Research, Inc. (SGQR), a leading financial technology and research development company, announced today their partnership agreement to develop and promote indexes that combine the performance of popular Exchange-Traded Products (ETPs) with the proprietary SecuredGrowth process to enhance the return of any benchmark index or portfolio in a fully transparent, low-risk and liquid manner.
http://jlne.ws/161zuqZ

Eurex launches options on French government bond futures
Press Release (Eurex)
With effect from 10 September, the international derivatives market Eurex Exchange will launch options on futures that are based on notional long-term bonds issued by the French Republic (“Obligations Assimilables du Trésor” – OAT) with a notional coupon of 6 percent and a remaining maturity of 8.5 to 10.5 years. The minimum price change (tick size) is measured in points and, as with the Bund options, equals 0.01, corresponding to a tick value of 10 euros. Trading hours are from 8 a.m. to 5.15 p.m. CET.
http://jlne.ws/161A2gC

Global Exchanges Are Up YOY, Softening Performance in Q2
Tom Groenfeldt – Forbes
Among global financial exchanges Dubai Financial Market provided the strongest performance, quarter against quarter, experiencing an increase in share price of 62.1 per cent in Q2 against 3.6 per cent in Q1.
http://jlne.ws/161BpvU

CME Group Signs Up Five Clients For Hong Kong Telecommunications Hub 
Press Release (CME via The Wall Street Journal)
CME Group, the world’s leading and most diverse derivatives marketplace, today announced five clients have registered for and are now using its Hong Kong telecommunications hub; and they include CASH Financial Services Group, QUAM Securities, Philip Futures, and R.J. O’Brien & Associates HK Limited.
http://jlne.ws/161D3xF

Chicago Mercantile Exchange Trying to Clean Up Its Act on Wash Trades
Bryan Wiener – Benzinga
The Commodity Futures Trading Commission (CFTC) recently reached out to the trading community requesting feedback concerning a Chicago Mercantile Exchange (CME) proposal to update its own rule governing “wash trades” in its Globex electronic marketplace.
http://jlne.ws/15ZsbT2

Regulation

Insight: Resigned to reform, Wall Street tries a different tack in DC
Lauren Tara LaCapra and Douwe Miedema – Reuters
In March, as U.S. bank regulators were framing a new rule that would affect the $630 trillion derivatives market, JPMorgan Chase & Co sent five bankers from New York and London to Washington to raise some fine points about the impact of the financial reform.
http://jlne.ws/16UqZgK

CFTC’s Chilton Says ‘Thoughtful Review’ of Warehouses Needed
Agnieszka Troszkiewicz –  Bloomberg
A “thoughtful review” of commodity warehousing is needed after hearing from users about its effect on markets, according to Bart Chilton, a commissioner at the U.S. Commodity Futures Trading Commission.
http://jlne.ws/1bGzZgw

Industry concerned over CFTC substituted compliance
John Bakie – The Trade
Current Commodities and Futures Trading Commission (CFTC) proposals on substituted compliance for extraterritorial derivatives regulation are lacking in clarity and risk over-complicating the market, experts have said.
http://jlne.ws/18t1BVW

SEC charges hedge-fund mogul Steve Cohen
James O’Toole – CNN Money
The Securities and Exchange Commission announced charges Friday against hedge-fund mogul Steven Cohen, accusing him of failing to supervise employees who engaged in insider trading.
http://jlne.ws/1bGABCI
**There is what you know and what you ought to know.  Willful ignorance should not be a defense. -JB

Finra Probes HFT Algorithms for Controls
Carla Main – Traders Magazine
The Financial Industry Regulatory Authority is investigating whether high-frequency traders have established controls to ensure their algorithms don’t malfunction and cause broader harm to markets.
http://jlne.ws/1bGz4N7

CFTC charges trading firm under new ‘antispoofing’ authority
Marty Steinberg – CNBC
A high frequency energy trading firm is being charged by federal regulators Monday with manipulating markets through “spoofing,” an increasingly frequent scheme in which false bids are submitted and then pulled back, the Commodities Futures Trading Commission said.
http://jlne.ws/1bGzBib

Strategy

Make a Profit This Earnings Season
Steve Sosnick – Barron’s
Hedge your bets by accounting for a stock’s volatility as well as its direction.
http://jlne.ws/18vIszs

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