JLN Options: Miami International Sees September Launch For Stock-Options Exchange

May 3, 2012

LEAD STORIES Miami International Sees September Launch For Stock-Options Exchange
By Jacob Bunge Of DOW JONES NEWSWIRES, The Wall Street Journal
Miami International Holdings Inc. is targeting a late-September launch for a new U.S. stock-options market after filing legal documents with U.S. regulators last week.
Formal filing of exchange rules with the Securities and Exchange Commission on April 26 advances a plan by the startup to introduce what would be the 10th U.S. options exchange, as established rivals prepare to introduce two additional markets this year.
“Along with outstanding technology, we intend to provide competitive pricing and superior customer service,” said Shelly Brown, head of strategic planning and operations for Miami International, in a statement Wednesday.
http://jlne.ws/IIA43J ICE Announces Brent Crude Option Open Interest of One Million Contracts and Daily Trading Volume Record
Press Release
IntercontinentalExchange ICE, a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, today reported that open interest in ICE Brent Crude options on futures crossed one million contracts for the first time, closing at 1,004,699 contracts on May 1. The contract also established a daily volume record of 63,494 on May 2, surpassing the fifty thousand contract milestone for the first time ever. The previous daily volume record for Brent options of 48,644 contracts was set on April 3, 2012.
Open interest in Brent Crude options reached 500,000 contracts on January 25, 2012. In April, average daily volume (ADV) in Brent Crude options was 28,578 contracts, up more than 400% from April 2011 ADV of 5,565 contracts.
http://jlne.ws/JQjs8r Hong Kong Puts Exceed Calls Most Since 2007 After Rally (Singapore)
By Jonathan Burgos and Adam Haigh, Bloomberg (via Oregon Live)
Concern China’s central bank will refrain from more monetary easing is convincing options traders that a 16 percent rally in Hong Kong stocks has gone too far.
There were 1.66 puts to sell the Hang Seng Index for every call to buy the equity benchmark gauge Wednesday, according to data compiled by Bloomberg. The ratio touched 1.67-to-1 on March 30, the highest level since November 2007. More than $339.7 billion has been added to Hong Kong equity values this year as the index posted the second-biggest gain among the world’s developed markets.
http://jlne.ws/Ktp3jV TABB Says Rising Global Derivatives Volumes Put Pressure on Financial Firms to Automate Post-Trade Allocation and Settlement Processes
Enhanced Online News
The expanding role of listed derivatives in institutional investor trading strategies has placed significant pressure on financial institutions to automate their post-trade processes. These rising volumes and processing complexity are forcing firms to address inefficiencies in their existing manual processes. According to new TABB Group research published today, “Processing Complexity: Back Office Challenges of Listed Derivatives,” written by Andy Nybo, a principal and head of derivatives research, increasing use of derivatives in trading strategies will create greater complexity across front- and back-office processes.
http://jlne.ws/KgMwLa

EXCHANGES

ISE Introduces Implied Order Functionality
Press Release
The International Securities Exchange (ISE) announced today that it has introduced Implied Order functionality*. With Implied Orders, ISE will significantly enhance the execution of multi-legged strategy orders by enabling greater interaction of the complex order book with the regular order book. The result will be an increased fill rate for multi-legged strategy orders as well as tighter spreads and increased liquidity on the regular order book…
Implied Order functionality displays liquidity from ISE’s complex order book on the regular order book published to OPRA. An Implied Order is automatically created if the limit price of a multi-legged order can match or improve the ISE Best Bid or Offer when each leg of the multi-legged order is paired against a resting order or quote. For the system to generate an Implied Order, the net price of the multi-legged order must be satisfied when both legs are filled on the regular book. This functionality will be automatically available in ISE’s trading system for eligible multi-legged orders.
http://jlne.ws/IJjzHn Nasdaq’s new US options offer emerging market exposure
By Anish Puaar, The Trade
Nasdaq OMX PHLX, a US options bourse, has launched new index options based on popular MSCI benchmarks that track the performance of international stocks.
The new products are based on index provider MSCI’s emerging market and EAFE indices and, according to Nasdaq OMX, are the first and only cash settled options available in the US based on these benchmarks.
http://jlne.ws/K4OqM0 CBOE Holdings, Inc. To Present At UBS Securities 2012 Global Exchanges Conference On May 9
Press Release
CBOE Holdings, Inc. CBOE today announced that Edward T. Tilly, President and Chief Operating Officer, will present at the UBS Securities 2012 Global Exchanges Conference in New York, NY on Wednesday, May 9, 2012, at 10:40 a.m. Eastern time.
The presentation, to be broadcast live over the Internet, can be accessed at www.cboe.com under Investor Relations, Events and Presentations. Approximately 24 hours after the live presentation, an audio Webcast will be available for replay at the same address.
http://jlne.ws/IH1PwC CME Group Adds Ethanol to Expanded CBOT Grain and Oilseed Trading Hours on CME Globex
Press Release
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will expand electronic trading hours for its CBOT Denatured Fuel Ethanol futures and options on CME Globex in line with recently announced plans to expand CBOT grain and oilseed trading hours. Pending CFTC certification, CME Group customers will have expanded market access to a variety of CBOT futures and options on CME Globex 22 hours per day.
Effective May 20, 2012, for trade date May 21, 2012, electronic trading hours for CBOT Corn, Mini-Sized Corn, Soybeans, Mini-Sized Soybeans, Wheat, Mini-Sized Wheat, Soybean Meal, Soybean Oil, Rough Rice, Oats, and Ethanol futures and options plus all related calendar spread options and inter-commodity spread options will be extended to:
Sunday to Monday, 5:00 p.m. to 4:00 p.m. CT
Monday to Friday, 6:00 p.m. to 4:00 p.m. CT.
http://jlne.ws/IJhoRf Chicago Analyst Reacts to CME Group Extended Hours
by Andy Eubank, Hoosier Ag Today
CME Group has announced the expansion of electronic trading hours for CBOT grain and oilseed futures and options beginning Monday, May 14, 2012. The move will expand market access to 22 hours per day when the electronic trade begins at 6 PM Chicago time, and concludes at 4 PM the next day
Analyst Steve Erdman with EFG in Chicago says the move by CME Group addresses two areas. One is competition coming from the Intercontinental Exchange.
http://jlne.ws/Kxxj2X NYSE Euronext CEO t o Receive Leadership Award
Press Release
Duncan Niederauer, CEO of NYSE Euronext, and Alison Niederauer, Esq., a board member of Autism Speaks, will receive the Philanthropic Leadership Award at Fitting Together on Tuesday, June 12. At the gala, the Niederauers will be joined by leaders from the financial services, technology, entertainment, and real estate industries to raise funds to support QSAC (Quality Services for the Autism Community).
The honorary co-chairs for this year’s gala are U.S. Senator Kirsten Gillibrand and U.S. Senator Charles E. Schumer. The senators will be joined by Depository Trust & Clearing Corporation, HiTouch, Knight Capital Group, Koeppel Auto Group, KPMG, Macy’s, PricewaterhouseCoopers (PwC), SVFC Treatment & Research Group, Stuart Frankel & Co., USI Insurance and others to honor the Niederauers for their commitment and service to the autism community.
http://jlne.ws/IxK68o IntercontinentalExchange’s CEO Discusses Q1 2012 Results – Earnings Call Transcript
SeekingAlpha
IntercontinentalExchange (ICE) Q1 2012 Earnings Call May 2, 2012 8:30 AM ET
http://jlne.ws/KgLIGb

REGULATION

Derivatives transparency sparks debate
By Telis Demos and Hal Weitzman, The Financial Times
The chief US futures regulator and the head of an industry group representing the world’s biggest banks have clashed over Washington’s desire to bring greater transparency to privately negotiated derivatives markets.
Gary Gensler, chairman of the US Commodity Future Trading Commission, said the $700tn market for over-the-counter derivatives was “the largest dark pool” among the world’s financial markets and needed to be opened up to public scrutiny.
http://jlne.ws/IZCGaX

STRATEGY

Be Greedy While Others Are Fearful
The VIX consistently overestimates the market’s risks, which makes for opportunities to short the “fear gauge.”
By Bill Luby, Barron’s
Fear is good business on Wall Street. For starters, fear helps to encourage impulsive and emotional decisions on the part of retail and institutional investors alike. It is contagious, capable of spreading extremely quickly and can sometimes appear to be unbounded.
Fear also has been responsible for the development of a wide range of structured products tailored for institutional investors who wish to protect principal, minimize volatility and take other steps to counteract potential risks. The ugly side of fear is that it impels many people to sell at the bottom and wait to get long until markets are near a top.
These are all good reasons to want to sell fear, but not why I choose to do so.  No, I am short fear because fear is almost always overpriced – and by a large margin.
http://jlne.ws/IIeGgG

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