JLN Options: Nasdaq’s Newest Options Exchange to Give Priority to Size

Oct 30, 2012

Lead Stories

Nasdaq’s Newest Options Exchange to Give Priority to Size
Peter Chapman, Traders Magazine
Nasdaq OMX Group’s BX Options exchange will start to differentiate itself from its older sister, the Nasdaq Options Market, by favoring size over speed on contracts involving two stocks and one ETF.
BX will alter its order allocation formula on Thursday from a method that favors the fastest traders to one that favors the largest, according to a Nasdaq notice to members.
** Guess size does matter. –JB

Asia Volatility at Six-Year Low Spurs Hedge Fund Wagers: Options
Bei Hu and Tomoko Yamazaki, The Washington Post
Asian hedge funds are forming to bet on the return of volatile asset prices, undeterred by the failure of predecessors after the 2008 financial crisis when governments stepped in to calm markets.
The HSI Volatility Index, a measure of Hang Seng Index option prices, reached a six-year low earlier this month, and Japan’s Nikkei Stock Average Volatility Index is trading near a 20-month low. Fortress Convex Asia Fund in Singapore, with more than $50 million, and Voltex Asia Capital Ltd. in Hong Kong are tapping investor demand for returns independent of market direction and for protection against a rebound in price swings if government stimulus runs out of steam.

More Options With More Options
Chintan Kotecha, Nitin Saksena, Youssef Brahimi and Benjamin Bowler, Index Universe
Exchange-traded products span a wide range of offerings, including broad style, sector, industry, country, regional and cross-asset benchmarks. A key reason for their popularity is convenience. Because exchange-traded products trade and settle like a stock, there is no additional infrastructure or documentation required. The most popular exchange-traded product is the exchange-traded fund. For the remainder of this piece, for readability and familiarity, we use the term “ETF” to mean exchange-traded fund and to include other exchange-traded products such as exchange-traded notes (ETNs).
** This is a looong article. Might want to get your coffee first before starting. –JB

EUR Eying Option Strikes
Action Forex
It difficult to remain engaged in a market that is nearly almost closed this side of the Atlantic. Participants are very much distracted by Hurricane Sandy’s images of destruction that dominates all forms of media. By day’s end, she is expected to cause as much as $20b in economic damage just being one of the biggest Atlantic storm that has made landfall.

Clouds Hang Over Futures Forum
Jacob Bunge, The Wall Street Journal
Russell Wasendorf Sr, the disgraced chief executive of Peregrine Financial Group Inc., may not be the only industry figure missing from the largest annual gathering of the global futures sector as attendees battle Hurricane Sandy to make the event that starts here Tuesday.
However, it is Mr. Wasendorf’s shadow and that of bankrupt brokerage MF Global Holdings Ltd. MFGLQ that loom largest over a business that has seen the pillar of 40 years of growth—the segregation of customer and client funds—ripped apart.

Hurricane’s shutdown of markets irks idled Chicago traders
David Roeder, Chicago Sun-Times
For Chicago trading firms, Monday was a quasi-holiday. As traders on the East Coast stayed away from offices because of Hurricane Sandy’s life-threatening barrage, financial markets here operated at a leisurely pace.
And some Chicago traders didn’t care for it one bit. But they’ll have to put up with it again Tuesday, as the storm has forced the closure of most financial markets, including all stock-related dealings, for a second day.
** “If you want to make God laugh, tell him about your plans.” — Woody Allen


CME’s Duffy: Longer grain-trading to stay
Tom Polansek and Ann Saphir, Reuters
CME Group Inc (CME.O) will maintain the nearly round-the-clock electronic grain-trading that it implemented in May despite criticism by some traders that the new format is hurting market liquidity, a top executive told Reuters on Monday.
The exchange expanded the grain trading session to fend off a challenge from rival IntercontinentalExchange (ICE.N).

NYSE to test new plan; trading floor undamaged by storm
Sakthi Prasad, WTAQ.com
NYSE Euronext said it plans to test a new contingency plan to help resume stalled U.S. equity trading, and added that its famed trading floor is not yet damaged by Sandy, one of the biggest storms to hit the United States.
U.S. stock markets will be closed for a second day on Tuesday, as Wall Street turns its attention to whether markets would be able to resume functioning on the month’s final trading day on Wednesday.

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