JLN Options: Options Exchange ISE Turning to ETFs

Jan 31, 2013


Options Exchange ISE Turning to ETFs
Brendan Conway, Barron’s
The International Securities Exchange, neck-and-neck for the number three spot in the U.S. stock-options market, just rechristened its product-development group as ISE ETF Ventures, if that gives you an idea where the options exchange sees its future.

Wall Street vs. commodity traders at U.S. watchdog swaps hearing
Douwe Miedema, Reuters
Wall Street banks and Chicago commodity traders on Thursday will each try to sway the top U.S. derivatives regulator their way at a public hearing on whether new rules unduly favor one of the two rivals.

Low Volatility Here to Stay? VIX Futures Say Yes
By Kaitlyn Kiernan, The Wall Street Journal
Though the S&P 500 has given up earlier gains, the market’s so-called fear gauge has remained in the red.

‘Fear’ Trades Back to Three-Week High
Brendan Conway, Barron’s
Were investors looking for better economic data? Less of a so-so economic view from the Federal Reserve?
Maybe it’s just time for a little reversion to the mean. The CBOE Volatility Index bumped to a three-week high this morning.

Oil Options Lure Banks on Calmest WTI Since 1996
Grant Smith, Bloomberg
The lowest oil volatility in 17 years is pushing down options costs, setting up trades that BNP Paribas SA (BNP) and Commerzbank AG (CBK) say will profit when Mideast supply disruptions send prices swinging again.

OPTIONS: Livevol Launches New Trading Platform
John D’Antona Jr., Traders Magazine
Livevol, a San Francisco-based vendor of equity options trading technology, has launched a new options trading system that includes a trade execution system, data and analytics tools, and visual aids.
Called Livevol X, the system includes an order execution platform, similar to an equity execution management system, pre-trade and post-trade risk analyses, and visual aids.

Euro Has Longest Stretch of Monthly Gains in Decade
Joseph Ciolli, BloombergBusinessweek
The euro gained for sixth straight month against the dollar, the longest winning streak in almost a decade, as risk appetite improved amid speculation the worst is over in the currency bloc’s sovereign-debt crisis…
A gauge of currency volatility declined, decreasing the chance that price swings will wipe out profits. The JPMorgan G7 Volatility Index, based on three-month futures options on Group of Seven nations’ currencies, reached 8.66 percent, after touching a five-month high of 9.19 percent Jan. 18.

Exclusive: JPMorgan bet against itself in “Whale” trade
Emily Flitter, Reuters
There is a new twist in the London Whale trading scandal that cost JPMorgan Chase $6.2 billion in trading losses last year. Some of the firm’s own traders bet against the very derivatives positions placed by its chief investment office, said three people familiar with the matter.


Nasdaq OMX Reports 4Q Profit, CME Declares Dividend
The Options Insider
On Thursday, Nasdaq OMX Group, Inc. (NASDAQ: NDAQ) reported a higher fourth-quarter profit with revenue growth coming from corporate solutions, U.S. options, and U.S. proprietary data products businesses while equity trading volumes fell.

CME Retreat on Grain Hours Welcomed by Traders Who Need to Sleep
Tony C. Dreibus & Jeff Wilson, Bloomberg
CME Group Inc. (CME), owner of the world’s largest grain market, is backing off an expansion of trading hours in May that left some traders complaining that 21 hours a day left them with little sleep and less liquidity.
Even before completing a survey of users, CME Group told customers in a Jan. 29 letter that it has heard enough “to be able to decide to reduce trading hours” at the Chicago Board of Trade.

NYSE, NYSE MKT and NYSE ARCA Participation in Industry LULD Testing
Press Release (NYSE Arca)
The NYSE Euronext will participate in the Industry Test of LULD on Saturday, February 2nd.  MWCB will not be supported this weekend. The next MWCB test will be on Saturday, March 2, 2013. A limited number of symbols will be available to participants for testing as detailed in the Testing Plan.  All production customer gateway connections will be available for order flow.  Public SIP and proprietary market data feeds will be available over production channels. All NYSE Euronext members are encouraged to participate.
http://jlne.ws/11nnjS4 (PDF)


Traders Seek Harmonization in New Futures, Swaps Rules  
Katy Burne, The Wall Street Journal
A federal regulator is discussing new rules for large derivatives that traders say could determine which platforms are the winners and losers of financial-market overhaul.
The Commodity Futures Trading Commission recently began considering rules that could change what size energy futures can take place privately, away from exchanges, and what delay will be allowed in the public reporting of those trades.


Using gold options to trade the debt ceiling
James Ramelli, Futures
Gold rang in 2013 extending its impressive win streak rallying for the 12th consecutive year despite the last quarter of 2012 being the worst for the precious metal since 2008. With equity markets at multi-year highs and volatility at the lowest levels in the past five years, can we see gold extend its winning streak to lucky number 13? What is keeping gold from making new multi-year highs?

Credit Suisse Launches Gold Income Note
Credit Suisse unveiled a new strategy exchange-traded note ( ETN ) for generating income on gold.
The Gold Shares Covered Call ETN (NASDAQGM:GLDI) attempts to generate cash flow on gold by selling covered call options.

New Restoring Customer Confidence Video
The ninth video in our Restoring Customer Confidence series deals with securing segregated funds. Each week we will post a new idea answering the question – how do you restore customer confidence and bring traders back?

Restoring Customer Confidence More ideas»
Customer Segregation: Keep It Separate

Customer Segregation: Keep It Separate

There has been much talk about protecting customer funds but keeping them in segregated accounts outside of the brokerage house. John Omahen, vice president of post trade derivatives solutions at SunGard, talks about the value in moving customer funds to a clearing house. Such segregation could help not only protect customer funds, but also could create lower financing costs.

Watch the video »

Also see — Customer Segregation: A Clear View


About the Restoring Customer Confidence video series
In the aftermath of the MF Global collapse, fraud at Peregrine Financial Group and high profile high-frequency trading shocks, John Lothian News asks – how do you restore customer confidence and bring traders back? Previous videos:

Visit the video series page on MarketsWiki.tv over the next several weeks for new ideas and solutions.

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Past Options Newsletters

Seeing red: tricky times in the markets

Seeing red: tricky times in the markets

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