Commentary & Insight

Jock Percy

Jock Percy of Perseus Telecom on Microwave Technology in the Trading World
MarketsWiki.tv

Jock Percy spoke with John Lothian News Editor-at-Large Doug Ashburn about the use of microwave for data transmission – what is driving the demand, the benefits and limitations of wireless, and a bit about the economics of technology upgrades. He closes with a look to the future of wireless and its global implications.

Dr. Jock Percy is CEO of Perseus Telecom, a global carrier of financial telecommunications specializing in ultra low-latency market-to-market connectivity. Before taking the helm at Perseus, Percy spent a number of years in the telecommunications sector, with firms such as Double Helix (sold to ACE*COMM in 2006), BT, Telekom Austria, Finnet, and Saudi Telecom. In 2009 he founded FXecosystem, a provider of low-latency infrastructure to the foreign exchange market.

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Lead Stories

Options Price in Another Big Move for Stocks With Jobs Friday  
Kaitlyn Kiernan, The Wall Street Journal
Ahead of Friday’s key employment report, options traders are expecting still more fireworks in an already volatile week.
The options market is pricing in an additional 1.3% move in either direction for the popular SPDR S&P 500 ETF tracking the benchmark Standard & Poor’s 500-stock index before the week is out.
http://jlne.ws/Zw7OKB

S.E.C. Freezes Assets of Thai Trader in Smithfield Inquiry
Michael J. De La Merced, Dealbook
Another international deal appears to have an insider trading problem.
The Securities and Exchange Commission froze the assets of a trader based in Bangkok on Thursday, as it investigates a purported insider trading scheme tied to Smithfield Foods’ $4.7 billion sale to a Chinese meat processor.
http://jlne.ws/Zw2IOv
**It is getting to the point where it will be more newsworthy if no one tries to make a quick million on insider information about a merger. -JB

Worried Much? Volatility Trading Volume is Soaring Again
Brendan Conway, Barron’s
On the face of it, markets are only looking a little more volatile lately. But activity in trading vehicles designed to profit from much bigger market gyrations is sending a different signal.
http://jlne.ws/Zw9d3K

VIX Notches Third-Highest Finish of 2013  
Kaitlyn Kiernan, The Wall Street Journal
The market’s so-called fear gauge notched its third-highest finish of the year, and its first close above 17 this year not to be closely preceded by a more than 30% surge, as stocks pushed a two-week drop to 3.6%.
http://jlne.ws/Zw9mUK

Why This CBOE Volatility Index (VIX) Pop Looks Different  
Adam Warner, Schaeffer’s Investment Research
I’ll never doubt the Hindenburg Omen again!
OK, I take that back. But I would agree that this current selloff has a bit of a different feel than the other selloffs we’ve seen in the longer-term bull market. At least that’s the case in terms of the CBOE Volatility Index (VIX).
http://jlne.ws/Zwb88x

Swings Suppressed as Global Volatility Reveals No Panic
Nikolaj Gammeltoft, Liz Capo McCormick and Alexis Xydias, BloombergBusinessweek
Price swings across assets and around the world are holding below historical averages even as central banks roil markets.
http://jlne.ws/ZwaM1J

Joint venture bid to shake up derivatives pricing  
Anish Puaar, Financial Times
Nasdaq OMX’s new European futures venue NLX has launched a service in conjunction with derivatives pricing and analytics provider SuperDerivatives, in a bid to gain an edge in risk management for illiquid derivatives.
http://jlne.ws/1b9LFne

Madoff: Don’t let Wall Street scam you, like I did
Sital S. Patel, MarketWatch
Securities regulators are grossly underequipped to police financial markets, hedge funds are a danger to the market, and criminals have been scamming investors since the beginning of time and are not going to stop anytime soon.
http://jlne.ws/Zw6G9J

Exchanges

New services launched to support trading in VSTOXX derivatives
Press Release (Eurex)
Effective today, the international derivatives market Eurex Exchange is offering new research tools via its website enabling interested investors to obtain a comprehensive insight into the world of analysis, valuation and trading of volatility derivatives. The VSTOXX Advanced Services offering is primarily aimed at portfolio managers, proprietary traders, client traders, and brokers, as well as risk managers and institutional investors, all of whom can hedge their portfolios much better with the volatility derivatives listed on Eurex Exchange.
http://jlne.ws/Zwa4BF

Delay in Europe Indexes Open Causes ‘Angst’
Jenny Cosgrave, CNBC
Stock market operator NYSE Euronext on Thursday delayed the opening of its stock market indexes, attributing the late start of trade to technical issues which caused “aggravation” and “angst” among traders.
NYSE Euronext said the glitch was preventing all members from entering orders on the regulated market.Trading resumed at 10:00 a.m. CET.
http://jlne.ws/Zw6wzh

Chicago at center of new IP exchange 
John Pletz, Crain’s Chicago Business
Chicagoans have long believed they can create a market for anything – from pork bellies to market volatility.
Now a group that includes the Chicago Board Options Exchange, is launching an intellectual-property market for patent portfolios that would allow big companies to streamline the lengthy, often-maddening task of licensing patents and also allow investors to buy in.
http://jlne.ws/Zw9ALQ

BATS Global Markets Reports May Volume and Activity
Press Release (BATS)
BATS Global Markets (BATS) today reported that BATS Chi-X Europe set a monthly market share record of 14.0% for Spain’s IBEX 35 while also establishing a one-day record of 34.6% in Sweden’s OMXS30 Index…
BATS’ U.S. equities market share was 10.4% in May vs 10.9% in April. BATS Options recorded 3.8% market share in May compared to 4.0% in April.
http://jlne.ws/16NsG5F (PDF)

Regulation

SEC Warns Investors About Binary Options and Charges Cyprus-Based Company with Selling Them Illegally in U.S.
Press Release (SEC)
The SEC alleges that Banc de Binary Ltd. has been offering and selling binary options to investors across the U.S. without first registering the securities as required under the federal securities laws.
The company has broadly solicited U.S customers by advertising through YouTube videos, spam e-mails, and other Internet-based advertising.
http://jlne.ws/Zw2syZ

Technology

How the Robots Lost: High-Frequency Trading’s Rise and Fall
Matthew Philips, BloombergBusinessweek
Steve Swanson was a typical 21-year-old computer nerd with a very atypical job. It was the summer of 1989, and he’d just earned a math degree from the College of Charleston. He tended to

ward T-shirts and flip-flops and liked Star Trek: The Next Generation. He also spent most of his time in the garage of his college statistics professor, Jim Hawkes, programming algorithms for what would become the world’s first high-frequency trading firm, Automated Trading Desk.
http://jlne.ws/Zw8QWW
**Long but interesting article.  Have to like it when the first automated trading program was named BORG (Star Trek reference was intentional). -JB

Strategy

Volatility Has Entered the Building!
The uptick in IV favors a few options-selling strategies
Tyler Craig, InvestorPlace
The ongoing market correction has been far from a clean, orderly pullback. Like a drunken sailor, it has wobbled to and fro, frustrating many short-term market timers.
The dizzying switchbacks from up days to down days have ushered in a new regime of elevated volatility. While it’s impossible to predict the duration and magnitude of the current downturn, it is fair to say a 5%-plus correction has been long overdue.
http://jlne.ws/Zw9SCl

Time to Make Fear Pay Off 
Steven M. Sears, Barron’s
Keep calm and overwrite.
With implied volatility elevated as investors fret that the stock market will experience another sharp decline, opportunities exist to profit from the fears animating the options market.
http://jlne.ws/15ELK1b

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