CFTC Proposal Poses “Monumental” Challenge to FCMs
By John Lothian Changes to the way customer funds are held and accounted for by futures commission merchants (FCMs) were inevitable after the bankruptcies of MF Global and Peregrine Financial Group. But it is pressure from buy-side market participants and their allies in Congress who are pushing for regulatory changes that could change the face of the futures business. At last week’s CFTC Roundtable, the fourth panel of the day titled “Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives Clearing Organization,” highlighted the challenges and potential consequences to the industry. CFTC plans call for FCMs to hold more “residual interest” capital to cover all customer margin calls to reduce customer-to-customer default risk. Because the roundtable was under-reported by the big news services, we are bringing you this John Lothian News Special Report based on the CFTC’s video of the meeting. Watch the JLN video: The deadline for public comment on the proposed rulemaking on Enhancing Protections Afforded Customers and Funds Deposited by Customers is February 15, 2013. Members of the public wishing to submit comments on the roundtable and proposed rulemaking may do so via:
- Paper submission to Melissa Jurgens, Secretary, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581; or
- Electronic submission by visiting http://comments.cftc.gov and following the instructions for submitting comments through the CFTC’s website.
Lead StoriesOptions Traders Side With Comcast on NBCUniversal Deal
Kaitlyn Kiernan, The Wall Street Journal
As Comcast Corp. doubled down on its bet on traditional television networks, options traders took the gambler’s side.
http://jlne.ws/XPfnIV CBOE would consider going private, exec says
Reuters (via Chicago Tribune)
CBOE Group Holdings Inc., which became a publicly held company in 2010 after years of effort, would consider going private again if doing so would benefit its shareholders, a top executive suggested Thursday.
** Note the story just below which seems to say the opposite. I am posting these in no particular order. Seems more an issue about hypotheticals. Is the CBOE in talks? No. Would they consider going private if someone offered them a big enough check? Of course they would consider it. (At least that is how I read it.) –JB CBOE president: Buyout deal hasn’t been on radar
Jacob Bunge, MarketWatch
The parent of the Chicago Board Options Exchange hasn’t considered taking the company private, and running the options market as a public company has benefitted its customers, a senior executive said Thursday.
http://jlne.ws/Wr6ciu VIX Seasonality Suggests Higher Readings
Simon Maierhofer, Seeking Alpha
When complacency reigns, investors get wet or at least so goes the saying. The VIX has been trading below 15 for all of 2013, but the only ones getting ‘wet’ are VIX bulls and stock bears. Still, the VIX is at a 73-month low and eventually there’s some money to be made buying VIX calls or long VIX ETFs. When will that be? VIX seasonality provides some clues.
http://jlne.ws/XPfyDY Investors Suffering From Acrophobia
Scott Martindale, Seeking Alpha
Stocks are inching ever forward, but investors are showing plenty of indecisiveness along the way. They might be suffering from acrophobia — fear of heights. Their trepidation is reflected not only in the ongoing price consolidation as the major market averages struggle at long-term highs, but also in the extremely low trading volume.
http://jlne.ws/Wr7JVG FX Revenue At Major Banks Shrank in 2012 – Research
Clare Connaghan, Dow Jones Newswires (via Fox Business)
Foreign-exchange revenue generated by the world’s leading banks last year fell to its lowest level in at least five years owing to subdued trading conditions, research from business intelligence provider Coalition showed Thursday.
http://jlne.ws/XFEGis OIC Announces Meyer “Sandy” Frucher to Receive Joseph W. Sullivan Award at the Annual Options Industry Conference
Press Release (OIC)
The Options Industry Council (OIC) today announced Meyer “Sandy” Frucher as the 2013 recipient of the Joseph W. Sullivan Options Industry Achievement Award in recognition of outstanding contributions to the growth and integrity of the U.S. options market. The award will be presented at the 31st Annual Options Industry Conference, to be held April 24-26 at the Green Valley Ranch in Las Vegas, Nevada.
http://jlne.ws/XFNDZ2 OptionsCity Metro wins “Best Options Trading Platform” award
Press Release (OptionsCity)
OptionsCity Software, Inc.today announced that its flagship trading and market making platform, Metro, has been named “Best Options Trading Platform” by Wall Street Letter in the 2013 Institutional Trading Awards. This marks the second consecutive win for Metro in this award category.
ExchangesNYSE to rent space to ICE traders
The NYSE Euronext’s New York Stock Exchange will allow ICE traders to use trading floor space at 20 Broad Street, according to a filing with the Securities and Exchange Commission on Wednesday.
RegulationFINRA Starting Sweep on ATS Practices
Tom Steinert-Threlkeld, Traders Magazine
The Financial Industry Regulatory Authority is about to pay visits to a wide range of alternative trading systems, in an attempt to make sure they are properly handling customers’ orders.
The independent regulator of brokers, which shares oversight of alternative trading systems with the Securities and Exchange Commission, has made ATS operations one of its top priorities in 2013, according to John Malitzis, executive vice president of market regulation at the agency.
TechnologyNearly 50% of US Asset Managers and Hedge Funds Prefer Separate OMS and EMS Platforms Despite Growing Overlap in Functionality
Press Release (via Reuters)
Shrinking budgets are forcing US asset managers and hedge funds to reduce their technology spending, giving rise to the idea of combining order management (OMS) and execution management systems (EMS). Going directly to the buy side to learn if a combined system, or OEMS, could meet their needs, TABB Group surveyed 52 buy-side firms to gauge how they saw current OMS and EMS offerings, including proprietary systems, as well as trends and analysis covering OMS and EMS usage and functionality.
EventsThe Options Industry Council Announces Investor Education Day in Costa Mesa March 2
Press Release (OIC)
The Options Industry Council (OIC) today announced that its first Investor Education Day (IED) for 2013 is taking place in Costa Mesa, CA on March 2…
The Investor Education Day offers two different tracks for attendees based on their investment experience and skill level – Options Basics or Advanced Strategies. Options Basics will examine fundamentals, such as basic strategies and the risks and rewards of using options, while Advanced Strategies will focus on more complicated concepts such as butterflies, condors and the Greeks.