The International Securities Exchange renamed its product development group ISE ETF Ventures, to emphasize its expanded efforts in the ETF business, Barron’s reported. The ISE calculates a number of indexes used as the basis for various ETFs, the most widely owned ETF that uses an ISE index being the First Trust ISE Revere Natural Gas Index Fund (FCG), which manages $422 million. With ISE ETF Ventures, however, ISE is expanding beyond just developing indexes into helping to bring new ETFs to market with capital commitment, business development, and marketing support, according to an ISE press release.
New York banks and Chicago traders clashed at a CFTC hearing over the new rules on swaps trading which will require swaps to move to exchange-like platforms and go through clearing houses. The rules are part of the Dodd-Frank overhaul of the financial industry. In particular the two camps disagreed over the amount of margin parties would need to maintain to trade the swaps. The margin requirement for cleared and uncleared swaps is higher and more costly than that for futures and options, and the investment banks are worried that their clients will turn to futures instead of using swaps, Reuters reported. The CFTC is currently finalizing rules for Swap Execution Facilities (SEFs).
The VIX jumped above 14 on Wednesday for the first time in four weeks but remained relatively low, and the VIX futures contracts going out to October were all below the 20-year average of 20.68, the Wall Street Journal reported.
Nasdaq OMX reported a high 4Q profit, with much of that revenue coming from U.S. options trading. CME Group declared a first-quarter dividend of $0.45 per share. CME also reversed its expansion of trading hours after traders complained of lack of sleep and liquidity, Bloomberg reported. The exchange had expanded grain trading from 17 hours to 22 hours, partly in competition with the IntercontinentalExchange, which recently started offering a new set of grain contracts.
Nasdaq OMX Group also said it was merging its data and index businesses in a reorganization of the company. Nasdaq agreed to buy Thomson Reuters’ investor and public relations units in December, as it diversifies its business. It also took a 25 percent stake in The Order Machine, a Dutch ATS.
Once again a call came to eliminate the 60/40 tax treatment for derivatives, this time from a Republican — Rep. Dave Camp of Michigan, the chairman of the Ways and Means Committee, The Hill’s ‘On the Money’ blog reported. The current setup lets certain investors treat 60 percent of their earnings as long-term capital gains, but if that were scrapped those gains would have to be treated as ordinary income and taxed at a higher rate.
The SPDR S&P 500 ETF (SPY) celebrated its 20th birthday, having become one of the most widely traded securities over the past 20 years and spurred development of the global ETF industry. The SPY is managed by State Street Global Advisors.
CBOE Holdings declared a special dividend of 75 cents on December 11, leading to a 52-week high for the stock, according to Forbes. CBOE has been paying regular dividends since 2008. CBOE also said it would move the SPXpm contract from its all-electronic C2 exchange to the CBOE hybrid trading platform on February 29, Traders Magazine reported. The PM-settled version of the exchange’s flagship SPX contract started trading on C2 in October 11, the first time the CBOE had offered automated executions on an options based on the S&P 500 index.