Somebody Stole 7 Milliseconds From the Federal Reserve
Last Wednesday, the Fed announced that it would not be tapering its bond buying program. This news was released at precisely 2 pm in Washington “as measured by the national atomic clock.” It takes 7 milliseconds for this information to get to Chicago. However, several huge orders that were based on the Fed’s decision were placed on Chicago exchanges 2-3 milliseconds after 2 pm. How did this happen?
**Proves that time = money. Just never thought it would be so little time and so much money. -JB
New York Still Investigating Trading on Early Access
William Alden – Dealbook
The top law enforcer in New York State is not done scrutinizing high-speed trading based on early looks at sensitive data.
Eric T. Schneiderman, New York State’s attorney general, said on Tuesday that such trading – which he called “insider trading 2.0” – was still a focus of his office, which reached a settlement with Thomson Reuters over the issue in July.
JP Morgan Is Discussing $11 Billion Settlement
Devlin Barrett – The Wall Street Journal
J.P. Morgan Chase JPM & Co. is in discussions to settle regulatory probes related to mortgage-backed securities for $11 billion, a person familiar with the matter said Wednesday.
The talks with federal and state regulators are continuing and are subject to change, according to people familiar with the matter.
U.S. Stocks Beating World With Lower Volatility
Alex Barinka – BloombergBusinessweek
U.S. stocks are delivering the best risk-adjusted returns among the world’s biggest developed markets as a third straight year of earnings growth produces steadier gains.
Videocast: VIX hovers at 14 level
Inverse VIX ETFs Testing All-Time Highs
Tom Lydon – ETF Trends
With the Fed keeping its accommodative policy, exchange traded funds that short the CBOE Volatility Index, or “VIX,” have surged alongside the rally in equities. However, another round of debt ceiling talks could throw markets into turmoil.
FX vol enters the dead zone; fears mount over calm before the storm
Peter Garnham – Euromoney
Implied volatility in the FX markets has fallen to levels last seen before the eruption of the financial crisis, a fact that might concern investors who witnessed the violent price action in 2008.
Volcker rule curtailing FX liquidity, say buy-side participants.
Michael Watt and Joti Mangat – FX-Week
Investors say foreign exchange market-makers are already trimming risk appetite ahead of the Volcker rule ban on proprietary trading in the US. But, while liquidity in emerging market and frontier currencies has suffered, other market participants believe the new regulation is not to blame.
Treasury Secretary: Markets too calm about debt ceiling
Hibah Yousuf – CNN Money
In addition to the muted market action, a key metric for measuring market fear and volatility, the VIX, is indicating calm markets. And even though CNNMoney’s Fear & Greed Index has ticked just slightly into “Fear” mode, it was neutral earlier in the week. There doesn’t seem to be a sense of panic at all.
CBOE Holdings Announces Date Of Third-Quarter 2013 Earnings Release And Conference Call
Press Release (CBOE)
CBOE Holdings, Inc. (NASDAQ: CBOE) will announce financial results for the third quarter of 2013 before the market opens on Friday, November 1, 2013. A conference call with remarks by CBOE Holdings, Inc. senior management will begin at 7:30 a.m. Central Time. A presentation will be referenced during the call and will be available on the Investor Relations section of our website at http://ir.cboe.com under Events & Presentations.
REGULATION & ENFORCEMENT
Deutsche Börse’s News Service for Traders Draws Scrutiny of Investigators
Brody Mullins and Scott Patterson – The Wall Street Journal
Several times a month, the Labor Department invites news reporters to a sealed room for an early look at soon-to-be-released reports such as the unemployment rate. One organization attending in recent years stands out from the rest.
No Escape From Jail or Fines in Global Market-Abuse Curbs
Jim Brunsden & Ben Moshinsky – Bloomberg
Crooked bankers and insider traders would have no safe havens under planned global guidelines for market-abuse penalties, amid concerns some countries don’t have strict enough rules.
**All the laws in the world do no good if no one enforces them in a consistent, even-handed manner (see next story). -JB
SEC Omitted Evidence Damaging to JPMorgan’s Jamie Dimon
Janet Tavakoli – Huffington Post
The SEC filed a cease-and-desist order on September 19, 2013, in the matter of JPMorgan Chase & Co.’s “London Whale” credit derivatives trading incident and misstatement of earnings. JPMorgan admitted it violated securities laws and agreed to pay a $920 million settlement.
U.S. SEC sets zero-tolerance objective for glitches at exchanges
Technical glitches and other operational errors at U.S. exchanges cannot be tolerated, given the high-speed, interconnected nature of the markets, the head of the U.S. Securities and Exchange Commission said on Tuesday.
**It may not be a fair comparison but it seems akin to the stance the government takes towards the airline industry. Accidents will happen but when they do every effort is made to determine a cause and prevent a repeat of that problem. Takes some time but as a result you are now statistically more likely to die by falling out of bed than flying (really). -JB
CFTC Ends Silver Manipulation Probe Finding No Cause for Action
Silla Brush – BloombergBusinessweek
The CFTC probe, which reviewed data on silver positions and related derivatives traded on exchanges operated by the CME Group (CME:US) Inc., didn’t produce evidence for lawyers to recommend an enforcement action, the agency said in a statement today.
VIX vs. SPY: Part 1
Adam Warner – Schaeffer’s Investment Research
I’m always getting questions regarding the CBOE Volatility Index (VIX) along the lines of, “Why isn’t the VIX doing this?” or, “If the VIX is doing this, why isn’t the market doing that?” T
hen I got this epiphany: Why not answer them with actual math?