Strengthening Practices for Preventing and Detecting Illegal Options Trading Used to Reset Reg SHO Close-out Obligations
SEC Risk Alert
The alert spotlights certain effective practices that some firms use to identify risks and detect trading activities that could be used to circumvent the Reg SHO close-out requirements, including trading that continually “resets” a clearing firm’s or broker-dealer’s Reg SHO close-out requirements.
**On page 12 of the PDF is a bullet point list of the sorts of things the SEC is looking at here. The list is not exhaustive but a good start. -JB
Derivatives Margin Losses Could Help Save CCPs, Regulators Say
Ben Moshinsky – BloombergBusinessweek
Derivatives traders should be prepared to lose the initial margin they post at clearinghouses if it’s needed to prevent a financial crisis, global markets regulators said.
**Take one for the team. -JB
Misra Starts London Derivatives Venue as Rival to Nasdaq
Nandini Sukumar – Bloomberg
Hirander Misra, former chief operating officer of Chi-X Europe Ltd., plans to start a derivatives exchange in London, entering the same market as new venues from Nasdaq OMX Group Inc. (NDAQ) and CME Group Inc.
Videocast: September pop in VIX?
How Many Options Exchanges can be Profitable?
Dan Collins – Dan Collins Report
For more than a decade I had been going to the Futures Industry Association conference in Boca Raton and to its Futures and Options Expo in Chicago. As part of each conference the FIA would always include a panel of options exchange leaders.
Questioning The Popularity Of Volatility-Tracking ETNs
Introduction: A newly-popular form of portfolio insurance appears to be exchange-traded notes (ETNs) based on the VIX, options on the ETNs, and other volatility-related vehicles. Bloomberg.com described the phenomenon a few days ago this way:
Yes, Leveraged ETFs Could Be Destabilizers: Fed Study
Brendan Conway – Barron’s
A Federal Reserve Board study getting attention this morning thanks to Zero Hedge suggests leveraged ETFs could be contributors to the next Flash Crash-like event in the stock market. Or, worse still, the next Black Monday.
Analyst: We Were Wrong on NYSE-ICE Deal; It’s a Good Deal
David Benoit – The Wall Street Journal
“We were wrong,” isn’t typically the headline of an analyst report.
But Brad Hintz of Sanford Bernstein issued a lengthy mea-culpa on his original opinion of one of the highest-profile deals of the year: The sale of the storied New York Stock Exchange with the upstart IntercontinentalExchange.
REGULATION and ENFORCEMENT
OPTIONS REPORT: Wells Fargo Asks Court To Throw Out Prop Trading Suit
Wells Fargo Securities, a unit of Wells Fargo & Co., asked the Second Circuit Court of Appeals late last month to uphold the dismissal of a suit brought by one-time business partner Williams Trading.
E*Trade Sends More Trades Outside Firm As Routing Is Scrutinized
Jacob Bunge – The Wall Street Journal
E*Trade Financial Corp. has dramatically reduced the number of customer stock orders sent to an internal trading unit, which the discount broker is trying to sell amid regulatory scrutiny of its order routing practices.
Get Set for a Spike in Volatility
Steven M. Sears – Barron’s
An options trade on CBOE shares could protect investors from stock-market turbulence this coming fall.