JLN Options: Supreme Court Denies ISE Appeal On Index Options Dispute

May 13, 2013

Lead Stories Supreme Court Denies ISE Appeal On Index Options Dispute
Jacob Bunge and Brent Kendall, Dow Jones Business News (via NASDAQ)
The U.S. Supreme Court has decided not to take up a long-running legal battle over an exchange’s right to trade lucrative options contracts linked to stock indexes.
http://jlne.ws/16v3Y90
**CBOE press release is below. -JB Low Volatility Is Depressing Options Sellers
Tyler Craig, InvestorPlace
Barring the occasional spike to the high teens, the CBOE Volatility Index (CBOE:VIX) appears to have found a new home in the 12-14 zone this year.
While the low-volatility regime settling over Wall Street might be applauded by bull market lovers, though, it does have its detractors.
http://jlne.ws/16v4GTB Major market operators to build cash pool for derivatives trades
Huw Jones, Reuters
Two of the world’s biggest market infrastructure companies are joining forces to help banks track down enough cash to underpin their derivatives trades, spurred by new regulation that aims to make safe a traditionally risky area of business.
http://jlne.ws/16v2WJX Top Hedge Funds Bet on Greek Banks
Sam Jones, Financial Times (via CNBC)
Some of the world’s leading hedge funds are pouring money into the Greek banking sector in expectation of huge potential returns, even as the country struggles to right its economy in the face of deep government spending cuts.
http://jlne.ws/16v65tr HFT is not driving investors from the stock market
Justin Schack, Financial Times
For a long time, only a tiny group of folks like me cared about the structures through which investors’ orders to buy and sell stocks and other financial instruments were actually traded. Lately, that has changed.
http://jlne.ws/12pM6ba Donations, lobbying by high-speed traders on the rise: report
Sarah N. Lynch, Reuters (via MSN Money)
High-frequency trading firms increased their campaign contributions to federal lawmakers by 673 percent from the 2008 to the 2012 election cycle, according to a report that sheds light on their political connections in Washington and efforts to impact policymaking.
http://jlne.ws/17XV0ih NYSE Arca Options// Update on Jumbo SPY Options
Press Release (via email…full text below)
Dear NYSE Arca Options Participants,
Given the industry discussion about Jumbo SPY options and questions from a number of clients, we wanted to take a moment to share our current thoughts on this issue.
At this time, we have ensured our technical readiness to list Jumbo options and are prepared to submit a rule filing accordingly.  However, ongoing discussions with many of you have reaffirmed some of the concerns about this product we initially described in our comment letter (attached) on the BOX rule filing.  In particular, despite some revisions to the BOX filing, our concerns about creating a two-tiered market for products offering identical economic exposure persist.  In addition, unlike the recent, successful launch of mini options (which allow retail investors to enter into protective put and covered call strategies against smaller stock positions for the first time), Jumbos offer no new benefits to offset these structural concerns – it has always been possible to execute large trades using standard SPY options, which offer quoted markets that are among the deepest and most liquid in the industry.  We also note that, so far, Jumbo SPY options have met with extremely limited uptake.
Accordingly, we have chosen not to list Jumbo SPY options immediately, but will instead monitor volume in the product and stand ready to offer a competitive marketplace for our customers to trade them if they eventually meet with industry acceptance.
In the meantime, we are thankful to the many of you who reached out to share your thoughts on this issue, and welcome further feedback.
Thanks and best regards,
Steve Crutchfield
EVP – Head of U.S. Options
NYSE Euronext

Exchanges

CBOE Wins in S&P Index Dispute 
Press Release (CBOE)
The Chicago Board Options Exchange (CBOE) announced today that the Supreme Court of the United States denied the International Securities Exchange’s (ISE) petition to review the Illinois Appellate Court’s decision that permanently restrained and enjoined ISE from listing or providing an exchange market for the trading of S&P 500 Index (SPX) and Dow Jones Industrial Average (DJX) options and enjoined OCC from issuing, clearing or settling the exercise of such ISE options. This brings to a close over six years of litigation.
http://jlne.ws/17XW6dY NYSE Keeps Options Open to Exit Euronext
Dow Jones Business News, (via NASDAQ)
NYSE Euronext ( NYX ) is considering a dual-track process to either sell or spin off a European stock trading business that’s attracting interest from potential private equity suitors, according to people familiar with the situation.
http://jlne.ws/17XUqkJ Gary Katz Participates in Market Structure Roundtable
Press Release (ISE)
The International Securities Exchange (ISE) announced that President and CEO Gary Katz will participate in an Equity Market Structure Roundtable that will take place today in New York. Hosted by Representative Scott Garrett (R-NJ), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, the purpose of the roundtable is to facilitate dialogue about current market structure issues and opportunities to improve existing regulations. Mr. Katz will speak on a panel on the topic of “Creating a Level Playing Field for Equity Market Participants.”
http://jlne.ws/10uhIbO (PDF)

Regulation

New Regulations Rank as Top Risk — DTCC Survey  
Ivy Schmerken, Advanced Trading
82 percent of financial firms responding to a DTCC survey ranked new regulations and the time and resources required to implement new regulations as a top 10 risk facing the industry.
http://jlne.ws/16v4R16 FINRA Delays Rule on Front-Running of Blocks
Tom Steinert-Threlkeld, Traders Magazine
The Financial Industry Regulatory Authority has proposed to the Securities and Exchange Commission that a new date of September 3 be established for implementation of its rule on the front-running of block transactions.
Its Rule 5270 had been slated to go into effect June 1.
http://jlne.ws/16v4h3q

Technology

optionMONSTER Holdings, Inc. Wins 2013 Illinois Technology Association “Outstanding Technology Development” CityLIGHTS Award  
Press Release (via BusinessWire)
optionMONSTER Holdings, Inc., the parent of tradeMONSTER, the online brokerage industry’s leader in user experience, has been honored with a 2013 Illinois Technology Association (ITA) CityLIGHTS Award in the “Outstanding Technology Development” category. The venerable award goes to the ”company or organization that utilizes or developed a technology tool, process or service that accelerated growth.”
http://jlne.ws/17XYPEc

People

Credit chief at ‘London Whale’ bank prepares hedge fund launch 
Harriet Agnew, Financial News
Tolga Uzuner, the former international h ead of eq uity and corporate credit at JP Morgan’s chief investment office – which shot to prominence last year because of big losses in the division by a trader known as the “London Whale” – left the bank last month.
http://jlne.ws/17mfljw Lloyds chairman Sir Win Bischoff to retire within a year
Rachel Cooper, The Telegraph
The 71-year-old, who became chairman of Lloyds in September 2009, will leave “no later than the shareholders meeting in May 2014”, the bank said in a statement on Monday.
http://jlne.ws/16v5qbj

Strategy

Indulge Your Appetite for Stocks 
Steven M. Sears, Barron’s
For now at least, the stock market seems to be the only opportunity available. It’s OK to buy, but keep an eye on the exit.
http://jlne.ws/16v52K6 The Bulletproof Case For Going Long On Volatility 
Seeking Alpha
I’ve said it before and I’ll say it again: now is the time to position yourself long on volatility. Market volatility can come from anything, including unexpected news events, economic worries and uncertainty, and other global issues — and we’ve gone way too long without it.
http://jlne.ws/17XVBRe

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