Lead Stories

VIX Finishes In ‘Backwardation’
Kaitlyn Kiernan, The Wall Street Journal
The market’s so-called fear gauge ended Monday’s session in an unusual state of worry, closing in “backwardation” for only the fourth time this year, as anxious investors looked toward elections now just hours away.
http://jlne.ws/YRQcGU

Volatility the Likely Outcome of Elections
Investors are buying VIX options in anticipation of lower stocks regardless of who wins the White House.
Steven M. Sears, Barron’s
The most sophisticated investors in the stock market are casting early ballots for Tuesday’s presidential election. The expected outcome, regardless of who wins the race, is more tumult in the stock market.
This is the message emanating from the Chicago Board Options Exchange’s Volatility Index (VIX). The fear gauge, as VIX is known, is edging higher Monday even though the stock market has stalled ahead of Tuesday’s election.
http://jlne.ws/SVxNFH

The Presidential Election And VIX Behavior
Scott Murray, Seeking Alpha
VIX data goes back to 1990, so we have five presidential elections to weigh the behavior of uncertainty and therefore VIX levels. What could the election mean to the performance of volatility shortly afterward?
http://jlne.ws/YS23EM

How High Might The VIX Spike?
Bill Luby, Seeking Alpha
Given all the drama in the eurozone, not to mention the fiscal cliff, the various difficulties in China, continued unrest in the Middle East and Northern Africa, etc. it is more than a little surprising that the CBOE Volatility Index (VIX) has failed to trade above 30.00 this year.
http://jlne.ws/UgqsoL

Exchanges

NYSE Euronext bets on cuts to offset trading losses
Luke Jeffs, Reuters
NYSE Euronext (NYX.N)(NYX.PA), the world’s largest stock market, is hoping ambitious cost cuts will help offset lower trading levels, in the latest sign of growing pressure on the world’s top trading firms.
NYSE Euronext said on Tuesday it smashed its 2012 cost cut target of $63 million by taking out $82 million of expenses, a third of the $250 million the exchange has pledged to cut by 2014.
http://jlne.ws/UgsgxU
**London Stock Exchange and ICAP are also expected to report lower profit next week. –SR

IntercontinentalExchange Sees Rebound in Business
Jacob Bunge, The Wall Street Journal
IntercontinentalExchange Inc. expects financial and commodity firms to ramp up trading in new energy futures markets as more heavily regulated swap products are left behind, executives said Monday.
Broader distribution and more familiar rules around futures trading are seen helping drive a rebound in business for ICE, which suffered over the summer as swap traders stepped back from off-exchange commodity markets ahead of stricter regulations. 
http://jlne.ws/UgrQI3
**ICE melted a little over the summer but is now becoming solid again. –SR

NYSE Euronext Announces Third Quarter 2012 Financial Results
Press Release
NYSE Euronext (NYX) today reported net income of $108 million, or $0.44 per diluted share, for the third quarter of 2012, compared to net income of $200 million, or $0.76 per diluted share, for the third quarter of 2011. Results for the third quarter of 2012 and 2011 include $18 million and $29 million, respectively, of pre-tax merger expenses and exit costs. In the third quarter of 2012, our GAAP effective tax rate included a discrete net deferred tax benefit of approximately $12 million, principally related to the enacted reduction in the corporate tax rate from 25% to 23% in the United Kingdom. Excluding merger expenses, exit costs and discrete tax items, net income in the third quarter of 2012 was $108 million, or $0.44 per diluted share, compared to $186 million, or $0.71 per diluted share, in the third quarter of 2011.
http://jlne.ws/YRXHO5

Regulation

Dodd-Frank’s Financial Outsourcing
The Wall Street Journal
President Obama likes to describe a mythical corporate tax deduction for moving jobs overseas. But a real-life Obama policy is already encouraging financial transactions to occur outside America. Two big international banks now say they won’t participate in the U.S. swaps market. This follows an October letter from foreign regulators warning Commodity Futures Trading Commission Chairman Gary Gensler not to blow up the global derivatives marketplace.
http://jlne.ws/SUFrQG

Technology

Million-Dollar Traders Replaced With Machines Amid Cuts
Mary Childs, Bloomberg
Wall Street’s credit-derivatives traders, who before the financial crisis commanded $2 million of annual pay, are being replaced by machines as banks cut costs and heed new regulations.
UBS AG (UBSN), Switzerland’s biggest bank, fired its head of credit-default swaps index trading, David Gallers, last week, with no plan to fill the position, according to two people familiar with the matter. Instead, the bank replaced Gallers with computer algorithms that trade using mathematical models, said the people, who asked not to be identified because moves are private.
http://jlne.ws/YRThqf

Events

CME Group Inc : CME Group to Host Fifth Annual Global Financial Leadership Conference
Press Release
CME Group will host the fifth annual Global Financial Leadership Conference (GFLC) Nov. 12-14, 2012, at the Ritz-Carlton Beach Resort in Naples, Florida. The GFLC is an exclusive event that brings together decision-makers from the world’s leading financial institutions to discuss emerging geopolitical trends, debate critical economic issues and provide perspectives on future developments in the financial marketplace.
Topics to be discussed include:
– Impact of geopolitical trends on global financial markets
– High frequency trading and evolving capital market dynamics
– The new global energy landscape
– Effect of the U.S. elections on domestic and international markets
– Potential outcome of current and proposed regulatory policy
http://jlne.ws/YRZ7Ij

Pin It on Pinterest

Share This Story