Breaking News

JLN Options: ISE Cancels Jumbo S&P 500 Options Debut on Liquidity Concern

Lead Stories

ISE Cancels Jumbo S&P 500 Options Debut on Liquidity Concern
Nikolaj Gammeltoft, BloombergBusinessweek
International Securities Exchange, the second-biggest U.S. options market, withdrew plans to trade larger-size options on the SPDR S&P 500 ETF Trust (SPY) amid concerns the contracts may threaten market liquidity.
http://jlne.ws/14aVjnJ

Court Won’t Block Vote on NYSE and ICE Deal
Peg Brickley, Dow Jones Newswires (via Fox News)
A Delaware corporate-law judge on Friday refused to block the merger of NYSE Euronext (NYX) and Intercontinental Exchange Inc. (ICE), dumping a challenge by shareholders who argued the deal was flawed.
http://jlne.ws/14aZ1xT

The Most Valuable Formula Ever Created
Alex Planes, The Motley Fool
On this day in economic and business history…
The Black-Scholes option-pricing model, first published in 1973 in a paper titled “The Pricing of Options and Corporate Liabilities,” was delivered in complete form for publication to The Journal of Political Economy on May 9, 1972.
http://jlne.ws/14aV9wC

The Most Beautiful Correlation In The Market Continues To Work Perfectly
Joe Weisenthal,Business Insider
We’ve been posting this chart for ages, and been marveling forever at how beautiful it is, and it just never ceases to amaze us.
The relationship between initial jobless claims (red line) and the S&P 500 (blue line) has held remarkably strong for years now.
http://jlne.ws/14aZvUJ

Volumes drift ahead of OTC derivatives reform deadlines
Richard Henderson, The Trade
Global OTC derivatives trading volumes have slipped as market participants adjust to impending regulation and the emergence of swap futures, new data has shown.
http://jlne.ws/14aWDHp

Exchanges

Off-Exchange Trading Falls to 35% in April
Tom Steinert-Threlkeld, Traders Magazine
Off-exchange trading fell to 35.0 percent of shares exchanged on all lit and unlit venues in April, according to statistics maintained by BATS Global Markets and Nasdaq OMX Group.
That is the third straight drop in share of off-exchange trading, since a recent peak of 36.7% in January.
http://jlne.ws/14aVSOr

CBOE Holdings Not A Bad Option
Forbes
Although financials continue to lead the market higher, newer segments are taking the reins in Q2. In addition to smaller regional banking institutions, many investors are seeing solid performances out of firms in the exchange business, such as CBOE Holdings (CBOE).
http://jlne.ws/14aYOuD

Regulation

Options Industry Comments Against Derivatives Tax Proposal
Comment Letter (ISE)
ISE joins the OCC and other exchanges in commenting against the House Ways and Means Committee proposal to change the tax treatment of derivatives.
http://jlne.ws/12juAFz (PDF)

CFTC may adjust new margin rule to soothe broker fears
Chris Prentice, Reuters
The Commodities Futures Trading Commision (CFTC) is prepared to adjust a new rule stemming from the Dodd-Frank financial reform law, an agency commissioner said on Thursday, the most concrete sign yet the U.S. regulator might bow to industry criticism.
http://jlne.ws/14aVEGY

U.S. swaps regulator to meet on trading rules next week
Douwe Miedema, Reuters
The top U.S. derivatives regulator will discuss next week keenly awaited rules for swaps trading that have the potential to weaken Wall Street’s dominant position in the $650 trillion market.
http://jlne.ws/14aWweP

Is the waiting over for SEF rules?
The Trade
Final rules on how OTC derivatives will be traded under Dodd-Frank could be revealed next week, with the US Commodity Futures Trading Commission (CFTC) scheduled to discuss key reforms.
http://jlne.ws/14aVZcS

CFTC Phone Taps Get the Goods on Traders
Courthouse News Service
Two New York Mercantile Exchange employees supplied a commodities broker with inside information for years, the Commodity Futures Trading Commission claims in court.
http://jlne.ws/14aVv6D

People

Hess to Strip CEO of Chairman’s Role After Annual Meeting
Jim Polson, Bloomberg
Hess Corp., the oil company that’s in a proxy battle with billionaire Paul Singer’s Elliott Management Corp., said it will strip Chief Executive Officer John B. Hess of the chairmanship after its annual meeting next week.
http://jlne.ws/14aU5sF

LSE Said to Hire Schwieger From Merrill as Equities Head
Sofia Horta e Costa & Nandini Sukumar, Bloomberg
London Stock Exchange Group Plc (LSE) hired Brian Schwieger from Bank of America Corp.’s Merrill Lynch unit, three people with knowledge of the plans said.
http://jlne.ws/ZTxq4C

RBS Names Bostock CFO as Van Saun Moves to Head Citizens
Gavin Finch, Bloomberg
Royal Bank of Scotland Group Plc named Nathan Bostock as finance director to replace Bruce Van Saun, who is moving to run Citizens Financial Group Inc. as the British lender prepares to sell a stake in the U.S. division.
http://jlne.ws/14aTSFV

UBS Asia-Pacific Equities Head Beshke to Retire, Memo Says (1)
Bei Hu, BloombergBusinessweek
C.J. Beshke, UBS AG (UBSN)’s head of Asia-Pacific equities, will retire after 24 years with the largest Swiss bank, according to an internal memo distributed yesterday.
http://jlne.ws/14aUg7i

Strategy

When trading options, keep an eye on implied volatility
Emilu Bailes, Market Intelligence Center
When I became interested in learning about Options I didn’t know anything about “volatility.” Although options appealed to me, as a new retiree, for risk management of my investments, the full education as a student at OptionsANIMAL opened many topics that have served me well as a conservative investor, including VOLATILITY! As the general market goes through the up and down cycle the value of options goes through a cycle, too.
http://jlne.ws/14aWiEx

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