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JLN Options: ISE Shelves Plan to Bring Pari-Mutuel Settlements to Options Market

Lead Stories

ISE Shelves Plan to Bring Pari-Mutuel Settlements to Options Market  
Katy Burne – The Wall Street Journal
All bets are off on one firm’s bid to make playing the options market a bit more like going to the track.
The International Securities Exchange has shelved plans for an options contract using technology also known in the world of horse races — so-called pari-mutuel settlement, in which all bets are pooled upfront and the winners’ take comes out of the pool.
http://jlne.ws/1azr690

Big Rally — So the Market Defies Gravity?
Andrew Giovinazzi – The Options Insider
What a difference a day makes.  The relatively subdued moves yesterday gave way to an explosion after the close when the market decided Big Ben has some teeth left after all.  I will call it his reiteration of a reiteration of Fed policy.  The market liked the way he spoke live as opposed to the dour old minutes they released.  Either way the market loved it.  Did the volatility love it?
http://jlne.ws/16yzJsA

Videocast: ‘Huge’ VIX call buying [posted 11:32a CST]
Chris McKhann – optionMONSTER
http://jlne.ws/1azByNJ

OCC Announces the Promotion of James Knoeck to Senior Vice President – Chief Audit Executive
Press Release (OCC)
OCC announced today that James Knoeck has been promoted to Senior Vice President – Chief Audit Executive. Mr. Knoeck joined OCC in September as Vice President – Head of Internal Audit from the State of Wisconsin Investment Board.
During his time at OCC he led the restructuring of the internal audit department, necessitated by OCC’s designation as a Systemically Important Financial Market Utility (SIFMU).
http://jlne.ws/1azxVr8

DRJ: Where are market regulators?
Jon “DRJ” Najarian – optionMONSTER
I suspect the SEC, FINRA, and CFTC are big fans of Groucho Marx, or at least his observations on fair dealing. How else could they justify turning a blind eye to a global media powerhouse such as Reuters selling early access to market-moving information? How could these authorities not condemn a practice like high-frequency trading (HFT), which causes significant market disruptions on a daily basis and destroys investor confidence?
http://jlne.ws/1azyUHI

Lifting SEC Ad Ban Promises More Reach to Hedge-Fund Pitches
Dave Michaels and Margaret Collins – BloombergBusinessweek
Investment pitches by entrepreneurs and hedge funds may get a higher public profile on television, through social media and even at sporting events following the lifting of an 80-year-old rule by U.S. securities regulators.
http://jlne.ws/1azpr3g
**For a few good laughs check out the hashtag #hedgefunslogans on Twitter. -JB

The Fourth Estate Versus Hedge Funds  
John Kimelman – Barron’sPublications from Bloomberg Businessweek to the Atlantic are slamming these investments in the wake of a decision allowing them to begin advertising.
http://jlne.ws/12wVQ0d

New Advertising Rules Could Disadvantage CTAs
Dan Collins – Dan Collins Report
The Securities and Exchange Commission (SEC) on July 10 voted to approve new rules implementing lifting the ban against advertising private placements to the general public as mandated by the JOBS Act.
http://jlne.ws/1azyEIJ

FINRA’s Executives Prosper While Investors Suffer
Daniel Solin – US News
I can fully understand why FINRA’s chief executive Richard Ketchum reported in the organization’s most recent annual report that 2012 was “a solid year.” I assume he meant it was a bonanza for him and his fellow regulators at the industry-sponsored agency that makes a pretext of self-regulating its members.
http://jlne.ws/16yoU9W

Exchanges

NYSE’s Reputation And Derivatives Business Can Gain From LIBOR Win
Trefis
NYSE Euronext (NYSE:NYX) announced this week that it will take over the administration of the London Interbank Offer Rate (LIBOR) from the British Bankers’ Association (BBA).
http://jlne.ws/1azvqVz

Regulation

Europe, U.S. strike peace on cross-border swap rules
Douwe Miedema and John O’Donnell – Reuters
The European Union agreed with U.S. regulators Thursday on how to jointly supervise foreign derivatives traders operating in their territories, solving a months-long trans-Atlantic rift.
http://jlne.ws/1azoVCn

CME Group resubmits plan to update rules blocking wash trades
Tom Polansek – Reuters
CME Group Inc, the world’s largest futures exchange operator, has resubmitted to U.S. regulators a plan to update its rules prohibiting wash trades after pushing back the provisions’ start date.
http://jlne.ws/1azrBQv

U.S. SEC upholds supervisor’s ban for broker’s trading
Suzanne Barlyn – Reuters
Looking the other way while a broker racks up commissions by making excessive trades can have devastating consequences for his or her supervisor: a lifetime ban from the securities industry.
http://jlne.ws/1azv3ul

Hedge Fund Hijinks To Continue After SEC Move
John Wasik – Forbes
If you can get past the hypophallic cover of this week’s Bloomberg BusinessWeek, there’s a story that the hedge fund industry wants you to avoid.
Hedge funds aren’t worth the exorbitant fees they charge.
http://jlne.ws/16xnblj
**If you haven’t seen it already here is a picture of the cover referenced above. Funny or poor taste?  Seems to be differing opinions on that.  -JB

Technology

Trading Technologies Launches MultiBroker Trading Solution
Press Release (TT)
Trading Technologies International, Inc. (TT), a global provider of high-performance trading software for derivatives professionals, today announced the production release of its MultiBroker trading solution.
TT’s MultiBroker gives the buy side direct market access via multiple brokers from a single X_TRADER Pro or API connection to TTNET, TT’s fully managed global hosting solution. TT software routes orders through TTNET’s end-to-end architecture, never through a third-party network, providing superior speed, stability, and accuracy.
http://jlne.ws/14IPvDj

OPTIONS EDUCATION

Time Decay and Weekly Options
Dan Passarelli – The Options Insider
One of the characteristics of options that I talk a lot about with my options coaching students is that premium sellers see the most dramatic erosion of the time value of options they have sold during the last week of the options cycle.
http://jlne.ws/16yA8eM

5 Misperceptions About VXX
Russell Rhoads – CBOE (via The Street)
1) VXX Is An Exchange-Traded Fund
2) VXX Is VIX
3) Options On VXX Are Options On VIX
4) VXX Has No Relationship With VIX
5) VXX Will Always Lose Value Because VIX Futures Pricing Is Always In Contango
http://jlne.ws
/16yAT7B

Strategy

The Cautious Bull Trade 
Steven M. Sears – Barron’s
Even as small company stocks surge to new highs, the options market will actually pay you to bet on a further advance. Here’s how it works.
http://jlne.ws/12sVD2P

How to battle volatility
Mark Hulbert – MarketWatch
To the casual observer, the stock market appears to be in turmoil once again. And though it calmed down this past week, heightened volatility is just one misplaced word from Ben Bernanke away. What should investors do?
http://jlne.ws/16yBLsJ

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