| March 10, 2016 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | | ISE Getting A New Parent
JLN Staff
Amid all the talk about mega-deals in the exchange space, Nasdaq has grabbed the latest headlines with a deal to buy the International Securities Exchange, (ISE) for $1.1 billion. The deal is expected to close in the second half of 2016.
The deal bolsters Deutsche Boerse's pocketbook in its push to merge with the London Stock Exchange. From Nasdaq's perspective, they get a relative deal in the ISE, which was bought by Deutsche Boerse's Eurex for $2.8 billion cash in December 2007.
At the time, the ISE held 28.1 percent of the US equity options marketshare, second only to CBOE Holdings. There were just six equity options markets then. Last month, with the ISE now among a field of 14 options exchanges including three of its own, it collectively held 15 percent of the options volume, according to OCC data. ISE operates three electronic options exchanges: ISE, ISE Gemini and ISE Mercury.
Nasdaq meanwhile, has been trying to grow its options business through a combination of acquisitions, such as buying the Philadelphia Stock Exchange, (PHLX) in 2009 and then adding additional new options markets on the Nasdaq platform such as Nasdaq Options Market and Nasdaq BX Options. Collectively, they hold about 22 percent marketshare in the US equity options space, according to OCC data. This deal pushes Nasdaq to the forefront of equity options, from a marketshare perspective.
(To read the rest of the commentary click here
| | | | | | Lead Stories | | | Deutsche Boerse to sell ISE options exchange to Nasdaq
Reuters
Deutsche Boerse (DB1Gn.DE) is selling U.S. options exchange operator International Securities Exchange for $1.1 billion to Nasdaq (NDAQ.O), potentially strengthening its hand in a proposed merger with London Stock Exchange (LSE)(LSE.L). Deutsche Boerse said late on Wednesday that it was set to book a disposal gain in the high triple-digit millions of euros from selling ISE, having written it down continuously since acquiring it for $2.8 billion in 2007.
goo.gl/KehvyV
****SD: Obviously, there is a lot out there about the sale: the Financial Times and Wall Street Journal have a bit more color than just rehashing the press releases (as does the above from Reuters). In our Exchanges section, you will find a Bloomberg story with a slightly different angle on the sale and an article from the FT that looks at Nasdaq stock.
Europe Rates Markets Radiate ECB Heat as FX Stays Cool: Analysis
Bloomberg
It's a study in contrast. Europe's rates volatility mirrors the elevated levels that prevailed before European Central Bank's December meeting when investors expected President Mario Draghi to aggressively ease the policy. But the euro is showing no such nerves, Bloomberg strategist Tanvir Sandhu writes. This divergence potentially exposes currency markets to greater swings if Draghi manages to surprise. On the obverse side, a lukewarm ECB outcome could affect rates market more.
goo.gl/zWg9HE
Proposed regulatory change could hit U.S. options trading volume
Reuters
U.S. options exchanges, already hard pressed to revive declining volumes, face a new threat from regulatory changes that could restrict the use of options in retirement accounts, which until now have been a growing part of the industry. The U.S. Department of Labor's (DOL) Conflict of Interest rule aims to stop brokers and advisors from recommending products that put their profits ahead of clients' best interests. The rule, proposed in April 2015, is expected to be published during the first half of this year.
goo.gl/fvKD3L
Volatility Update: Return of Bullish Sentiment
Fred Ruffy - The Ticker Tape
The month of March was off to a strong start when, on "Super Tuesday" (March 1), the S&P 500 jumped 46 points and many measures of market volatility fell to their lows of the year. Although the rally coincided with Presidential primary elections, the return of bullish sentiment lately probably has less to do with the events on the political front, and more to do with expectations for corporate earnings improvement in 2016.
/goo.gl/gJ1gTv
| | | | | | Exchanges | | | Nasdaq Just Took a Step Toward Challenging the Flash Boys Bourse
Bloomberg
Nasdaq Inc.'s deal to acquire Deutsche Boerse AG's International Securities Exchange gives it another chance to bring a trading speed bump to the U.S. stock market, a move that would put it in direct competition with IEX Group Inc.'s proposed public venue.
goo.gl/6xykGP
****SD: The battle continues.
Nasdaq shares fall after deal to buy options business ISE
Financial Times
Investors greeted Nasdaq's deal to buy International Securities Exchange, the US options business of Deutsche Börse, with some scepticism on Thursday, sending Nasdaq's shares down as much as 3.5 per cent. The acquisition for $1.1bn in cash and debt is the largest for the US exchanges operator in nearly a decade and will extend its leading share in the highly competitive US options market.
goo.gl/zXuQ6q
****SD: Surprised by the scepticism given the pricetag.
Exchange Sector Heats Up As Deutsche Boerse And London Stock Exchange Group Discuss Merger Of Equals - ICE Throws Curve (Global) Ball With Potential Counter Bid - FTSE Mondo Visione Exchanges Index Down 0.7% On Month
Mondovisione
The exchange sector heated up at the end of February as Deutsche Boerse and London Stock Exchange Group revealed that they were in discussions about a potential merger of equals. The deal is structured as an all-share merger under a new holding company, where Deutsche Boerse shareholders would receive 1 share in the holding company per 1 Deutsche Boerse share held and London Stock Exchange Group shareholders would receive 0.4421 shares in the holding company per London Stock Exchange Group share. This gives Deutsche Börse shareholders a 54.4% stake in the united market operator.
goo.gl/X70TZW
BOX Price Improvement Activity for February
Press Release
In the month of February price improved contracts on BOX Options Exchange ("BOX") averaged 375,006 per day. Price improvement versus the prevailing NBBO for contracts submitted via BOX's price improvement auction, PIP, averaged $736,376 per day, while total savings to investors in February was $14.7M. With this, BOX has saved investors over $736M since its inception in 2004. Overall average daily trading volume on BOX in the month of February was 524,548 contracts.
goo.gl/lx6J9m
Banks save EUR3.5bn in swaptions compression drive
Risk.net (Subscription)
BGC Partners-owned Capitalab's multilateral swaptions compression service has generated around EUR3.5 billion ($3.84 billion) of regulatory capital savings for its bank clients over the past six months, according to the firm's co-founders. London-based Capitalab, which has 24 bank clients, has compressed EUR1.3 trillion of euro, sterling and yen swaptions notional since launching its Swaptioniser service in September 2015.
goo.gl/M30RRC
| | | | | | Regulation & Enforcement | | | BlackRock, State Street Urge SEC to Harmonize Exchange Rules
Bloomberg
BlackRock Inc. and State Street Corp., along with more than a dozen industry participants, are urging regulators to take steps to ward off extreme market volatility after the stomach-churning price swings of last August. The group pressed the U.S. Securities and Exchange Commission in a letter to force exchanges to harmonize rules on trading halts designed to curb volatility. Executives from Cantor Fitzgerald & Co., Charles Schwab & Co. and JP Morgan Asset Management were among those signing the letter.
goo.gl/FE1TX2
| | | | | | Technology | | | Report: US Fintech Venture Funding Rose More Than $7 Billion in 2015
Finance Magnates
According to the latest KPMG and CB Insights report on venture deals, the US fintech sector gained 72% in 2015, hitting a record $7.40 billion - that is a giant increase compared to 2014, when the industry collected $4.3 billion.
goo.gl/6LrgcX
| | | | | | Strategy | | | Forget gold, silver is the best bet for options players
MarketWatch
The February surge in gold was vindication for gold bugs and mania for financial media eager to feature a commodity other than oil. And lets face it, gold can be a valuable part of an overall asset mix. For futures traders, however, gold is just another market. And for those seeking some slight diversification from gold and perhaps a bit more stability, we recommend silver this month  especially to those who write options.
goo.gl/P64Abg
Inside the New PUT-Write ETF: Can it Counter Volatility?
Zacks via Nasdaq
The U.S. bourses were on a tumultuous ride at the start of the year and were languishing in the red. Concerns over the Chinese market slowdown and the oil price rout had a brutal impact on the broader market. Though the markets are on the mend now, we share the skepticism of several other investors on the duration of this uptrend. A certain level of uncertainty is still present in the market.
goo.gl/IExSEI
| | | | | | Education | | | You Asked, We Answered: Getting Started with Options
The Ticker Tape
Interest in listed stock options remains one of the fastest-growing trading segments, according to options industry data. But reports from the ground also tell us that growth among new usersÂas well as repeat volume and migration to increasingly complex and flexible options strategiesÂcould improve, if only more stock traders knew where to start.
/goo.gl/LZYhjM
CME Group Announces Singaporean Team Wins 13th Annual Trading Challenge
Press Release
CME Group, the world's leading and most diverse derivatives marketplace, today announced the winners of its 13th annual CME Group Trading Challenge, including the first-place winners from Nanyang Polytechnic in Singapore. This is the first time a Singaporean team has won the competition, and the third year in a row that the winning team has been from a university outside the United States.
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