Americas ETP News
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Knight Surges on Takeover Bids From Getco, Virtu
November 29, 2012--Knight Capital Group Inc. (KCG) capped its biggest rally in nine years after getting takeover offers from Getco LLC and Virtu Financial LLC, setting up a bidding war that may end its 17-year history as an independent company.
Getco’s cash and stock offer values Knight at $3.50 a share, an 18 percent premium from the Nov. 27 close, and retains its public listing, according to a filing yesterday from the Chicago-based high-frequency trader. Virtu submitted a bid to buy Knight for about $3 a share, a person with direct knowledge of the matter said. Another person familiar said the company’s offer was made yesterday. Knight was bailed out by six financial companies in August after losing more than $450 million in a trading malfunction.
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Source: Bloomberg
Who Benefits From ETFs In 529 Plans?
November 29, 2012--Exchange traded funds (ETFs) have taken the financial industry by storm over the last few years as investors have flocked to the fund type.
Blending the line between traditional indexing and active trading, investors have poured more than $1.1 trillion into roughly 1,251 different funds since their creation in 1993, according to data from State Street. Much of this growth has come at the cost of traditional mutual funds, which continue to see outflows.
Faced with shrinking contributions and meager returns, ETFs are now making inroads into 529 college savings vehicles and 401(k) retirement plans as administrators hope to make up for the market's recent poor performance and volatility.
For the countless parents who have joined such plans in order to help pay for their children's future college expenses, the question remains, are there any real benefits to adding the security type to their plans?
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Source: Investopedia
BlackRock: Ahead of the Street
November 29, 2012--Larry Fink was once a prince of Wall Street. In the 1980s he became the youngest managing director ever at First Boston, where he was a pioneer in the mortgage bond market.
He might have been fitted for the crown at the investment bank, now owned by Credit Suisse, but in 1986 his mortgage department lost $100 million in a single quarter. Two years later he was out.
Today, as the head of BlackRock [BLK 197.04 1.42 (+0.73%) ] – the world’s largest asset manager, with $3.7 trillion in assets – Mr Fink is at the pinnacle of US finance. But do not suggest that he is a Wall Street chieftain. Mr Fink has long defined himself as an anti-Wall Street figure.
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Source: CNBC
CBOE Holdings To Transition SPXpm From C2 To Hybrid Trading On CBOE
Move to Consolidate the Company's S&P 500 (SPX) Product Line on a Single Exchange and Increase Access to SPXpm
November 29, 2012--CBOE Holdings (NASDAQ: CBOE) announced plans today to transition its SPXpm product from the company's all-electronic C2 Options Exchange (C2) to Chicago Board Options Exchange (CBOE), where it will be traded on CBOE's hybrid trading model which incorporates both electronic and open outcry trading.
The transition will consolidate the company's entire S&P 500 options product line on one exchange, CBOE.
The company's pm-settled SPX options (including SPXpm, SPX Weeklys and SPX Quarterlys) will trade in CBOE's hybrid environment under ticker "SPXPM." Its flagship SPX option, which is a.m.-settled, will continue to trade in CBOE's open outcry environment under ticker "SPX." The migration of SPXpm from C2 to CBOE is expected to result in increased access and liquidity by exposing the product to an even broader user base.
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Source: CBOE
DB-Synthetic Equity & Index Strategy-North America-US ETF Model Portfolios-House View Portfolio Update
November 29, 2012--Adding China exposure and cutting on Dividend and Gold exposures
Market Performance
Since the launch of our House View portfolio (HVP) on October 2, 2012, the US equity market (SPY) has dropped by 2.0%, the broad US Fixed Income market (BND) has been nearly flat at +0.1%, and the Commodity market (DBC) has lost 2.89%
Model Performance
Our HVP is down by 0.79% since its launch. However this is still higher than the equity market and our multi asset class benchmark which are down by 2.0% and 1.55%, respectively.
Portfolio Updates and New Membership
We added a new satellite long position on China (MCHI) with a weight of 10%. The weight for this new position will be funded by reducing the target weight for the US Dividend and the Gold positions by 5% each.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy-North America
CBOE To Introduce CBOE Low Volatility Index-Features Lower Downside Volatility Plus Upside Participation
Features Lower Downside Volatility Plus Upside Participation
November 29, 2012--The Chicago Board Options Exchange(R) (CBOE(R)) announced today that it will begin disseminating values for a new benchmark index, the CBOE Low Volatility IndexSM (ticker: LOVOL) tomorrow, Friday, November 30.
The CBOE LOVOL Index is designed for investors whose preferences have shifted from investing in riskier assets to lower-volatility assets. The new index aims to provide investors with the ability to replicate an investment strategy that is subject to less downside volatility in a portfolio of S&P 500® stocks, while still preserving the bulk of market gains.
The CBOE LOVOL Index is a blend of two of CBOE's most popular strategy benchmark indexes - the CBOE S&P 500 BuyWrite Index (BXMSM) and the CBOE VIX Tail Hedge IndexSM (VXTHSM). The LOVOL Index bridges the space between the BXM and VXTH strategies:
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Source: CBOE
When Is Federal Debt Likely to Reach the Statutory Limit?
November 29, 2012--The Congress has traditionally placed a limit on the total amount of debt that the Department of the Treasury can issue to the public and to other federal agencies. Lawmakers have enacted numerous increases to the debt limit-commonly known as the debt ceiling-some of which have been temporary and many of which have been permanent.
As discussed in a short CBO report—Federal Debt and the Statutory Limit, November 2012—Treasury debt is now approaching the current limit of $16.394 trillion. As of November 27, 2012, debt subject to that limit stood at $16.279 trillion—$115 billion below the statutory ceiling. About $11.5 trillion of that debt is held by the public, and the other $4.8 trillion is held by the federal government’s trust funds and certain other government accounts.
view the CBO report—Federal Debt and the Statutory Limit, November 2012
Source: CBO (Congressional Budget Office)
Federal Debt and the Statutory Limit, November 2012
November 29, 2012--The Congress has traditionally placed a limit on the total amount of debt that the Department of the Treasury can issue to the public and to other federal agencies. Lawmakers have enacted numerous increases to the debt limit-commonly known as the debt ceiling-some of which have been temporary and many of which have been permanent. Treasury debt is now approaching the current limit.
What Is the Current Debt Limit, and When Is It Likely to Be Reached?
The current statutory debt limit is $16.394 trillion. As of November 27, 2012, debt subject to that limit stood at $16.279 trillion—$115 billion below the statutory ceiling.
The Treasury anticipates that borrowing will reach the current limit near the end of December 2012. However, because the Treasury can take certain measures that it has used previously when borrowing approached or reached the debt limit, the Congressional Budget Office (CBO) expects that the department will be able to continue funding government activities without an increase in the debt limit until mid-February or early March.
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Source: CBO (Congressional Budget Office)
CFTC's Division of Swap Dealer and Intermediary Oversight Issues Amended No-Action Letter on the Pay-to-Play Rules for Swap Dealers Conducting Business with Certain Governmental Special Entities
November 29, 2012--The Commodity Futures Trading Commission's (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) today issued an amended no-action letter addressing the pay-to-play rules applicable to swap dealers who conduct business with certain governmental special entities.
The letter has been amended from the original version that was issued on November 20, 2012.
The pay-to-play rules in Commission Regulation 23.451 restrict a swap dealer from engaging in certain activities with a governmental special entity, if the swap dealer (or a covered associate of the swap dealer) made or solicited contributions to an official of that governmental special entity during the preceding two years, with limited exceptions. The no-action letter provides relief to swap dealers and their covered associates for making certain contributions to officials of certain special entities that may otherwise fall within the scope of Commission Regulation 23.451.
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Source: CFTC.gov
The Trading Profits of High Frequency Traders
Paper Authored By: Matthew Baron, Jonathan Brogaard. Andrei Kirilenko
First Draft: October 2011
Current Draft: November 2012
November 28, 2012--Abstract
We examine the profitability of high frequency traders (HFTs). Using transaction level data with user identifications, we find that high frequency trading (HFT) is highly profitable: HFTs collectively earn over $23 million in trading profits in the E-mini S&P 500 futures contract during the month of August 2010.
The profits of HFTs are mainly derived from Opportunistic traders, but also from Fundamental (institutional) traders, Small (retail) traders, and Non-HFT Market Makers. While HFTs bear some risk, they generate unusually high average Sharpe ratios with a median of 4.5 across firms in August 2010. Finally, HFTs profits are persistent, new entrants have a higher propensity to underperform and exit, and the fastest firms (in absolute and in relative terms) earn the highest profits.
view thge paper-The Trading Profits of High Frequency Traders
Source: Global Economic Intersection
