Rich
12 years ago
OptionsXpress Accused by SEC of Naked Short-Sale Violations
By Joshua Gallu
Apr 16, 2012 5:15 PM ET
OptionsXpress Inc. (OXPS), the Chicago brokerage acquired by Charles Schwab Corp. (SCHW) last year, was accused by U.S. regulators of using sham “reset” transactions as part of an abusive naked short-selling scheme.
The company and four executives violated Securities and Exchange Commission rules in conducting trades from at least October 2008 to March 2010 designed to give the illusion of compliance with rules governing short sales, the SEC said in a statement today. An OptionsXpress customer was also accused by the SEC of participating in the alleged violations.
In a short sale, an investor borrows shares and sells them with the goal of profiting from a price decline by repurchasing at a lower price and repaying the loan. The SEC’s Regulation SHO requires brokers to close out clients’ short sales within three days and bars them from executing further bets against individual companies until previous sales have been settled.
OptionsXpress, its former chief financial officer Thomas Stern and the customer, Jonathan Feldman, are fighting the agency’s claims, which were filed in administrative court in Washington today...
OptionsXpress helped its customers buy shares while simultaneously selling call options that were essentially the economic equivalent of selling shares short, the SEC said. The purchase of shares created the illusion that the firm had satisfied the close-out obligation even though they were never actually delivered to the purchasers, according to the order.
Stock-Kiting Scheme
The transactions allowed OptionsXpress and its customers to engage in a “stock-kiting scheme” that deprived true stock purchasers of the benefits of ownership, the SEC said in its order. OptionsXpress had repeated failures to deliver stock in firms including Sears Holdings Corp. (SHLD), American International Group Inc. (AIG) and Chipotle Mexican Grill Inc. (CMG), according to the order.
In January 2010, customers involved in the OptionsExpress trades accounted for an average of 48 percent of daily trading volume in Sears, the SEC said. In 2009, six OptionsXpress accounts purchased about $5.7 billion worth of securities and sold short about $4 billion of options, according to the order.
The SEC settled related claims against three OptionsXpress employees: Peter Bottini, Phillip Hoeh and Kevin Strine, according to a separate administrative order filed today. Attorneys for Strine and Hoeh declined to comment. A phone call to Steven Biskupic, a lawyer for Bottini, wasn’t immediately returned.
In resolving the action, Bottini, Hoeh and Strine agreed to cooperate with the SEC’s investigation without admitting or denying wrongdoing or paying any financial penalties.
Charles Schwab, the San Francisco-based brokerage, agreed to buy OptionsXpress for about $1 billion in stock last year, adding the retail options brokerage founded in 2000 to its equity and mutual fund offerings. The acquisition was completed in September. http://tiny.cc/k1svcw
Posted by Jesse at 6:52 PM
http://jessescrossroadscafe.blogspot.com/2012/04/sec-charges-optionsxpress-with-naked.html
Seminole Red
13 years ago
OptionsXpress Launches Target Markers -- Winner of Customer Wish List Poll
Thursday 12/09/2010 8:00 AM ET - Globenewswire
Related Companies
Symbol Last %Chg
OXPS 20.31 1.65%
As of 4:00 PM ET 12/10/10
optionsXpress Holdings, Inc. (Nasdaq:OXPS), a pioneer in bringing professional technology for options and futures trading to individual investors, launched Target Markers for Streaming Charts on December 8, allowing customers to quickly identify desired entry or exit points for their trades. The feature was one of 8,000 product ideas submitted by customers. It won the November 2 customer Wish List poll and is live at www.optionsXpress.com today.
Target Markers for Streaming Charts is a new drawing tool that quickly calculates and displays streaming theoretical profit or loss between the current price and any point on the chart. Streaming Charts are one of the most popular features at optionsXpress. It is powerful technology that's easy to use -- traders just select and click on the chart.
The optionsXpress customer Wish List gives traders the opportunity to submit product ideas and suggestions to optionsXpress, and then other customers can vote on those suggestions. optionsXpress takes the most popular product suggestions and integrates them into its trading platforms. The Wish List has been an important input to developing innovative features including: (1) displaying Greeks and NBBO on the Trade & Probability Calculator; (2) the ability to launch a detached Streaming Chart from any page; and (3) alerts for Technical Chart Patterns. The most recent poll is just ending with votes on features including largest gap up/down Dragon screens, searching by symbol on the earnings calendar, displaying Greeks on the watch list, and displaying positions in chains.
"We constantly look at how our customers trade by analyzing site activity and conducting research -- but there is no substitute for direct dialogue with customers on what they want," said David Fisher, Chief Executive Officer of optionsXpress. "We are committed to an on-going conversation with our customers, in-person, on the phone, in email, over chat, and through our website. We listen and in return our customers' suggestions allow optionsXpress to stay ahead of competitors by developing cutting-edge innovations."
Wish List polls are typically open for one month and optionsXpress develops the winning selection during the next development cycle.
About optionsXpress Holdings, Inc.
optionsXpress Holdings, Inc., a pioneer in equity options and futures trading, offers an innovative suite of online brokerage services for investor education, strategy evaluation, and trade execution. optionsXpress Holdings subsidiaries include optionsXpress, Inc., a retail online brokerage specializing in options and futures, brokersXpress, LLC, an online trading and reporting platform for independent investment professionals, Open E Cry, LLC, an innovative futures broker offering direct access futures trading for high volume traders through its proprietary software platform, and Optionetics, Inc., a leading provider of investment education services, including live seminars, proprietary software analytics, online and offline educational products and individual coaching. For more information: http://www.optionsxpress.com.
The optionsXpress Holdings, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6907
Options involve risk and are not suitable for all investors. Please read "Characteristics and Risks of Standardized Options" or available by calling 1-888-280-8020.
Futures involve substantial risk and are not appropriate for all investors. Please read "Risk Disclosure Statement for Futures and Options" prior to applying for an account.
Online trading has inherent risk due to system response and access times that may vary due to market conditions, system performance, volume and other factors. An investor should understand these and additional risks before trading. Products and services intended for U.S. customers and may not be available or offered in other jurisdictions.
Copyright (C) 2010 optionsXpress, Inc. All rights reserved. Member FINRA, SIPC, CBOE, ISE, NFA, NASDAQ, NASDAQ OMXPHLX, NYSE ARCA, NYSE AMEX, and NYSE ARCA.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: optionsXpress Holdings, Inc.
CONTACT: FD
Kim O'Halloran
+1 312.553.6733
Kim.OHalloran@fd.com
optionsXpress
Jodi Fronczke
+1 312.267.6764
JFronczke@optionsxpress.com
Stock
17 years ago
4:30PM OptionsXpress announces CEO, David Kalt to step down (OXPS) 23.57 +0.46 : Co announces that David Kalt has elected to step down as CEO effective September 30, 2007. Upon Mr. Kalt's departure David Fisher, currently President of optionsXpress, will assume the role of CEO and Mr. Kalt's seat on the Board of Directors. Mr. Kalt, along with Chairman of the Board James Gray and Executive Vice Chairman Ned Bennett, founded optionsXpress in 2000. James Gray will remain non-executive Chairman and Ned Bennett will continue to play a significant role in setting the Co's strategic direction while remaining Executive Vice Chairman. Mr. Bennett will also remain CEO of optionsXpress, the Co's broker-dealer subsidiary. After Mr. Kalt transitions out of his day-to-day role, he expects to pursue other, earlier-stage entrepreneurial business opportunities, while remaining one of the Co's largest shareholders.
Stock
17 years ago
optionsXpress Holdings, Inc., Announces Acquisition of XpressTrade, LLC
Wednesday January 24, 4:01 pm ET
Accretive Deal to Accelerate Company's Expansion into Fast Growing Futures Industry
CHICAGO, Jan. 24 /PRNewswire-FirstCall/ -- optionsXpress Holdings, Inc. (Nasdaq: OXPS - News) today announced it has completed the acquisition of XpressTrade, LLC, for approximately $37 million. XpressTrade, also based in Chicago, is a leading Internet-based futures and foreign exchange broker, which offers self-directed retail customers, 24-hour access to 25 exchanges and over 300 futures products worldwide, including electronic and open outcry, through its award-winning browser-based trading platform. The powerful, yet easy-to-use platform provides a wide array of sophisticated analytical tools and rich educational content, catering to both experienced and novice futures investors alike.
"We believe the acquisition of XpressTrade positions optionsXpress as the premiere derivatives-focused online brokerage," said David Kalt, Chief Executive Officer of optionsXpress. "The proliferation of electronic trading and introduction of new, retail-friendly products by the exchanges likely sets the table for significant growth in the futures industry, particularly from retail investors. XpressTrade accelerates our ability to capitalize on this opportunity."
XpressTrade was formed in 1996 by four futures veterans with over 100 years of collective industry experience, including Principal, Dan O'Neil. With an emphasis on investor education, high-touch customer service and an easy-to-use interface, XpressTrade has achieved average annual revenue growth of 70% and pretax income growth of 77% since 2003. Customer assets have almost tripled over the same period. Most recently, XpressTrade significantly upgraded its web-based platform in late 2006, improving the interface and adding new tools such as the Trade Strategizer and Technical Analyzer.
"We think optionsXpress is a perfect strategic and cultural fit. Bringing all of our products under one roof creates a powerful value proposition for the investor," commented Mr. O'Neil. "Our combination offers a best in class platform for the growing number of self-directed investors who utilize stocks, options, bonds, mutual funds and futures in their portfolios."
optionsXpress management will discuss the transaction in more detail on the upcoming fourth quarter and full year earnings conference call, scheduled for 10:00 am Central Time on January 31st.
Transaction Terms:
XpressTrade's members will receive 70% of the consideration in cash and 30% in stock, representing $25.9 million in cash and the assumption of certain operating liabilities and 504,546 common shares. Three principals have agreed to multi-year employment agreements. optionsXpress expects the transaction to be accretive in 2007. Additional financial synergies are expected to be realized through operating efficiencies.
Merrill Lynch & Co. and Kirkland & Ellis LLP provided advisory services to optionsXpress and William Blair & Company and Sidley Austin LLP provided advisory services to XpressTrade.
XpressTrade 2006 Financial and Operating Metrics:
For the twelve months ended December 31, 2006, XpressTrade generated approximately $18.7 million in revenue and $7.8 million in pretax income, a 58% and 68% increase over 2005. Key operating metrics for 2006 were:
-- Open accounts of 8,800
-- Daily Average Revenue Trades of 2,900
-- Customer Assets of $126 million
About optionsXpress Holdings, Inc.
optionsXpress Holdings, Inc. provides innovative securities brokerage products and services for investor education, strategy evaluation and trade execution. Through its subsidiaries optionsXpress, Inc., an online brokerage, and brokersXpress LLC, an online broker dealer for investment representatives and advisors, the company offers a wide range of investor tools, outstanding customer service via Live Help chat service and competitive commissions. optionsXpress has been named the top online securities brokerage by Kiplinger's Personal Finance (2006) and by Barron's in its last four annual surveys (2003 to 2006).
More information can be found in the Investor Relations section of optionsXpress' website at http://www.optionsxpress.com/investor .
Safe Harbor
This press release may contain forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks. We urge you to carefully consider these risks in evaluating the information in this press release, including risks related to general economic conditions, regulatory developments, the competitive landscape, the volume of securities trading generally or by our customers specifically and other risks described in our filings with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. The forward-looking statements made in this press release relate only to events as of the date of this release. We undertake no ongoing obligation to update these statements.
FOR FURTHER INFORMATION:
Investor Inquiries: Media Inquiries:
Janelle Woodward Josh Inglis
Ashton Partners Strategics, Inc.
(312) 553-6722 (312) 346-2007
--------------------------------------------------------------------------------
Source: optionsXpress Holdings, Inc.
expat7
17 years ago
8 Jan 07 - Morningstar: Online Brokerage Review
by Patrick O'Shaughnessy | 8 Jan 07 |
With 2006 in the books, now seems like an appropriate time to review the online brokerage sector. We cover five online brokerages here at Morningstar: Charles Schwab SCHW, E*Trade ETFC, TD Ameritrade AMTD, TradeStation TRAD, and optionsXpress OXPS. On the whole, we believe this group is currently expensive, but we are impressed with a couple of the business models and would look to pick up shares at the right price.
Industrywide, we view the near-term impact of price competition as low due to the overall value proposition that large, established brokerages offer. Nevertheless, with competitors offering cheaper and even free stock trades, it seems likely that pricing pressure will ultimately mount. Arguably the most vulnerable of the bunch is TD Ameritrade, where the merger between TD Waterhouse and Ameritrade offered significant scale benefits but little in the way of diversification and long-term growth. The firm still boasts great returns on invested capital, but it is much more dependent on trading demand than its competitors.
Going different routes, E*Trade and Charles Schwab have been more effective at minimizing pricing risk and creating superior long-term growth possibilities. E*Trade has chosen to emphasize its banking capabilities to capture a higher share of its customers' wallets. By offering easy access to savings accounts, mortgages, and home equity loans, E*Trade has created a successful online banking operation that enjoys significant cost advantages. Schwab, on the other hand, has focused on becoming the premier online financial advisor. With a very popular "Talk to Chuck" advertising campaign, the firm has enjoyed great success in attracting customer assets away from expensive and often-conflicted full-service brokerages.
We also follow two niche players in the brokerage industry. Both TradeStation and optionsXpress have grown rapidly over the last several years by offering innovative trading capabilities in profitable niches. They will be hard-pressed to sustain their growth, however, as larger brokerages look to protect their turf and other start-ups emerge in this low-barrier-to-entry business.
As we often say at Morningstar, a great business does not make for a great stock. While we like the direction that E*Trade and Schwab are heading, the market has largely priced in much of their earnings potential. However, investors tend to overestimate the impact a weakening stock market would have on these firms, and if these stocks were ever to reach a reasonable price, we think it would make sense to pick up shares. We view TD Ameritrade, on the other hand, as a less attractive investment. Until management lessens its reliance on trading-generated revenue, the firm will have limited growth opportunities and continue to be overly dependent upon the trading climate. Finally, we believe TradeStation and optionsXpress remain risky bets, and we'd advise a large discount to our fair value before purchasing shares of these firms.
http://www.morningstar.ca/globalhome/industry/news.asp?articleid=MStarUS182891_2007-01-08_12-34-00
expat7
17 years ago
01.09.07 The Return Of The Day Trader
Forbes.com
Financial Services
The Return Of The Day Trader
Liz Moyer, 01.09.07, 6:00 AM ET
The day trader is back. And now, come along two new brokerages to mine the opportunity.
The fact is that hope springs eternal, at least in the discount broker world. Despite a brutal pricing war in recent years, a decline in online trading that crimped profits at the biggest retail sites, and the industry's feast and famine track record, two new discount brokerages aimed at so-called active investors are opening for business this week.
The sites, OptionsHouse.com and Just2Trade.com enter a crowded field, led by such names as E*Trade Financial, TD Ameritrade, Fidelity Brokerage, Bank of America, OptionsXpress and Scottrade. Both are offering flat-rate trading and claim to have newer, superior technology.
Good news for them that the markets have been on an upswing, drawing investors back to online trading. Just a couple of years ago, the biggest discount brokerages were struggling with declining revenues from lower trading volumes, prompting them to slash fees and do other promotions to generate trading volume.
Now, the Dow Jones industrial average is near an all-time high, with a record close of 12,480.69 on Jan. 3, reason enough to make investors optimistic about trading (maybe opportunistic is a better word). It seems to be a time for the return of the late-1990s day trading phenomenon.
Improved residential broadband Internet access and cheaper, more interactive software, is changing things this time, however. There's a new breed of day traders, or at least a new venue. Now, instead of setting up shop in day trading firms, traders can sit around their living rooms trading and still have access to the sophisticated analytical and market data information they once could only get at a firm.
"There is more opportunity to appeal to highly active traders who don't want to sit in day trading offices," said Chris Musto, general manager of financial services for Keynote Systems, a mobile communications and Internet testing firm.
Mostly the new sites are offering the latest in trading technology and professional trading tools, such as market data and other information, in a slimmed-down brokerage offering that doesn't clog the screen with a lot of excess stuff. They are aiming at the niche of investors who already know what they want, or who have access to research and other information elsewhere and who aren't confused about how to set up and execute trades.
OptionsHouse.com debuted Monday offering flat fees of $9.95 a trade, regardless of the size of the transaction. Despite its name, the firm, a subsidiary of the market making firm Peak6, offers stock and options trading services. Options are becoming increasingly popular with retail investors who want to hedge their stock trades or dabble in a new market.
"We still see there being a tremendous opportunity," says John Hass, a former Goldman Sachs partner who is co-CEO of OptionsHouse. "There really isn't anything for retail that is user-friendly and has a pricing structure that fits."
Just2Trade.com is an offshoot of Success Trade Securities and is offering unlimited $2.50 a trade to active traders and low margin interest rates (promising to match any firm that is lower) in its Tuesday debut. In the rush to appeal to a broader mass market brokerage consumer, "Everyone forgot about the active trader," says Fuad Ahmed, chief executive of Success Trade Securities.
Well, most everyone. In recent years, some of the big discount retail brokerages have developed programs for the highly active trading segment. And another firm, TradeKing, opened for business in December 2005. TradeKing, a reincarnation for former executives of SureTrade, offers a flat fee of $4.95.
Just2Trade would steeply undercut the larger firms. E*Trade has $6.99 pricing for active traders, for example. Ameritrade charges $9.99. OptionsXpress charges $12.95. But the big firms say traders care about other factors, especially the quality and speed of their trade execution.
And the whole pricing war seemed to ratchet up yet another notch in October, when Bank of America offered free stock trades to anyone who kept $25,000 on deposit with it. That program isn't necessarily targeted at active traders, however.
The discount brokerage industry has gone through periods of expansion before, only to beat a retreat when the markets cooled off. The first round was in the 1980s, when banks started setting up discount brokerages. Those went away, but paved the way for existing sites like Charles Schwab to emerge as market leaders. The last two years have seen consolidation among the biggest firms.
"Maybe we're due for a third round," says Geoff Bobroff, a consultant in East Greenwich, R.I.
http://www.forbes.com/2007/01/08/day-traders-return-brokerages-biz-cx_lm_0109trading.html?partner=ya...
expat7
17 years ago
"Another Banner Year for Options"
TheStreet.com
Active Trader Update
Another Banner Year for Options
By Steven Smith
Senior Columnist
1/5/2007 3:33 PM EST
URL: http://www.thestreet.com/markets/activetraderupdate/10331012.html
This column was originally published on RealMoney on Jan. 5 at 11:03 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.
While it may not receive the same amount of coverage as the investment-banking league tables, the Options Clearing Corp.'s year-end tally of volume and exchange market share is widely anticipated within the options industry. According to the numbers, 2006 was another banner year, with total options volume hitting a record 2.02 billion contracts. That's a 35% increase over 2005 and marks the fourth consecutive year of 30%-plus volume growth.
Finding Common Ground
Once again, the big drivers include the increasing role of hedge funds, which now make up nearly 25% of trading volume in both equities and options, and the adoption by traditional mutual funds of options as a tool for generating income and reducing risk. This is most evident in the growth of covered-call and buy-write funds, which have raised some $100 billion over the past two years.
In addition, there has been a trickle-down effect, as retail investors also embrace options for money management rather than pure speculation. In fact, a recent survey by Schwab (SCHW) of 2,000 of its option clients revealed that more than half use options for income generation and some 46% are using options as part of their retirement-planning portfolio.
Thanks to entry into options by mainstream brokers such as Schwab, E*Trade (ET) and OptionsXpress (OXPS) , which have all emphasized educational and trading tools, options are slowly but finally shedding their "too risky" and "too complicated" labels. The steep drop in commission rates has also been instrumental to overcoming costly barriers to entry, as options-trading fees are now basically in line with equity transactions.
The continued growth of exchange-traded funds has provided an efficient vehicle for both professional money managers and self-directed traders to use options. ETFs such as the Spyder Trust (SPY) , the Nasdaq 100 Trust (QQQQ) and iShares Russell 2000 Index (IWM) are typically the most-active options, trading collectively an average of more than 350,000 contracts a day.
Slicing a Bigger Pie
While stock and commodity exchanges have been participating in a global consolidation, the options industry is now up to six separate exchanges. When the Nasdaq (NDAQ) enters the business later this year, it will be seven, thanks to an expanding pie that has allowed even the smallest exchanges to show growth. But a shift in market share and the fact that 30% annualized growth cannot continue indefinitely might finally lead to some mergers in 2007.
The main battle is still between the Chicago Board Options Exchange (CBOE) and the International Securities Exchange (ISE) , which together make up more than a 60% market share.
But the big surprise is how well the CBOE has rebounded over the past two years. It had its world turned upside down when the ISE launched the first all-electronic exchange in 2001, and it saw its market share slip from nearly 70% to 25%. However, the CBOE has regrouped, refocused and revamped its exchange to include a hybrid and remote electronic trading and has been rewarded by having its market share increase to 33% from 31% over the past year. In its favor is its stranglehold on S&P 500 and other index options.
The ISE has seen its market share slip fractionally to 29.19%, even though it still garners 32% of all equity option volume. The CBOE is preparing for an initial public offering sometime this year, and having access to fresh capital and a tradable currency will only make it a more formidable force. And much like the Chicago Board of Trade (BOT) (from which it was spawned) is now merging with its longtime bitter rival Chicago Mercantile Exchange (CME) , the CBOE might then be in a position to pursue what is now an equally unfathomable an alliance or merger.
The biggest winner on a percentage basis was the Philadelphia Stock Exchange (PHLX), which saw its market share increase to 14.05% in 2006 from 10.46% in 2005. This was mainly a result of the PHLX getting an electronic platform in place and being able not only to compete but also to leverage its being the home of some tech indices, including the SOX.
This stands in contrast to the American Stock Exchange (Amex), which squandered its exclusive listings on ETFs and many of the largest energy issues and saw its market share decline to 9.98% from 13.85%. The exchange has finally added electronic trading to its open outcry, but it will be hard pressed to regain market share. However, seat prices have gained some 30% to $300,000 over the past year, mainly on hopes of a merger.
Its most likely partner would be the Boston Options Exchange (BOX), which became the second all-electronic exchange when it launched in 2004. Unfortunately, since then, its market share has hovered just above 5% and showed some slippage last year. But the BOX is well financed, as some of the biggest investment banks and market makers like UBS, J.P. Morgan (JPM) and Interactive Brokers were founding equity partners, so it has a built-in liquidity base and the wherewithal to expand or finance a purchase of a regional exchange.
The dark horse is Arca, which is now owned by the New York Stock Exchange (NYX) . Arca's market share has held steady at a respectable 11% over the past two years. But since its initial public offering last March, the NYSE has made no bones about wanting to re-enter and grow its derivatives business. As the NYSE's proposed merger with Euronext is proceeding, I expect that will give it a global presence to push for combining options and equities on one seamless platform.
Through all this, the big winners continue to be customers, both professional and retail, who are enjoying an unprecedented decline in fees and an increase in access to information and trading tools. Enjoy it while it lasts.
Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.
expat7
17 years ago
Electronic Equity Options Trading to Boom in 2007
http://www.financialnews-us.com/?page=ushome&contentid=1046784127
Jennifer McCandless
21 Dec 2006
Electronic equity options trading is expected to surge in the new year as new technologies are rolled out - although options make up a minority of electronic trades, volumes have more than doubled in recent years.
Related Stories
According to a survey from Financial Insights and sponsored by Bank of America, automated options trading has gained a stronger foothold in the market. Of the 30 US buy-side firms surveyed, all expect to maintain or increase their equity options trading in the upcoming year.
Of those who responded to the survey, 61% said they traded some portion of their options holdings electronically, compared with just 39% who rely solely on the telephone to make trades.
Respondents also said the two most desired features of any electronic trading platform are the ability to execute multi-leg orders and smart-order routing capability.
"There are nascent technologies being developed that could do for options trading what algorithms did for equities. The survey suggests that options desks are beginning to embrace these new technologies," said Dean Curnutt, head of institutional equity derivative sales for Bank of America.
The survey found equity options account for a minority of total electronic trades, with six in 10 respondents having less than 10% of their assets invested in equity derivatives.
"The survey results suggest that growing buy-side interest in options as an asset class has increased both trading volume and demand for execution quality. With volume having more than doubled in the past five years, options markets are finding faster, more cost-efficient methods of execution," said David Cox, chief research officer at Financial Insights.
Smaller firms, typically those with less than $500m (€380m) in assets, are using automated equity options trading more often than their larger counterparts, mainly because smaller firms, especially hedge funds, tend to have fewer traders.
expat7
17 years ago
It's Nice That the CBOE Uses OptionsXpress' Virtual Trading Platform:
http://www.cboe.com/tradtool/virtualtrade.aspx
The Chicago Board Options Exchange made the agreement with
'otionsXpress' last July.
CBOE(R) Adds optionsXpress'(R) Virtual Trading Platform to the Internet's Most Visited Options Site
excerpts:
optionsXpress Holdings, Inc. and the Chicago Board Options Exchange(R), Incorporated (CBOE) today announced an agreement to offer optionsXpress' comprehensive virtual trading platform to the approximately one million investors who utilize the Exchange's award-winning website, CBOE.com, each month.
"There is no better way to learn than through hands-on experience, and the optionsXpress virtual trading platform is an invaluable tool for putting theory to practice and testing investing strategies," said CBOE Executive Vice President of Business Development, Edward Provost. "This state-of-the-art simulated trading system significantly enhances the learning experience and takes CBOE's investor education offerings to a new level."
About the Chicago Board Options Exchange
CBOE, the world's largest options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, visit the CBOE website at: http://www.cboe.com /
About optionsXpress Holdings, Inc.
optionsXpress Holdings, Inc. provides innovative securities brokerage products and services for investor education, strategy evaluation and trade execution. Through its subsidiaries optionsXpress, Inc., an online brokerage, and brokersXpress, LLC, an online broker dealer for investment representatives and advisors, the company offers a wide range of investor tools, outstanding customer service via Live Help chat service and competitive commissions. optionsXpress has been named the top online securities brokerage by Kiplinger's Personal Finance (2006) and by Barron's in its last four annual surveys (2003 to 2006).
http://www.wtol.com/Global/story.asp?S=5165868
expat7
17 years ago
SEC Approval of New Margin Rules Good for Options Trading:
SEC Approves New Margin Rules for Stocks, Derivatives (Update1)
By Edgar Ortega
Dec. 13 (Bloomberg) -- The U.S. Securities and Exchange Commission approved rules that may allow institutional investors to put up less collateral when buying stocks on margin and trading derivative contracts.
Regulators expanded a year-old test program that sets collateral requirements based on the potential loss for an entire portfolio of securities, instead of by individual trades. So- called portfolio margining is already in effect in Europe and Asia, as well as for futures contacts traded on U.S. exchanges.
The Chicago Board Options Exchange and the New York Stock Exchange, the largest options and equity markets in the U.S., proposed the new rules. The exchanges acted in part on suggestions from securities firms including Goldman Sachs Group Inc. and Morgan Stanley, two of Wall Street's biggest margin lenders to hedge funds.
``This is the biggest change in margin rules in 40 years and the biggest change for hedge funds and prime brokerages since you had them develop in the early 1990s,'' said Douglas Engmann, a managing director at Fimat USA, a unit of Paris-based Societe Generale. ``If you look at typical hedge strategies used in options and equities, you will see margin requirements going down 70 or 80 percent, and in some cases 90 percent.''
Margin requirements now would be equal to the maximum potential loss on a portfolio based on an increase or decline of as much as 15 percent in the value of each investment held. Federal Reserve rules previously required that investors put up at least 50 percent of the market value of each security.
Previous Limits
The SEC formerly limited the use of portfolio margining to a small set of securities, including equity-index options and exchange-traded funds. The new rules, which will take effect April 2, expand the program to stocks, equity options, futures contracts tied to a stock and some derivatives traded between brokerages, the CBOE said.
Equity investors often buy or sell option contracts to hedge against stock declines or as speculative investments that can boost returns.
The new rules make ``the U.S. equity markets much more competitive in a world where the lines continue to blur between product classes, where cross-border trading is common, and where capital moves quickly to the most efficient markets,'' CBOE (Chicago Board Options Exchange) Chairman William Brodsky said in a statement today. ``The benefits to customers from these changes are profound and will revolutionize our marketplace.''
Fimat's Experience
Fimat was the only broker approved to offer clients a full range of portfolio-margining services under the SEC's test program. One customer's margin requirement fell to $80 million from $600 million because so many of its investments were hedged, limiting the overall risk, Engmann said.
``While the previous rules served us well over many years, this important modernization incorporates recent advances in hedging strategies between futures, options and stocks,'' Grace Vogel, head of member-firm regulation at the NYSE said in an e- mailed statement.
Derivatives are contracts whose value is derived from a security or another asset. The derivatives approved for inclusion in portfolio margining include forward and swap contracts, as well as equity-index options with different expiration dates than what's available on exchange-traded contracts, according to a Sept. 13 NYSE filing with the SEC.
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- 12/13/06 - Dow Jones News Service - OPTIONS REPORT: New Margin Rules Affect Options Traders
OPTIONS REPORT: New Margin Rules Affect Options Traders
(Mohammed Hadi)
NEW YORK (Dow Jones)--In a move that is sure to create a splash in the options industry, the Securities and Exchange Commission has approved long-awaited changes to the way brokers can assess margin requirements.
"The new rules better reflect the risk in a portfolio," explained Steve Sanders, managing director of business development and marketing for Interactive Brokers Group.
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