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New NYSE Options Pricing Pyramid Promotes Derivative Driven Market Melt-Up

Last New NYSE Options Pricing Pyramid Promotes Derivative Driven Market Melt-Up

August Orders For Durable Goods Drop to 7-Month Low

Courtesy of Chopshop at Fibozachi

Monday, Tyler Durden of Zero Hedge noted that the ISE had instituted special rebates for specific option liquidity providers in an attempt to bolster volumes and capture market share ~ "Let The Churn in QQQQ, Citi and Bank of America Hit Infinity…."  And the NYSE didn’t miss a beat; responding in kind with an extremely aggressive option pyramid pricing scheme.

NYSE Euronext’s U.S. Options Exchanges Announce New Pricing and Fee

New York, April 5, 2010 – NYSE Euronext’s U.S. options exchanges, NYSE Arca and NYSE Amex options, announced new rate changes for each market center that became effective April 1, 2010.   NYSE Arca options is introducing higher posting credits in premium tier products, tiered customer rebates in non-premium penny pilot issues and a reduction in the LMM rights fees. NYSE Amex options is introducing a reduced electronic broker dealer rate, a reduced electronic firm rate, tiered pricing for firm proprietary manual trades and the implementation of the Professional Customer designation.

In an effort to dredge a moat around market share for Amex & Arca, the NYSE has implemented a new Penny Pilot "Premium Tier" pricing schedule for the options of 15 specific issues.  Liquidity providers transacting serious size across these anointed sticker symbols … AAPL, BAC, C, DIA, EEM, FAZ, GDX, GE, GLD, IWM, QQQQ, SPY, UNG, USO & XLF … will (yet again) enjoy additional rebates as the NYSE attempts to [1] stave off competition from other options exchanges and [2] further buoy an anemic equity market, which continues to plow forward on phantom volume at 3 am on Sunday night (like the accelerator of a Toyota Camry beneath a sleep-driving Ambien junkie approaching a raised drawbridge with both eyes closed shut, one hand on the wheel and the other on his sixth bear claw).

NYSE Arca Fee Changes

NYSE Arca Fee Changes

 

NYSE Amex Fee Changes 

NYSE Arca Premium Tier Fees

For a complete explanation of the new NYSE Arca options rates and fees:  http://www.nyse.com/futuresoptions/nysearcaoptions/1159439190411.html

For a complete explanation of the new NYSE Amex options rates and fees:  http://www.nyse.com/futuresoptions/nyseamex/1228420271739.html

An explanatory webinar with Q&A was scheduled for 4:30 – 5:30 pm EST on April 6th: NYSE Options Explains New Fee Structure and Complex Order Book

Once released, we will provide a link to the recorded session.

While seemingly everyone continues to sing "Oh where, oh where has NYSE volume gone?  Oh where, oh where can it be?" … derivatives markets across the globe continue to belt out record volumes, like Aretha Franklin with her finger caught in a cookie jar.  And while seemingly everyone remains fixated on shrinking equity volumes, seemingly every exchange group remains fixated on expanding the breadth of their derivative offerings (options, futures and futures options).

New productsNew marketplacesLonger trading hours.  Fractional reserve leverage, fictionally collateralized in the event of extreme(-ly cyclical, recurrent) dislocation.  Structured chaos, neatly packaged for professional speculation alongside power law PowerPoint slides and presented to the public under the pretext of prudent portfolio management.  And you thought fictional reserve ‘backed’ leverage was reserved for mark-to-make-believe FASB 157 bullshit bank holdings and silver market short-side chicanery Hah!  As if anyone is going to have their contracts settled when financial markets finish climbing their spiral staircases in search of the highest ledges possible to LEAP from …. 

As digital cash flows across 21st century capital markets with the speed of a Mahwah server farm fart, increasingly inter-connected exchanges continue to roll out new derivative product offerings.  With so many market participants discussing inflation expectations, deflationary data and central bank exit strategies, the NYSE Liffe U.S. stepped up to the plate today by pitching new interest rate futures contracts and futures options to be launched Q3 / Q4 2010 on the Eurodollar and 2-year, 5-year, 10-year & 30-year US Treasuries.

 Is volume merely hiding in plain sight, dark pools and structured notes ?

As 21st century capital markets continue to evolve, ‘volume’ will continue to progressively migrate away from U.S. equities toward derivatives and foreign bourses.  Between the obvious overhang of CFTC position limits and the cross-pollination of inter-continental routing capabilities, the Chaebol-ization of supra-national financial exchanges appears to be reaching critical mass.

Supra-national exchanges haven’t forsaken America or equities.  They are merely employing Wayne Gretzky’s approach to offense and skating towards where the puck is going to be.  So, I’ll ask you, rather tongue-in-cheek: where is volume going to be?

 " A speculator is a man who observes the future, and acts before it occurs "  ~  Bernard Baruch

 


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