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My observations are that when there is a need in the market place the
vehicle is brought about.. I reflect back on when futures started trading
yrs ago on electricity.. It took a while before it made sense... with the
increase of use of electricity with technology, internet etc........ and
fact that we have not built new plants in yrs that it made sense. The pros
have been too bullish .. now need for "pure hedge" is here... being short S
& P or NAZ or MID Cap index is not a pure hedge..... and IRS has changed
tax laws making going short vs box a possible problem not allowing you to
use this as vehicle to hedge.... IRS didn't like the fact that you use to be
able to go short vs box and push a gain from one yr into next year..so now
you can't.. so really there is a big need for a "PURE" hedge and being able
to have futures on main listed stocks that the major institutions trade in
is needed.. therefore.. it most probably will be made available .. I had
neard November but had heard of possible delays... These are not the types
of derivatives that have necessarily caused problems with melt downs in
past... yes, LTC by selling tech stocks did bring in peak March 2000
Remember Abbey's famous call that tech was overvalued?? She made that
announcement the Fri. before the sell off started.. and you don't think GS
was part of the unwinding of that hedge fund?..... makes her call look not
so brillant if you look at it in that vein???) Many of the derivatives that
have gotten hedge funds in trouble have been the non listed type .. non U.S.
futures type.... like exotic foreign debt types from what I understand.. the
result, unfortunately is that they are forced to sell their more liquid
securities which then ends up creating melt downs in our markets...
----- Original Message -----
From: "Earl Adamy" <eadamy@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Saturday, September 08, 2001 10:06 AM
Subject: Re: [RT] Markets: Stock Index Futures and regulation
> Yes, that was a typo, I was referring to the introduction of single stock
> futures. I do not disagree with your observations as they relate to
current
> market conditions. My comments are directed toward conditions existing in
a
> major cyclical bear market of the type and scope we have not seen for
nearly
> a century. Should those conditions emerge, I believe that the enthusiasm
> for, and regulation of, derivatives will change markedly.
>
> I should, perhaps, add a few caveats regarding my opinions. I am
personally
> extremely bearish in my view of the equity markets for the next decade.
This
> is reflected in the fact that my investments have been 100% in long term
> treasuries and bond funds for well over a year now and I am even now
> completing the process of switching bond funds (most of which contain
GSE's
> and corporates) for treasuries. Futures trading is another matter, I don't
> care if the market goes up or down as long as it does one or the other,
> preferably in a trending manner. Finally, my investment hat is in no way
> married to the bear case should strong evidence emerge to the contrary,
> however I am in no way interested in trying to time my investments to
catch
> the absolute bottom in this market.
>
> Earl
>
> ----- Original Message -----
> From: <I4Lothian@xxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Saturday, September 08, 2001 7:32 AM
> Subject: Re: [RT] Markets: Stock Index Futures and regulation
>
>
> > Earl:
> >
> > With all due respect, stock "index" futures have been a huge success. I
> > believe you wish to be skeptical of single stock futures. And given
then
> > attendance and interest shown by the futures and securities industry
this
> > week at a seminar in Chicago by the Futures Industry Association, I beg
to
> > differ with your conclusion.
> >
> > Single Stock Futures, in my opinion, will be the single largest new
> product
> > we have ever seen introduced. There will be three exchanges in the U.S.
> > offering them, a very aggressive and with it Nasdaq-LIFFE, the yet to be
> > named but formidable Chicago Joint Venture of the CBOE/CME/CBOT and the
> just
> > announced AMEX. What product have we had launched by three exchanges
all
> at
> > the same time?
> >
> > Keep in mind that the banks wanted nothing to do with the CBOT when they
> > launched the bonds. Six months later they were knocking down the doors
> for
> > memberships and floor space. Look at the influence of stock volumes
from
> > tine introduction of options trading in the 1970s and stock index
futures
> in
> > the 1980s. Volume took off and never looked back. Nearly 1/3 of the
> weekly
> > NYSE volume comes from program trading alone.
> >
> > The new single stock futures will offer tremendous capital and
operational
> > efficiencies to some of the largest players in the industry. No more
> waiting
> > t+3 for stocks to settle. Same day settlement. Marked to the market at
> the
> > same clearing house, the OCC, for all the single stock futures and
options
> > trading. Same clearing house for settlement and delivery of options and
> > futures contracts.
> >
> > Take then that the biggest corporate names in the world are U.S.
companies
> > that can be traded as SSF. Take then that the U.S. capital markets are
> the
> > best in the world in terms of legal certainty, regulation and fairness.
> >
> > These are all parts of the equation why single stock futures will work.
> Will
> > they take volume from stocks? Yes and no. That same argument was made
> when
> > options and indexes were introduced and they only added to the liquidity
> of
> > the market. With the movement of time we have been able to introduce
> better
> > and better contracts to specifically meet the needs of traders, hedgers
> and
> > investors. We no longer need to run into gold or soybeans to hedge our
> > inflation or deflation risk. These tools will only make what people
want
> to
> > do, and do, more efficient.
> >
> > And I for one and going to do my best to make sure they will be
> successful.
> > Part of the reason I write my daily industry newsletter is to help
people
> in
> > the futures and securities industry manage the changes all around us.
Just
> in
> > the last week I have had a President and CEO of a U.S. exchange sign up
> for
> > the letter. A Senior Vice President of one of the Chicago exchanges
> signed
> > up. A large division of a clearing FCM will shortly be announcing they
> are
> > going to license my letter to offer to their clients and to attract new
> > clients. They will be offering it at a single stock futures newsletter.
> >
> > So, all the signs I see say that these new products are going to work.
> And
> > as the Nasdaq-LIFFE said, they are going to "make" them work. I have
> never
> > seen an exchange so confident, so focused on the good of the customer,
so
> > focused on offering a level playing field for all participants as the
> > Nasdaq-LIFFE. And I believe them.
> >
> > Regards,
> >
> > John J. Lothian
> >
> > Disclosure: Futures trading involves financial risk, lots of it! John
J.
> > Lothian is the President of the Electronic Trading Division of The Price
> > Futures Group, Inc., an Introducing Broker clearing Man Financial Inc.
> >
> >
> >
> >
> > In a message dated 9/8/01 7:17:41 AM Central Daylight Time,
> eadamy@xxxxxxxxxx
> > writes:
> >
> > << I doubt that stock index futures are going to get very far off the
> ground.
> > Essentially, stock index futures (low margin and high leverage) are the
> last
> > nail in the coffin of post-29 market regulation. I believe that we are
in
> > the early stages of a major cyclical bear market and I expect to see
> stock
> > market volumes diminish to levels not seen in decades as a byproduct of
> > severe price declines ... the pendulum always swings from one extreme
to
> the
> > other. I further expect that liquidity in the futures and options
markets
> > will suffer.
> >
> > I find it especially ironic that the post-29 market and banking
> regulations
> > were removed just as the markets moved to such excess. The fact that
> these
> > regulations were seen to be inhibiting the upward move of the markets
> should
> > have been a warning rather than a reason to remove the regulations.
> >
> > Earl >>
> >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> >
> >
> >
> > Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> >
> >
> >
>
>
>
> To unsubscribe from this group, send an email to:
> realtraders-unsubscribe@xxxxxxxxxxxxxxx
>
>
>
> Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
>
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