U.S. options market operators have agreed in recent months on the need for new automatic trading halts when stock options prices suddenly surge or plunge, similar to the "Limit Up/Limit Down" rules, fully implemented this past May.
Sources tell Reuters that the first part of the plan, which creates a uniform set of rules on how to deal with erroneous trades, is soon to be filed with regulators.
"We are constructive on Nasdaq OMX's (NDAQ +0.3%) progress over many years in creating a lower-risk, high-recurring revenue business model with solid execution, especially in cost management," says analyst Brian Bedell, upgrading to a Buy with price target lifted to $49 from $46. "We see the story as increasingly gaining traction among investors and improving NDAQ's P/E from subdued levels."
Also boosted to a Buy is IntercontinentalExchange (ICE +1.5%), with price target lifted to $219 from $202.
CME Group (CME +1.5%), however, is Bedell's top pick in the exchange sector, and he lifts the price target to $95.
"The maker fee is an incentive ... for people to provide liquidity into the market," says Nasdaq OMX (NASDAQ:NDAQ) CEO Robert Greifeld, speaking on the sidelines of a congressional-sponsored roundtable about equity market reforms. "To be rewarded for that in some way I think is fair and legitimate."
However, he says, the $0.30 fee "was not designed by God," and notes it's been at that level for 10 years.
The so-called "maker-taker" model is receiving heightened scrutiny following the Michael Lewis book which questioned the practice of paying brokers an an incentive to boost liquidity, and the major exchanges are competing with market-makers like KCG Holdings for order flow, perhaps enticing brokers to send orders to where they get paid the most, instead of where their customers get the best execution.
ICE CEO Jeffrey Sprecher also advocated lower fees, but goes further in suggesting a ban on maker-taker pricing altogether.
The odd trades, traced to a trading firm's mistake, also affected dealing in Nabors (NBR), Lorillard (LO -1.3%), Marathon Petroleum (MPC -0.3%), Canadian Natural Resources (CNQ +0.3%), Nasdaq OMX (NDAQ -0.9%) and Caterpillar (CAT +0.9%), among others -- but those trades will be left standing.
The NYSE will bust AOL trades of $33.17 or below, while Nasdaq, Direct Edge and NYSE Arca will cancel those at $33.16 and below.
Nasdaq OMX (NDAQ) has appointed Carlyle (CG) CFO Adena Friedman as a co-President in a move that the WSJ reports makes her the leading candidate to replace Robert Greifeld as CEO of the exchange operator when he departs. Nasdaq has been working on a succession plan since last year.
Friedman, who will become President of Global Corporate & Information Technology solutions, returns to the exchange operator after leaving for Carlyle in 2011 following an initial 17-year stint at Nasdaq.
The company also named Hans-Ole Jochumsen as a co-president with Friedman. Jochumsen will head the firm's Global Trading & Market Services.
Private equity firms have been aiming to reach a new group of investors, and KKR is making it happen, teaming with Nasdaq OMX (NDAQ) to form an exchange in which investors can sell a portion of their stakes in KKR buyout funds. KKR is likely to file regulatory paperwork as soon as this month, reports the WSJ.
The institutions and wealthy individuals who invest in P-E buyout funds (with minimums of millions of dollars required) typically must agree to have their money tied up for a decade or more, but this deal will allow them to sell smaller investors slices for as little as tens of thousands of dollars - the investors can cash out earlier than usual and the P-E firms get a far broader range of investors.
The already-public listings of P-E firms on major exchanges - with BX, CG, APO, FIG for instance, joining KKR - offer mom and pop investors shares in the parent companies rather than the individual buyout funds.