Wednesday's Headlines: Options trading is like crack for brokerages
Options trading is like crack for brokerages. Or so says one securities attorney who believes the trend of brokerages like TD Ameritrade, Schwab, Fidelity, E*Trade and Scottrade toward trading outside of traditional stocks as against consumer interest, according to Investment News today.
Indeed, options trading is up a whopping 22 percent since October. The lawyer reported a surge of calls related to options trading in the past six months. "They're easy money, huge commissions and they tend to be extremely addictive for those who actually trade them," the article states.
Those commissions mean there's an economic incentive for brokers to entice clients to add options to their portfolios even though they can be risky and complicated... Options traders at Schwab have three times the amount of assets held at the company, six times the trading activity and 25 percent longer tenure compared with its average retail client.
Goldman is focusing on the less risky business of providing start-up money to hedge fund managers. [WSJ]
Finra lists names in statement disclosing Reg D enforcement actions, including Securities America. [Investment News]
Brazil's Banco Prosper and the Brazilian unit of Portugal's Banif SGPS are for sale. [Bloomberg]
Citi's deals with very wealthy Saudis have become burdens. [Businessweek]
Wall Street's workforce shrank by 2.5 percent. [WSJ]
BofA, Goldman and Citi saw their credit ratings cut from A to A-. [Businessweek]
MF Global's trustee will return as much as $2.1 billion to commodity customers. [Bloomberg]
Chelsea Clinton's husband will launch a hedge fund with two other former Goldman traders. [Reuters]
Former Asia head of Highbridge Capital Management Carl Huttenlocher's newly-founded Myriad Asset Management is planning to raise $2 billion for his new hedge fund. [Hedge Fund Net]
The new Wells Fargo Hedge Fund Manager Index measures hedge fund performance in real time. [Hedge Fund Net]