John Lothian Newsletter: Traders boycott CME Eurodollar options; Clearing houses face capital stress tests; Senators defend CFTC in court over position limits

Apr 16, 2012

Independent traders at CME Group put hands in pockets on Friday and refused to trade Eurodollar futures in protest against private block trades. New global clearing house rules from IOSCO prescribe large capital buffers and stress tests. In the USA, senators have filed a brief in support of the CFTC’s efforts to impose position limits in the oil market. SIX Group in Switzerland says they’ve got a billion Swiss francs in a suitcase and are looking for something good to buy. In the top box, Nicole Rohr provides commentary from last week’s gold conference in New York, and an interview with Juan Carlos Artigas of the World Gold Council.

Observations – Statistics – Commentary

Traders boycott CME Eurodollar options
By Tom Polansek and Ann Saphir – Reuters
Independent traders boycotted pit trading of CME Group‘s options on Eurodollar futures on Friday in protest against large, privately negotiated trades that they say put them at a disadvantage.

More articles on this story from:


Matthew Leising – Bloomberg

Hal Weitzman – Financial Times


Gold’s Melting Pot
By Nicole V. Rohr – JLN Metals editor

If ever there was an example of the diversity of gold, this week’s Initiatives in Art and Culture conference: Gold: Vision, Value, and Values in New York was it.

In IAC president and founder Lisa Koenigsberg’s opening remarks, she mentioned the speaker line-up which included professionals from investment and research, mining, as well as historians, goldsmiths and jewelers.

As Thursday’s program progressed, William R. Williams, vice president of environment at Barrick Gold Corporation covered his company’s sustainability and social responsibility projects as the world’s largest gold producer. He detailed efforts such as Barrick’s involvement with a community water pipeline (47 km long) at the Bulyanhulu mine in Tanzania and his responsibility to ensure that these projects remain in operation and that the site is restored, even after the mine is shut down. This process known as reclamation, can take anywhere from one to 10 years.

From the investment side, Juan Carlos Artigas, global head of investment research at the World Gold Council (interview below), and CPM Group founder Jeffrey Christian spoke on the macro-economic drivers and investment options.

And third-generation jeweler, Benjamin Zucker, wove a story about gold jewelry transcending the daily talk of gold prices, inflation and production of the precious metal. He spoke about a ring he bought at a Sotheby’s sale when he was young, which opened up at the top. Inside was Hebrew text reading, “Good luck.”

“I had such tremendous love for an inanimate object,” Zucker said. “Gold… it’s so beyond, in my opinion, its use as a source of value. It’s quite extraordinary.”

What other commodity brings together a crowd like this? Extraordinary indeed.


Five Minutes with Juan Carlos Artigas
Juan Carlos Artigas is the global head of investment research at the World Gold Council in New York, where he is in charge of writing strategic and research notes that put gold in the context of global financial markets. He spoke at the Initiatives in Art and Culture gold conference about global and individual diversification of investments using gold and answered a few questions from JLN Metals editor Nicole V. Rohr.

Q: How has global gold supply and demand shifted?

A: If you looked at demand flow and supply flows a couple of years ago, you would have seen three sources of demand and three sources of supply. On the demand side, you would have had jewelry, investment and technology. On the supply side, you would have had mine production, recycling activities and central banks. As a whole, so collectively, central banks used to be a net source of supply. That trend started to shift little by little, so it was not a sudden move and suddenly central banks were buying. It was a graduate transformation, and over the past couple of years… central banks as a whole have become a net source of demand. When you look at that picture today, you see four sources of demand and two sources of supply.

Central banks have turned from net sellers into net buyers. The rationale is the same: diversification. When we saw selling in gold through central banks, it was primarily driven by European central banks diversifying away from gold. What we are seeing now is emerging markets’ central banks diversifying in part away from the dollar by including gold in their foreign reserves. And we expect that trend to be here in the sense of diversification and managing the reserves, and we have seen this structural shift in their behavior.

For the rest of the interview, visit MarketsWiki at


CBOE Holdings Announces Appointment of Alexandra Albright as Chief Compliance Officer
CBOE Holdings, Inc. today announced that Alexandra M. Albright has been named to the newly created role of Chief Compliance Officer for its affiliated exchanges — the Chicago Board Options Exchange, C2 Options Exchange, CBOE Futures Exchange and CBOE Stock Exchange. Albright, who will assume the CCO position on April 23, will report to President and COO Edward T. Tilly and to the regulatory oversight committees of the exchanges.


CQG $1.8 Million Gift to University of Dayton Trading Center Puts State-of-the-Art Software in Finance Students’ Hands
The University of Dayton announced today a gift valued at $1.8 million to the School of Business Administration to enhance student learning in the fast-growing field of alternative investments.


OTC clearing: Does the market need a mandate at all?
The move to clearing of standardised over-the-counter derivatives represents the most significant overhaul of the industry since the advent of electronic trading. For clearing houses it is the largest opportunity to expand their businesses in history. However, the mandate is fraught with challenges that must be addressed if the market is to function without disruption. In the first of this series, William Mitting looks at some of the key questions in the market concerning the implementation of the OTC clearing mandate.


The changing relationship between trading and compliance
Matt Grinnell, Fidessa – FOW
Compliance on the buy-side is changing. As hedge funds become increasingly regulated, the question of how best to achieve effective and efficient compliance lurks ominously ahead. This is a challenge that institutional asset managers have had to address for several years, and their path to compliance is strewn with stories of both overwhelming success and debilitating failure. As a result, these seasoned veterans have plenty of examples and experience to offer hedge funds when it comes to developing compliance best practices.


Chicago Board Options Exchange plots move to Secaucus
By Ed Beeson/The Star-Ledger
Could it become the New Jersey Board Options Exchange? The largest and oldest venue for trading financial instruments known as options is moving the heart and soul of its operations to the Garden State later this year.


Gorman’s Lonely Quest to Save Wall Street’s Honor
William D. Cohan – Bloomberg
There has been a noticeable dearth of leadership on Wall Street after the financial crisis. Where are the senior executives willing to explain to the American people how and why the financial industry’s behavior got our economy into so much trouble and why that behavior needs to change if there is to be any hope of restoring the public’s confidence in our capital markets? Without that restored faith, you can pretty much forget about any economic recovery anytime soon.


Brokers’ best ideas focus on short term
By Telis Demos in New York – Financial Times
Brokers with a short-term, bearish bent provided the best trading ideas to fund managers last year according to a new survey, as clients of brokers and banks seek more precise measurements of the value of the advice they receive.


MarketsWiki Page of the Day
Simon Rostron


MarketsWiki Recent Updates


Alexandra Albright; Juan Carlos Artigas; Simon Rostron

Companies, Organizations and Groups

Rosenblatt Securities Inc.; IOMA; Rosenthal Collins Group, LLC


Upcoming Events; Exchange traded note


21,989,107 pages viewed, 6,804 articles, 139,146 edits
MarketsWiki Statistics

Lead Stories

Clearing houses face capital stress tests
By Brooke Masters and Philip Stafford in London – Financial Times
Clearing houses and other central counterparties that handle complex securities transactions would be required to maintain enough capital and liquidity to withstand the simultaneous collapse of their two largest users under new global rules announced by securities and payments regulators on Monday.

Senators defend CFTC in court over position limits
Reuters via Yahoo! News
U.S. Senator Carl Levin and 18 other senators have filed a friend-of-the-court brief to help the U.S. commodities regulator defend its rules on position limits in oil markets aimed at preventing excessive speculation.

ECB member calls for non-EU contributions to IMF
Market Watch
Jorg Asmussen, Germany’s representative on the European Central Bank’s six-member executive board, called on non-European members of the International Monetary Fund to put up more money for use by the IMF in crisis situations.

Israeli Bank Sues Wall Street Giants
The Forward
Israel’s Bank Hapoalim has filed a massive $720 million suit against Bank of America, Merrill Lynch and Countrywide over its losses in the U.S. subprime crisis, alleging that the U.S. institutions misled and defrauded it. Click here for the rest of the article…

MF Global Executive Publicly Touted Company’s Customer Safeguards
By Sarah N. Lynch and Aruna Viswanatha – Reuters
MF Global’s assistant treasurer, now a key figure in the mystery over the bankrupt firm’s missing customer money, praised how well customer safeguards work one year before the firm’s collapse.

Longer Sentences Sought for Insider Trading
New Amendments Voted on Friday Target Financial Professionals; Defense Lawyers Argue Penalties Already are Plenty Severe
The U.S. Sentencing Commission, with encouragement from the Justice Department, is recommending that federal judges impose greater criminal penalties on Wall Street professionals convicted of insider trading.

Environmental Trading News

EU carbon trading system needs major overhaul: Deutsche Bank
Platts News
The EU Emissions Trading System needs fundamental reform if it is to be capable of sending a long-term price signal for low carbon energy investment, Deutsche Bank said in a report Friday.

**JK – Nice work from Deutsche Bank on this issue.

EU’s Emission’s Trading System Would Beat WTO Challenge
The European Union’s plan to impose carbon-emissions curbs on international airlines would probably stand up to any challenge at the World Trade Organization, according to a study by a University of Cambridge researcher.

**JK – It’ll be interesting to see China, of all countries, complaining to the WTO about the EU ETS.

EU states say renewable goal not fair on other fuels
Renewable energy does not have more right to an EU target than other fuels, according to pro-nuclear states and coal-intensive Poland, as debate heats up over updating a 2020 goal to have a 20 percent share of green fuel in the energy mix.

**RKB – Nothing much we don’t already know about drafting of Energy 2050 Roadmap. For their part, Britain and France calling for “technology neutral” approach.

For more environmental trading news, subscribe to the Environmental Markets version of the John Lothian Newsletter edited by Jim Kharouf.
Visit http://www.jlnenvironmental.comto subscribe.

Exchange & ECN News

SIX Group says on the prowl for buys- newspaper
Swiss stock exchange operator SIX group has up to 1 billion Swiss francs ($1.1 billion) in its war chest for takeovers and is looking at many possible targets, its chief executive told a Sunday newspaper.

Turquoise Launches New Competitive Spanish Pricing Promotion
Turquoise Global Holding Limited (Turquoise) is introducing a new pricing promotion for the most liquid Spanish stocks. Effective from 1 May 2012, the new promotion is designed in response to customer demand, and will be in place for six months.

Nasdaq’s Plan to Catch a Bid
Of the more than 1,400 exchange-traded products listed in the U.S., the Nasdaq Stock Market is home to just 100. A recent Nasdaq proposal for tightening spreads in thinly-traded ETPs, though, could revive competition for ETP listings, currently dominated by NYSE Arca.

Bulltick ‘Erroneous’ Trades Voided by Mexico Bourse After Plunge
Mexican stock exchange officials canceled a series of erroneous trades by Bulltick Capital Markets that set off a plunge in the nation’s benchmark index during the last trading session.

Deutsche Boerse CFO: Well Positioned Despite Failed Merger -Report
Dow Jones
Germany’s stock exchange operator Deutsche Boerse AG is well positioned even after its failed merger with competitor NYSE Euronext (NYSE), Chief Financial Officer Gregor Pottmeyer told German newspaper Boersen-Zeitung in an interview published Saturday.

On 9 March 2012, LCH.Clearnet Group Limited (“LCH.Clearnet”) and London Stock Exchange Group plc (“LSEG”) announced a recommended cash offer for a majority stake in LCH.Clearnet.

NYSE Euronext Announces 2012 Annual Shareholder Meeting Date

FESE European Equity Market Report – March 2012 Figures

TOM MTF Statistics Week 15 2012

Warsaw Stock Exchange: Derivatives Market In March 2012

[CBOE] Continuing Education Firm Element Advisory

[CBOE] Operational Systems Settings on Volatility Index Product Settlement Days

Gold by Gold lists on NYSE Alternext

Swedish Financial Supervisory Authority – Finansinspektionen – Norwegian Acta Company Loses Its Authorisation

Banks, Brokers & Dark Pools

ABN Amro Shrinking to Shadow as Dutch Rue Pride of Nation Lost
When the curtain rises at the Royal Theater in The Hague, an actor playing former ABN Amro Holding NV Chief Executive Officer Rijkman Groenink, an avid hunter, drops a dead deer upon the stage.

Next wave of Merrill departures seen legacy BofA brokers
Reuters via Yahoo! News
Hundreds of legacy Bank of America brokers may form the next wave of departures from Merrill Lynch after many recently pocketed their retention bonuses, recruiters and former brokers say.

Banks urge Fed retreat on credit exposure
By Tom Braithwaite – Financial Times
Wall Street banks are resisting a Federal Reserve plan to limit their exposure to individual companies and governments, warning it will cut a combined $1.2tn from credit commitments at Goldman Sachs, JPMorgan Chase, Morgan Stanley, Bank of America and Citigroup.

Goodwin departs Jefferies to set up bank
By Andrew Edgecliffe-Johnson in New York – Financial Times
Jonnie Goodwin, one of London’s best-connected media dealmakers, has left US investment bank Jefferies, to set up Lepe Partners, an “independent merchant bank” focused on media and internet transactions.

Goldman Sachs Said to Raise $2.5 Billion in ICBC Sale
Goldman Sachs will sell shares at HK$5.05 each, said the people, who declined to be identified. Temasek Holdings Pte said today it will buy 3.55 billion ICBC shares from Goldman Sachs and hold 5.3 percent of the lender’s Hong Kong-listed stock after the purchase.

Goldman Sachs CEO gets $16.2 million pay package
Reuters via Yahoo! News
Goldman Sachs Group Inc Chief Executive Lloyd Blankfein’s compensation increased 14.5 percent to $16.2 million in 2011 despite a sharp decline in profits and share price during the year, leaving the bank open to more attacks on its pay policies.

UBS Canada unit reports ‘inadvertent’ trading
Reuters via Yahoo! News
UBS AG’s Canadian unit said it “inadvertently” acquired 1 million class A shares of Air Canada , increasing its ownership in the air-carrier beyond the 20 percent threshold permitted under Canadian law. The shares were bought as part of regular activity to facilitate client trading, UBS Securities Canada said in a statement

Deutsche Bank to decide on Guggenheim bid Tuesday
Market Watch
Deutsche Bank AG (DB) board members are expected to take a decision on the sale of its U.S. asset management operations Tuesday, people familiar with the matter told Dow Jones Newswires.

Barclays’ Tax Deals Face US Scrutiny
Barclays ‘ controversial tax planning business will come under fresh scrutiny in a U.S. court this week over whether a transaction designed by the bank cost the U.S. government more than $1 billion in lost tax receipts.

Barclays To Reduce CEO Diamond’s Pay – Report
Dow Jones
Barclays PLC (BCS) is to reduce Bob Diamond’s pay amid investor concerns over bonus and tax deals awarded to the chief executive, the Sunday Times reports, without citing sources.

High-ranking banker brothers raided Bank of America as they left for UBS and VTB Capital
New York Post
A pair of high-ranking banker brothers have hit Bank of America Merrill Lynch hard, by leaving and taking a team of trusted staff with them to foreign rivals UBS and VTB Capital.

Wells Fargo lands former UBS wealth adviser
Reuters via Yahoo! News
Wells Fargo & Company expanded its broker ranks in Colorado, adding a veteran adviser from UBS Wealth Management Americas to its Wells Fargo Advisors brokerage unit, the company said on Friday.

Goldman Sachs Declares Preferred Stock Dividends

Regulatory News

The SEC News Digest
The SEC News Digest provides daily information on recent Commission actions, including enforcement proceedings, rule filings, policy statements, and upcoming Commission meetings.

CSA and IIROC announce the implementation of a dark liquidity framework in Canada
The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) are implementing a new regulatory framework for the use of orders entered without pre-trade transparency (dark orders).

CFTC Revokes Registration Of Robert Wayne Mansell – Chicago Board Of Trade Floor Broker Pled Guilty To Felony Charge

SEC Shuts Down Ponzi Scheme Targeting Persian-Jewish Community in Los Angeles
The Securities and Exchange Commission today obtained an emergency court order to halt an ongoing Ponzi scheme that targeted members of the Persian-Jewish community in Los Angeles.

Lifestyle Trader Pty Ltd wound up on ASIC’s application

ASIC suspends Australian Performance Financial Planning Pty Ltd licence

Investments – Indexes – Managed Futures – Managed Funds

LCH.Clearnet to accept Ginnie Mae Mortgage Backed Securities as collateral for initial margin cover purposes
LCH.Clearnet Limited (LCH.Clearnet) is to accept Ginnie Mae Mortgage-Backed Securities (GNMA MBS) as part of its ongoing plans to broaden the range of acceptable initial margin collateral.

Kathleen Webb Named CalPERS New Chief Of Risk, Compliance And Ethics

United States Commodity Funds LLC Launches the United States Agriculture Index Fund (USAG)
United States Commodity Funds LLC, a sponsor of exchange traded commodity funds, listed for trading on the New York Stock Exchange Arca, a new exchange traded commodity index fund, United States Agriculture Index Fund, under the ticker “USAG.”

Ex-Wall Street bankers bring science to China’s rocky stock market
Reuters via Yahoo! News
Ex-Wall Street bankers are betting science can exploit opportunities in China’s often rumor-driven stock market, with some predicting the quant-driven fund industry to grow by as much as 10-fold to 100 billion yuan within a few short years.

Tiger Management backs Kjær for new fund
By Dan McCrum in New York – Financial Times
Julian Robertson’s Tiger Management is to back a new hedge fund run by Knut Kjær, the former head of Norway’s sovereign wealth fund.

Prime Brokerages Consolidate After ‘Big Bang’
Hedge funds are cutting back on the brokerage accounts they hold as the prime brokerage industry begins to consolidate more than four years after the Lehman Brothers bankruptcy blew the sector wide open.

Humbler London hedge funds shun swanky Mayfair
Reuters via Yahoo! News
London hedge funds are shunning their traditional heartland in Mayfair, the city’s most expensive office neighbourhood, pushed out by straitened financial circumstances and the desire to dump their racy image for something more businesslike.

Supply-side drives commodities again
By Jack Farchy – Financial Times
Is this the moment when commodity markets throw off the shackles of the macroeconomic outlook? For investors fretting about a Chinese slowdown, excited about the US recovery, or living in fear of a eurozone meltdown that may seem hard to imagine.

iShares’ Frontier Switcheroo

CNSX Markets Announces Agreement With Google To Provide Real-Time Market Data From The Canadian National Stock Exchange

Barclays Launches First Locally Listed Exchange Traded Notes on Toronto Stock Exchange

NASDAQ OMX Announces Index Changes

Texas Instruments Incorporated To Join The NASDAQ-100 Index Beginning April 23, 2012

Standard & Poor’s Announces Quarterly Review Of S&P/TSX Preferred Share Index And The S&P/TSX Venture Select Index

Technology News

MXF Trading leverages Orc Market Maker for agricultural options market making
Orc, a leading provider of technology and services for the global financial industry, announced today that MXF Trading, a Chicago-based proprietary trading firm, will use Orc Market Maker for options market making on CME agricultural products.

Reports Economic Calendar

USDA Today

CBOE Events Calendar

Economic Release Calendar
The Economic Release Calendar (PDF) is a schedule of government, academic and industry economic releases, provided as a service to CME customers.

Asia-Pacific News

CHINA MONEY-Currency speculation seen emerging after trading band move
By Lu Jianxin and Kazunori Takada
China’s milestone move to widen the yuan’s trading band will give banks and companies the most space to speculate on the currency since the country established its foreign exchange market in 1994.

U.S. Treasury says China yuan move helpful
Reuters via Yahoo! News
The U.S. Treasury Department said on Sunday that a wider yuan trading band could help reduce global trade imbalances if it allows more play for market forces.

China stocks czar faces battle to win back investor trust
Reuters via Yahoo! News
In little over six months as China’s top securities watchdog, Guo Shuqing has let loose a flurry of reforms targeting insider trading, market manipulation and dodgy disclosure that have hamstrung China’s stock markets even as its economy surges.

China Economic Fairy Tale: 8% Growth Doesn’t Add Up
Beijing issues another too-good-to-be-true number. China is not growing at 8.1%, and unless something big is done fast, in months it will not be growing at all.

Foreign deals show off Singapore’s market clout
Reuters via Yahoo! Finance
A flurry of foreign fundraising, including a rare high-yield Chinese bond, has put the spotlight on Singapore’s growing role in the global debt capital markets.

Hong Kong Takeovers Loom Large With Banks Lending Yuan: Real M&A
As Hong Kong establishes itself as a hub for offshore trade and investment in China’s currency, the city’s family-owned banks can be acquired at some of the lowest valuations since the global financial crisis.

MIG Bank Announces the Opening of Its Representative Office in Hong Kong
Business Wire
MIG Bank, a leading Swiss bank providing online trading services for private and institutional clients today announced the opening of a representative office in Hong Kong.

Japan’s Securities And Exchange Surveillance Commission: Recommendation In Relation To False Statements In Annual Securities Reports, Etc. Of Olympus Corporation

Frontier Markets

Asset Managers Gather for Bloomberg Financial Summit in Doha
Business Wire via Yahoo! Finance
The first ever Bloomberg Doha Conference organized by Bloomberg LINK in partnership with the Qatar Financial Centre Authority opens tomorrow, Monday, April 16th at the Ritz Carlton, Doha.

Dubai Financial Market Company Shareholders Approve Financial Statements For The Fiscal Year 2011

Dubai Gold & Commodities Exchange Weekly Market Commentary – April 15, 2012

Dubai Financial Market: Announces The Resolutions Of Its AGM Held On 15/04/2012

Abdulaziz Al Ghurair Appointed As Chairman Of DIFC Authority’s Board Of Directors

NASDAQ Dubai Monthly Trading Report: March 2012

The Egyptian Exchange (EGX) Opens Its New Premises

Malawi Stock Exchange Weekly Report- 13th April,2012

Miscellaneous News

Muslims on Wall Street, Bridging Two Traditions
New York Times
A growing number of Muslims are trying to find their path through the rough-and-tumble world of finance – an environment that can often test their values and practices.

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