John Lothian Newsletter: Gensler, Wheatley Seek to Eliminate Conflicts in Benchmark Rates; Cargill calls for commodity sector transparency; Violent And Panicky Gold Selling Collapse Bullion And Commodity Markets

Apr 16, 2013

Regulators in the US and UK consider working together as an improvement toward reducing the risk of financial rate manipulation. Commodity giant Cargill’s CEO warns that trading houses need to embrace transparency and ethical behavior, or risk becoming as highly regarded as the banking industry. After more than a year and a half of floundering, the gold market finally moved decisively down, giving market observers a reason to put a fresh label on old news, and giving traders in other markets a good reason to panic and sell their stuff, too.

First Read

Standing with Boston
Ed TillyCBOE
This morning, we pause from the financial headlines in our small corner of the world, to reflect on the larger, front page headlines of the day. We were shocked and saddened by the tragic events that occurred in Boston yesterday afternoon. To our friends and colleagues in Boston, please know our thoughts and prayers are with you.


VIX Futures Bust Through Old Daily Volume Record
The CBOE Futures Exchange, LLC announced today that CBOE Volatility Index futures established an all-time single-day volume record of an estimated 449,955 contracts. Monday’s record eclipsed the 302,278-contract record set on February 25, 2013. In addition, the CBOE Gold ETF Volatility Index futures contract traded a single-day record of an estimated 1,488 contracts today. The previous record, 765 contracts, was set on March 28, 2013.

***ET: Setting these records never gets old!


Trading Technologies to Provide Connectivity to MexDer
Trading Technologies International, Inc. and The Mexican Derivatives Exchange today announced that TT has linked its X_TRADER derivatives trading platform to MexDer, the leading marketplace for trading derivatives on Mexican benchmarks, via the CME Group’s Globex platform. TT’s connection launched concurrently with CME’s iLink enhancements for MexDer via Globex, which were released on April 14.

**JK – Free margaritas with every trade!


Mexico, The Emerging Latin American Powerhouse
Trade Talk – Trading Technologies
For the past few years, coverage of Mexico in the U.S. media has largely been dominated by stories of violence stemming from the country’s drug cartels. Lately though, the media have increasingly been turning their attention to the story of Mexico’s booming economy, and new president Enrique Peña Nieto’s bold moves to radically reshape it. This robust growth in Mexico looks set to continue for some time, which has led the Financial Times to label Mexico as the “Aztec Tiger.”

***ET: Very fitting that the World Federation of Exchange’s annual meeting will be held in Mexico this October.


Otkritie selects SunGard to launch DMA service
Otkritie Capital the Russian financial services provider, has selected SunGard to help launch a new direct market access (DMA) service allowing for automatic real-time currency conversion from the Russian Ruble to the U.S. Dollar. SunGard has also added integrated access to an algorithmic trading service to provide Otkritie’s clients with access to Russian trading venues.

**JK – Free vodka with every server!


Once Swaps are in the Clearinghouse, the Real Work Begins
Ivy Schmerken – Advanced Trading
This week trueEX said it plans to launch a service to provide termination, compaction, re-balancing and backloading to CME clearing clients, giving dealers, buy side firms and FCMs direct access to their positions. While the transition of the OTC derivatives marketplace to central clearing is already underway, there are still a bunch of life cycle processes that need to be managed once positions are in the clearinghouse.

***ET: Ivy always has a way of explaining technical subjects well, including compaction.

**JK – trueEx should call it the “compactionator”


FOW’s European Equity Options Conference
FOW reutrned to Amsterdam for the third consecutive year to host our European Equity Options Conference. Keynote speaker Peter Vehaar kicked off the day by outlining the ’10 plagues’ of the European banking system and then there was a spirited Oxford Union-style debate on HFT regulation, with the side arguing that attempts to regulate HFT will harm the markets carrying the day.


GFI looks to the future
Last month, it was revealed that GFI Group, the wholesale broker, had a pending application with the Commodity Futures Trading Commission to launch GFI Futures Exchange. The application comes as delays to the rules governing how swaps will be traded on Swap Execution Facilities continue to cause consternation in some areas of the market.

***ET: Who couldn’t have anticipated that headline?


Electronic Bond Trading Steps to Fore
The evolution of bond trading from the telephone to electronic venues is gaining speed. The Securities and Exchange Commission is hosting a meeting Tuesday in Washington for some of the largest firms and trading-platform providers in the $9 trillion corporate-bond market.


New Norm On Wall St.: Less Chief
Wall Street leaders are being cut down to size. The era of the “imperial chief executive,” a domineering figure who ruled the company as if it was his own (think Sanford Weill at Citigroup Inc., David Komansky at Merrill Lynch & Co. and Hugh McColl at Bank of America Corp.), has ended.

***ET: “Less Chief” — wait, nobody told me.


Ask A Banker: What’s It Like?
The main skills required are attention to detail, cheerful obedience, and the ability to add two-digit numbers in your head. Also, it helps to like finance.

***ET: The trouble begins when you need to deal with more than two digits.


You Don’t Want to Mess With Wall Street’s Cop
Russell G. Ryan – Bloomberg
With its recent insider-trading settlement against SAC Capital Advisors LP, the Securities and Exchange Commission is again under fire for its policy of letting defendants resolve fraud allegations without admitting wrongdoing. For some critics, nothing the SEC does is ever tough enough, and no-admit settlements are just further evidence of the agency’s spinelessness.

**JK – Good piece about paying without admitting or denying.


DME’s Oman oil contract flourishes from futurisation of swaps
The Dubai Mercantile Exchange’s (DME) Oman crude oil futures contract is gaining more traction as regulation makes oil swaps less appealing for traders, according to Christopher Fix, chief executive at the DME.


Gold ‘Is Finished’
A year or two after fans of Glenn Beck and every conservative minded talk show or website told their followers to double down on gold, the precious metal’s bull run is over.

***ET: It’s all about the hedge. Yesterday, as gold prices toppled, the CBOE Gold Volatility Index (GVZ) rose over 61%, an all-time record percentage up move for the index. And for you, John, futures on GVZ set a new single-day trading record.

***JM: Ignoring the lack of value in definitive statements about the unknown future… didn’t the bull run end in September 2011? Did, uh, did you have car trouble on the way to the keyboard?



MarketsWiki Page of the Day

MarketsWiki Recent Updates


Ludwik Sobolewski; Henry Paulson, Jr.

Companies, Organizations and Groups

Warsaw Stock Exchange; International Monetary Fund


Upcoming Events; Gold


38,035,436 pages viewed, 7,449 articles, 156,813 edits
MarketsWiki Statistics

Lead Stories

Gensler, Wheatley Seek to Eliminate Conflicts in Benchmark Rates
Regulators will seek to eliminate conflicts that have led to manipulation of benchmark lending rates while investigations into Libor continue around the world.

Cargill calls for commodity sector transparency
Gregory Meyer in Lausanne –
Cargill has warned the commodities industry that trading houses must embrace ethical and transparent business practices or risk being vilified by the public and regulators as banks have been.

Violent And Panicky Gold Selling Collapse Bullion And Commodity Markets
Panic selling in gold markets has accelerated on Monday, with the yellow metal falling more than $200 an ounce over the past two trading sessions. The blood bath started on Friday, as sell orders for 400 metric tons worth about $20 billion hit the market, amid rumors the ECB would force Cyprus to sell gold reserves to help finance its bailout.

Gold’s Plunge Turns New York’s Diamond District Upside Down
Michael Casey – WSJ
Few businesses have been impacted more by gold’s rollercoaster price ride in recent years than the 2,600 independent firms jammed into New York’s bustling Diamond District. And since Friday, with the international price of gold falling more in dollar terms than in any previous two-day period since at least 1974, the activity on this crowded strip on 47th Street between 5th and 6th Avenues has gotten a little crazier.

**JK – How much is a gold plunger?

Exclusive: Regulator to fault JPMorgan over Madoff accounts
Reuters via Yahoo! News
By Brett Wolf and Aruna Viswanatha – Regulators plan to fault JPMorgan Chase & Co, which served as Bernie Madoff’s main bank for two decades, for failing to conduct adequate due diligence and report suspicious activity, according to a person familiar with the matter.

Italian Police Seize $2.35 Billion From Nomura in MPS Probe
Italian financial police have seized E1.8 billion ($2.35 billion) from Banca Nomura International PLC, a unit of Nomura Holdings Inc., as part of an investigation into Banca Monte dei Paschi di Siena SpA, prosecutors from the town of Siena said Tuesday.

Getco, Knight Tweak Merger
Dow Jones
Getco LLC and Knight Capital Group Inc. on Monday altered their merger to comply with New York Stock Exchange listings standards, according to a document filed with regulators.

Central Banks at Ease Limit Risk Political Backlash
Central banks are setting new expectations for monetary policy that may be hard to reverse as they slide deeper into the realms of fiscal policy.

Goldman’s Big Guns Fire Dud in Defense of Megabanks
Simon Johnson – Bloomberg
The six very large U.S. bank holding companies — JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley — share a pressing intellectual problem: They need to explain why they should be allowed to continue with their dangerous business model. So far their justifications have been weak, and the latest analysis on this topic from Goldman Sachs may even help make the case for breaking up the financial institutio

Europe Split Over Austerity as a Path to Growth
In the last year, the International Monetary Fund has performed a major reassessment of how it thinks austerity harms a weak, financially troubled economy. But while warning of the perils of slow growth, it still often insists on austerity for just such economies.


UK’s Financial Conduct Authority Publishes Complaints Data For The Second Half Of 2012
The Financial Conduct Authority (FCA) has published the latest complaints data showing complaints to financial services firms between July and December 2012.

ESMA Finds Divergence In National Supervision Of Money Market Funds

“Kaleidoscopes” – Speech Of CFTC Commissioner Bart Chilton At Washington University In St. Louis, St. Louis, MO , April 15, 2013

[Japan] FSA publishes Weekly Review No.41

Exchanges & Trading Facilities

CME Group ups gold, silver, nat-gas future margins
Market Watch
CME Group Inc. CME said it will raise the collateral requirements for trading in benchmark gold, silver and other precious metals futures contracts, effective at the close of business Tuesday. The exchange operator said it also will increase margins to trade its benchmark natural-gas futures, also effective Tuesday.

LME: Gets Request To List An Aluminum Brand; OKs Zinc Brand Name Change
Dow Jones
The London Metal Exchange said Monday it has received an application from Malaysian aluminum producer Daiki Aluminium Industry (Malaysia) Sdn. Bhd. to list its DIKM brand for trading under the exchange’s aluminum alloy and NASAAC futures contracts.

JSE Expands Quanto Futures Range To Include Nine New Commodities
Market participants will be able to obtain exposure to nine new foreign-referenced soft and hard commodities thanks to the JSE’s expansion of its Quanto Futures range. Products to be introduced under license from the CME Group are heating oil, gasoline, natural gas, palladium, sugar, cotton, cocoa, coffee and corn.

BM&FBOVESPA S.A. announces New Board of Directors
BM&FBOVESPA S.A. shareholders elected a new Board of Directors for the company on Monday, in an Ordinary General Meeting. The new chairman will be Pedro Pullen Parente, who was already a member of the previous Board. He will be substituting Arminio Fraga Neto, whose second mandate that started in May 2011 has now drawn to a close.

Expected Opening Price and Size Messages via CBOE Streaming Markets

Automation of Stock Option Strategy Orders in Classes that Trade until 315 PM CT

Nordic Growth Market NGM AB: NGM Welcomes Morgan Stanley As A New Issuer

Moscow Exchange Weekly Market Report: April 8 – 12, 2013

Finansinspektionen (FI) Swedish Financial Supervisory: Nordea Receives Remark And Administrative Fine Of SEK 30 Million

NASDAQ OMX Corporate Solutions Selected To Provide The Scottish Public Sector With A Collaborative Media Services Framework

New Zealand’s Financial Markets Authority: New Directors’ Guide Aimed At Sharpening Up Corporate Governance

Warsaw Stock Exchange Conducted First Trading Session On The New Trading System UTP – Updated

Hedge Funds & Managed Futures

Hedge Fund Billionaires John Paulson And David Einhorn Lost $640M In Gold Market Collapse
The gold bloodbath that hit the market over the past two trading sessions has definitely caused a dent in the portfolio of billionaire hedge fund managers. John Paulson and David Einhorn suffered combined losses of more than $640 million since Friday, according to their latest SEC filings, with the bulk concentrated in the former’s massive position in the SPDR Gold ETF.

Rothschild seeks to buy U.S. fund of funds businesss
Reuters via Yahoo! Finance
Rothschild is looking to double the size of its fund of hedge funds business via a U.S. acquisition to give it the scale it needs to flourish in an industry now dominated by a handful of big players.

Blackstone-Backed Senrigan’s Fund Said to Lose 13% on Sundance
Senrigan Capital Group Ltd., an Asia-focused event-driven fund backed by Blackstone Group LP, lost 13 percent last month after the collapse of Sichuan Hanlong Group’s bid to take over Australia ’s Sundance Resources Ltd. , according to a person with knowledge of the matter.

Former GLG trader James Berger returns with new hedge fund
Harriet Agnew – Financial News
A former portfolio manager at GLG Partners, who left the firm in June, is returning to the market with a new hedge fund venture, Financial News has learned.

Goldman’s big think about the commodity sell-off
Izabella Kaminska | FT Alphaville
Some deep thoughts from Goldman Sachs, by way of Jeffrey Currie and team, on the drivers of the current commodity sell-off (and no, their short gold advice from last week isn’t listed as one of them):

The Dow Jones Credit Suisse Hedge Fund Index Finished Up 1.21% in March

CalPERS Earns ‘A’ Grade In Asset Owners Disclosure Project 2012 Climate Change Survey – Global Climate Index Ranks System 15 Out Of World’s 1,000 Largest Asset Owners

Prime Advisors, Inc. Launches New and Enhanced Web Site
Enhanced resources on include immediate client portfolio access, assets under management, constant market updates, recent Prime Advisors, Inc. events, industry Presentations and Publications.

Argentina May Get U.S. High Court Hearing in Bond Case
Argentina may get a U.S. Supreme Court hearing in its legal battle with a hedge fund seeking to collect $2.5 billion owed by the South American country on defaulted bonds.

Mark Fisher: Gold Bulls Should Love This
The drop in gold prices could mean an opportunity for bulls, commodities trader Mark Fisher of MBF Clearing says.

Banks & Brokers

Senior Goldman Sachs Middle East banker resigns: sources
Reuters via Yahoo! News
By Dinesh Nair DUBAI – Khaled Eldabag, a senior investment banker at Goldman Sachs Group Inc who handled some of the Wall Street firm’s biggest clients in the Middle East, has resigned, two sources familiar with the matter said.

Analysis: Citi reaps profits from hiring rainmakers 2-3 years ago
Reuters via Yahoo! News
By David Henry NEW YORK – In the summer of 2010, senior executives at Citigroup Inc told the board of directors the bank needed to hire more dealmakers to have any chance of snagging underwriting assignments and rich takeover advisory fees.

Citigroup profit spikes 30%
Citigroup finally got it right, passing the quarterly test put forth by Wall Street analysts.

Missouri pension fund sues JPMorgan over ‘Whale’ losses
A Missouri pension fund has sued JPMorgan Chase & Co. executives and board members over $6.2 billion in trading losses that were revealed last year, citing a recent U.S. Senate report that criticized the bank’s management for failing to catch the bad trades.

UBS names Nomura’s Vereke as key investment bank exec
Reuters via Yahoo! Finance
ZURICH – UBS said Nomura investment banking co-head William Vereke will replace David Soanes as head of corporate client solutions in Europe, the Middle East and Africa from June 1.

UBS Said Planning to Fire 60 in Brazil in Restructuring
UBS AG , Switzerland’s biggest bank, will fire as many as 60 employees in Brazil as part of its international restructuring plan, said three people with direct knowledge of the matter.

Deutsche Bank Proposes Board Members to Boost Expertise
Deutsche Bank AG , continental Europe ’s largest bank, proposed three new members for its supervisory board as Chairman Paul Achleitner seeks to boost the committee’s competencies in risk, finance and legal issues.

Commerzbank Loses Case of Woman Fired for Suing Deutsche Bank
An ex- Commerzbank AG director won her employment tribunal case against the German lender for firing her when it discovered she was suing her previous employer, Deutsche Bank AG , for sexual discrimination.

Ex-HSBC worker: bank information is ‘scandalous’
Associated Press via Yahoo! News
MADRID — A former HSBC employee fighting extradition to Switzerland for allegedly stealing and revealing confidential information about private Swiss accounts said Monday the material in his possession highlights “scandalous” levels of tax evasion and money-laundering.

Clearing & Settlement

DTCC Expands Tampa Operations – Up To 255 New Jobs And $4.8 Million In Capital Improvements Planned
The Depository Trust & Clearing Corporation (DTCC) announced today that it has chosen Tampa as the expansion location for up to 255 high-wage, new jobs with total average compensation more than double the regional average salary of $46,000. In addition, the company announced a $4.8 million investment in its only Florida campus as part of the company’s long-term expansion strategy.

Euroclear Grows Luxembourg Office
Euroclear is expanding its presence in Luxembourg by broadening the role of its local office, further reinforcing its ties with financial institutions in the Grand Duchy. The office will accommodate up to ten employees who will focus on expanding client relationships and delivering account management services. The office is headed up by Jane Sidnell, reporting to Philippe Laurensy, Director and Regional Head, in Brussels.

Traiana Swap Data Repository Service Takes Multiple Banks Live to comply with Dodd-Frank Trade Reporting
Traiana, the leading provider of post-trade solutions, announces today the successful implementation of its Swap Data Repository Service (Harmony TR Connect) for over-the-counter (OTC) derivatives. Harmony TR Connect provides all market participants with the ability to comply with the trade reporting requirements under the US Dodd-Frank framework and EU’s European Market Infrastructure Regulation (EMIR), offering a single point of connection for post-trade reporting of foreign exchange, interest-rate and credit default swap trades.

CME Clearing – Performance Bond Requirements: FX, Metals, and Natural Gas Outrights; Natural Gas Intra-Commodity Spread Charges; FX and Metals Volatility Scans

Indexes & Products

STOXX Launches GC Pooling Indices in Cooperation with Eurex Repo
STOXX Limited, the market-moving provider of innovative, tradable and global index concepts, and Eurex Repo, the leading provider for international financing in the secured money market business today announced the launch of the STOXX GC Pooling index family, including the migration of the existing GC Pooling Indices calculated by Deutsche Börse into the new index family.

Canadian Derivatives Clearing Corporation Licensed by S&P Dow Jones Indices to Clear OTC Options Based on S&P/TSX Indices

Moscow Exchange Indices Weekly Review: April 8 – 12, 2013

Deutsche Bank to Reopen Issuances of Twenty-Six Exchange Traded Notes


Markit launches commission management platform in Europe
Markit, a leading, global financial information services company, today announced that its commission management service, which helps buy-side firms manage and allocate commission credits efficiently across multiple sell-side institutions, is now available in Europe.

BWise and Harvard Business School Professors Announce World Class Leadership Training Program on New Integrated Reporting Framework
BWise, a NASDAQ OMX company, and Harvard Business School Professors Robert G. Eccles and George Serafeim announce today a world class online leadership program to help companies utilize the new International Integrated Reporting Framework and provide them with a gap analysis of their current and desired state.

First Derivatives and tradable form alliance
Award-winning trading platform tradable has agreed a strategic partnership First Derivatives, a leading provider of software and consulting services to the capital markets industry. The new alliance will enable brokers to use the liquidity management and reporting tools of First Derivatives’ Delta Suite product through the platform.

Broadway Technology Appoints Claudia Cantarella as General Counsel
Marketwired via Yahoo! Finance
Broadway Technology, LLC, a leader in high-performance trading solutions for top-tier global banks and hedge funds, announced today Claudia Cantarella has joined Broadway as General Counsel.


SEC Charges Denver-Based Businessman with Insider Trading
The Securities and Exchange Commission today charged a prominent Denver-based businessman with insider trading based on confidential information he obtained from the CEO of an oil and gas company that was about to secure a huge investment.

SEC Charges Former Rochdale Securities Broker for Rogue Trades That Brought Down Firm
The Securities and Exchange Commission today charged a former employee at a Connecticut-based brokerage firm with scheming to personally profit from placing unauthorized orders to buy Apple stock. When the scheme backfired, it ultimately caused the firm to cease operations.

Federal Court in California Orders National Equity Holdings, Inc. and Its Principal, Robert J. Cannone, to Pay over $3.6 Million to Settle Fraud Charges in CFTC Action
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court Order against Defendants National Equity Holdings, Inc. (National Equity) and its Principal, Robert J. Cannone, both of Orange County, California, requiring them to pay restitution to defrauded customers in accordance with restitution set in a related criminal action at $1,059,096 (U.S. v. Cannone, SACR 11-263).

FINRA Files Complaint Charging John Thomas Financial, CEO Tommy Belesis With Fraud
The Financial Industry Regulatory Authority (FINRA) announced today that it has filed a complaint against John Thomas Financial (JTF), of New York, NY, and its Chief Executive Officer, Anastasios “Tommy” Belesis, charging fraud in connection with the sale of America West Resources, Inc. (AWSR) common stock, intimidation of registered representatives, trading ahead, failing to provide best execution for customer orders and various other violations.

Madoff trustee cannot block $410 million Merkin accord: judge
Reuters via Yahoo! News
By Jonathan Stempel – A federal judge blocked the trustee seeking money for Bernard Madoff’s victims from interfering with New York state’s $410 million settlement with Ezra Merkin, a Wall Street hedge fund manager accused of steering client money to the swindler.

Environmental & Energy

Europe Braces for Verdict on Climate Chief’s Carbon Plan
The European Union’s 54 billion- euro ($71 billion) carbon emissions cap-and-trade system may be undermined if the bloc’s Parliament votes against Climate Commissioner Connie Hedegaard’s temporary rescue plan tomorrow.

**RKB — Hedegaard trying to separate short-term backloading fix from longer-term overhaul. Bloomberg New Energy Finance says April 16 vote may set fate for the market for next several year.

Carbon May Rise 44% on EU Vote for Surplus Fix, Jefferies Says
European Union carbon allowance prices may jump as much as 44 percent if the bloc’s parliament votes in favor of a plan to temporarily cut a surplus, according to Jefferies Group Inc.

**RKB — “The price could push to 7 euros and perhaps beyond, but sooner or later reality will set in and the price will decline towards our average front-year EU allowance forecast of 5 euros,” Jefferies’ Gray said.

Governments urged to learn from each other’s climate policies
Business Green
Despite the seeming lack of climate policy progress at an international level, governments around the world are taking the right steps to curb their carbon emissions, potentially laying the foundations for a global deal.


Chinese Investment in Europe Jumps
China’s mergers and acquisitions activity in Europe last year was up 21% to $12.6 billion, a survey reported, as Chinese buyers moved to seize opportunities in a region hit by the lingering debt crisis and economic softness.

Third Quarter Financial Year 2013 – Singapore Exchange Reports $98Million
SGX recorded revenue of $191 million ($164 million), net profit of $98 million ($78 million) and earnings per share (EPS) of 9.1 cents (7.3 cents). The Board of Directors has declared an interim dividend of 4.0 cents (4.0 cents) per share, payable on 2 May 2013.

HKEx And Chongqing Financial Services Office Sign MOU
Hong Kong Exchanges and Clearing Limited (HKEx) and Chongqing Financial Services Office today (Monday) signed a Memorandum of Understanding (MOU) on cooperation and exchange of information.

HKEx: Stock Exchange Participants’ Market Share Report

Osaka Securities Exchange: SPAN Parameter Updated (Apr. 22, 2013 – Apr. 26, 2013)

Frontier Markets

Dubai Supremacy Challenged as Global Banks Move to Rivals
When Saad Iqbal left Deutsche Bank AG in Dubai two years ago as European banks scaled back amid the debt crisis, he turned to Riyadh as a construction boom makes Saudi Arabia a hub for project finance.

Shariyah Review Bureau Partners With Simply Sharia Human Capital To Deliver Islamic Finance Training (IFQ)

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

Pin It on Pinterest

Share This Story