John Lothian Newsletter: Nasdaq OMX Plans Third U.S. Options Exchange; Bats Pushes Derivatives, New Markets as It Reviews IPO; BRICS Futures Exchange Draws Light Traffic on First Day

Apr 2, 2012

Nasdaq OMX plans to open a new US options venue, bringing its total to three. BATS Global Markets continues forward with plans to introduce derivatives in Europe, and look for entries into new markets. Cross-traded BRICs futures products had their first trading day on Friday, with volume reported as light. In Europe, new pan-European laws and proposals sit poorly with hedge funds and other institutions. In the US, MF Global talk continues, and a report indicates that some large investors are now taking extra care against the failure of other brokers and service companies.

Observations – Statistics – Commentary

March is Over, April has Arrived

I am back from my month of travel that took me to Washington, DC, to Budapest, Hungary and back and forth between Chicago and Florida a couple of times. The last trip, 2,800 miles, was with the family for spring break. With the weather turning warm early in the U.S., it was a beautiful road trip down to Naples, Florida and back.

The John Lothian News team did an excellent job of keeping the seven newsletters coming and even dealt with the MarketsWiki server having operation issues that seemed perfectly timed with Jim Kharouf’s commentary about BATS technological issues.

This week is Holy Week in the Christian world and Friday is Good Friday. I would expect trading and news to be relatively muted.

It will be good to be back in the office and see the team. Thank you for your support and patience while I was living out of a suitcase in March.

BTW, if you did not see the Google April Fool’s video about their new 8-bit version of Google Maps that runs on Nintendo’s Entertainment System, you missed a good laugh.

~John J. Lothian


A Chance for the SEC to Step Up
By STEVEN M. SEARS – Barron’s
Dear Ms. Schapiro:
As chairwoman of the Securities and Exchange Commission, you undoubtedly know that a significant problem has erupted in the derivatives market. Recently, Credit Suisse’s VelocityShares Daily 2x Short-Term exchange-traded note, like BATS Global Trading, experienced what can charitably be described as a flash crash. For reasons that are hard to understand, even for someone who understands derivatives, this ETN (ticker: TVIX) seems to be a very sick product. Unit creation was halted for about a month, and after issuance of TVIX units recommenced, TVIX promptly lost some 60% of its value.


Comment: BATS backlash is overblown
By Bob Gasser, ITG chief executive – Financial Times
In the aftermath of the BATS Global Market’s initial public offering stumble last week, some market observers have suggested that this extraordinary, isolated event is one of many examples suggesting US equity market structure is somehow broken.

**** Sometimes you swing and you miss, or hit the catcher’s glove when you swing. The important part of failing to produce at the plate is to get right back in there and take another swing at it.


One Derivatives Trade That’s Now Off: Betting on the 2012 Election
Financial regulators are expected to prohibit traders from betting on the outcome of the 2012 election, according to people briefed on the matter, dealing a blow to Wall Street’s recent attempts to profit from politics.

*** This is strange. There have been markets allowed by the CFTC on the Presidential elections for years.


NYSE Euronext moves on after failed merger
By Telis Demos in New York and Philip Stafford in London – Financial Times
NYSE Euronext begins the next phase of its life on Monday, as it holds its first investor meeting since its failed Deutsche Börse merger amid questions about how it now plans to grow its clearing and technology revenues.

**** I would not call this a failed merger. I would call it temporarily uncompleted. If you know the history of these 2 companies, you know they don’t give up easily.


Global finance: Conflicting signals
By Brooke Masters – Financial Times
Post-crisis pledges by world leaders to work towards harmony in regulating banks and markets are in danger of coming to naught


Insight: As currency floats, Myanmar’s banks rise again
Reuters via Yahoo! News
Every table and much of the floor at Co-Operative Bank in Myanmar’s commercial capital is stacked with thick bricks of the local kyat currency. Money counting machines clatter. Workers carry sacks of cash slung over their shoulders.


Why Are the Fed and SEC Keeping Wall Street’s Secrets?
By William D. Cohan – Bloomberg
Getting what should be public information about major Wall Street firms can be maddeningly difficult. Bloomberg News discovered this in its ultimately successful effort to get information on the $1.2 trillion in “secret loans” the Fed doled out during the financial crisis. And I’ve had no small experience of it myself.


Pensions Find Riskier Funds Fail to Pay Off
Searching for higher returns to bridge looming shortfalls, public workers’ pension funds across the country are increasingly turning to riskier investments in private equity, real estate and hedge funds.


Shift towards high-profile enforcement
By Caroline Binham, Legal Correspondent – Financial Times
One hundred and forty officers swooped at residential addresses and banks at an hour when even the earliest commuters were still in bed. They rifled through books and filing cabinets and took away any device that could store electronic information – including an iPod belonging to one suspect’s child. This was not a scene from the latest US cop drama but the deployment of officials from Britain’s Financial Services Authority and the Serious Organised Crime Agency during an investigation codenamed “Tabernula” into alleged insider trading involving £22m of deals.


Hackers hit US credit card processor
By Nicole Bullock in New York – Financial Times
Global Payments, a processor of credit and debit card transactions involving brands such as Visa and MasterCard, said late on Sunday that up to 1.5m card numbers in North America may have been stolen in a security breach of its system.


MarketsWiki Page of the Day
Jeremiah Norton


MarketsWiki Recent Updates


Matt Zaner; Peter Djuvik; Jeremiah Norton

Companies, Organizations and Groups

Zaner Group; BATS Global Markets; Russian Trading System Stock Exchange



Mergers and acquisitions; Merger; Acquisition


21,333,975 pages viewed, 6,767 articles, 138,571 edits
MarketsWiki Statistics

Lead Stories

Nasdaq OMX Plans Third U.S. Options Exchange
Nasdaq OMX Group Inc. (NDAQ) is planning a new stock-options trading venue that may aim to capture more business from individual investors, according to people familiar with the matter. The new exchange launch would give Nasdaq OMX three U.S. options platforms and add a new tool for the New York company to bolster its share of U.S. equity derivatives trade, a market that has continued to expand while domestic stock-trading activity has dwindled.

**** Why stop there. Be the first to go quad.

Bats Pushes Derivatives, New Markets as It Reviews IPO
By Nandini Sukumar – Bloomberg
Bats Global Markets Inc. (BATS) will offer derivatives trading in Europe and push growth in markets such as Brazil as the third-largest U.S. equity-exchange operator seeks to re-establish credibility after a technical glitch forced it to cancel its initial public offering.

BRICS Futures Exchange Draws Light Traffic on First Day
By Marlene Y. Satter, AdvisorOne
Futures trades based on cross-lists of BRICS exchanges began trading on Friday, but interest in the new opportunity was light on its first day.

European rules alarm fund managers
By Alex Barker in Brussels – Financial Times
Some fund managers’ worst fears over pan-European regulation have re-emerged, prompting the hedge fund and private equity industries to hit back at Brussels’ proposed technical standards that they say will damage business and shut out the US and Asia.

MF Collapse Spooked Big Investors, Fed Finds
The collapse of securities firm MF Global Holdings Ltd. MFGLQ 0.00% has driven big investors to make sure their assets are better-protected against a trading partner’s potential failure, a Federal Reserve survey said.

Clients Raise Questions About MF Global Checks
MF Global customers who closed their accounts in the brokerage firm’s final days have been fuming for months about how the firm mailed checks to them, instead of promptly transferring the money electronically as usual. Many of those checks arrived after the bankruptcy filing, and subsequently bounced.

SEC: Funds limit restructuring options
By David S. Hilzenrath – Washington Post
After spending millions of dollars for a management consultant to analyze its operations, the Securities and Exchange Commission said a shortage of money will limit its ability to act on the recommendations.

Zoellick throws support behind Brics bank
By James Lamont in New Delhi – Financial Times
Robert Zoellick, the outgoing president of the World Bank, has backed the creation of a Brics bank, saying the need for such an institution highlights the dangers of existing multilateral organisations failing to mobilise sufficient resources to support large developing countries.

The G20 should say no to the eurozone
By Wolfgang Münchau – Financial Times
For anyone demanding a big bazooka, Friday was a disappointment. The finance ministers of the eurozone settled on one of the lesser proposals for an increase in the firewall. The agreement raises three immediate questions. How big is the firewall really? Will it all be enough? And should the Group of 20 leading economies top up their commitments to the International Monetary Fund?

Greenspan defends Bernanke over attacks
By Anna Fifield in Washington – Financial Times
Alan Greenspan has decried the Republican presidential candidates’ attacks on Ben Bernanke, his successor as chairman of the US Federal Reserve as “wholly inappropriate and destructive,” weighing into the nomination contest as it nears a tipping point.

In Wake of Groupon Issues, Critics Wary of JOBS Act
A little-noticed provision in the new JOBS Act would allow companies to iron out disagreements with regulators behind closed doors before they go public—a provision that might have prevented investors from finding out about Groupon Inc.’s early accounting questions until after they had been resolved. The provision, part of the bill passed by Congress and expected to be signed by President Barack Obama this week, would enable companies to submit confidential drafts of their initial-public-offering documents to the Securities and Exchange Commission before they file publicly.

Environmental Trading News

Carbon ‘Like Titanic’ Sinking on EU Permit Glut
The plunge in European Union carbon permits is putting prices on course for their longest-ever decline and shows no sign of ending as member states wrangle over curbing a glut in the market.

Trading Emissions Renegotiating Unprofitable Carbon Deals
Trading Emissions Plc is seeking to renegotiate unprofitable carbon contracts and there are “encouraging” initial signs that Chinese sellers are taking a “pragmatic approach to the problem.”

EPA Backpedals on Fracking Contamination
Wall Street Journal
The Environmental Protection Agency has dropped its claim that an energy company contaminated drinking water in Texas, the third time in recent months that the agency has backtracked on high-profile local allegations linking natural-gas drilling and water pollution.

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

BATS Weighs Cooling Its Listing Push
By JACOB BUNGE – Dow Jones
BATS Global Markets Inc. is considering suspending its efforts to recruit corporate listings after a software glitch last Friday derailed the exchange operator’s IPO, people familiar with the matter said.

On 9 March 2012, LCH.Clearnet Group Limited (“LCH.Clearnet”) and London Stock Exchange Group plc (“LSEG”) announced a recommended cash offer by London Stock Exchange (C) Limited, a wholly owned subsidiary of LSEG, for a majority stake in LCH.Clearnet. The full terms and conditions of the Offer and the procedures for acceptance of the Offer were described in the circular sent to LSEG Shareholders, and set out in full in the offer document sent to LCH.Clearnet Shareholders (the “Offer Document”), on 16 March 2012.

Traiana Announces Certification With ICE For OTC FX Clearing

LME Cobalt trading surges to new records
The London Metal Exchange (LME) saw record volumes transacted in LME Cobalt in March 2012 with 1,310 lots traded, the equivalent of $40 million.

Direct Edge Moving Ahead With Brazil Exchange
By Matthew Cowley, Rogerio Jelmayer and Jacob Bunge Of DOW JONES NEWSWIRES
Brazil’s financial market is already large enough for more than one securities exchange and it has the potential for growth, according to U.S. exchange operator Direct Edge Holdings LLC. “Brazil is a big and sophisticated market,” said Tony Barchetto, head of strategy for Direct Edge, in an interview. “Here we have had economic growth over the past decade and there’s increased economic stability.”

Maple and TMX to review commitment to deal
By Telis Demos in New York – Financial Times
A group of Canada’s biggest banks and pension funds will have to decide next month whether to extend a bid for TMX Group, the country’s largest exchange operator, amid uncertainty about the continuing regulatory review of the deal.

Maple Group and TMX Group Announce Extension of Offer To TMX Group Shareholders To April 30, 2012

London Stock Exchange Group plc pre-close period update for the eleven months ended 29 February 2012

TOM MTF Statistics Week 13 2012

CME Group Clearing Advisory
Change to ClearPort Exposure Limit Calculation- Effective Saturday, April 14, 2012 (Correction of Advisory 12-145)

CME Group Clearing Advisory
CME ClearPort Shifting from RAV to SPAN- Effective Saturday, April 14, 2012

Toronto Stock Exchange, TSX Venture Exchange, Montreal Exchange and TMX Select Closed for Good Friday

NYSE Announces Second-Quarter 2012 Circuit-Breaker Levels

MEFF New Member

Athens Exchange Market Operations Committee Decision

Banks, Brokers & Dark Pools

Traiana Announces Certification with ICE for OTC FX Clearing
Traiana, leading provider of post-trade solutions, announced today that it is certified to provide real-time connectivity to IntercontinentalExchange (NYSE: ICE), a leading operator of global over-the-counter (OTC) markets, clearing houses and regulated futures exchanges.

Big banks prepare to pay back LTRO loans
By Patrick Jenkins – Financial Times
A clutch of Europe’s biggest banks are preparing to return a chunk of the cheap three-year funding they recently took from the European Central Bank as early as this year.

U.K. Banks Worried About Luring Staff as Hiring Rises, CBI Says
U.K. banks are increasingly concerned about their ability to attract employees as hiring in financial services rose in the first quarter, according to a survey by Britain’s biggest business lobby group.

Angela Knight to step down from BBA
By Brooke Masters, Chief Regulation Correspondent – Financial Times
Angela Knight, the former Tory MP who had the unenviable task of defending the UK’s banking industry during the financial crisis, is stepping down as chief executive of the British Bankers’ Association.

Deutsche Bank Hires Citigroup Equity-Derivatives Executive Simon
Deutsche Bank (DBK) AG hired former Citigroup Inc. (C) managing director Jonathan Simon as Derek Bandeen, Citigroup’s equities head, overhauls the unit to halt a revenue slide, two people with knowledge of the move said.

CIMB to Buy Most of Royal Bank of Scotland’s Assets in Asia
Royal Bank of Scotland Group Plc (RBS) , Britain’s biggest state-owned lender, agreed to sell most of its Asia-Pacific cash equities and investment banking businesses to Malaysia’s CIMB Group Holdings Bhd. (CIMB) for 174 million pounds.

[Video] Citigroup’s Wieting on Fed, U.S. Stocks, Economy
March 30 (Bloomberg) — Steven Wieting, head of economic and market analysis at Citigroup Inc., talks about the outlook for the U.S. economy and Federal Reserve monetary policy. Wieting also discusses the performance of U.S. stocks.

Judge Orders SEC, Wells Fargo To Resolve Spar Out Of Court
By Matthias Rieker, Of DOW JONES NEWSWIRES
A federal judge denied the Securities and Exchange Commission’s attempt to force Wells Fargo & Co. (WFC) through the court to comply with demands for documents the regulator alleged the bank wasn’t providing for a mortgage-related investigation.

BNY Mellon targets Chicago’s wealthy
By Steve Daniels – Crain’s
It took Bank of New York Mellon Corp. a long time to find its way into Chicago’s wealth market.

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.

Investor advocates urge SEC to enhance broker rules
By Suzanne Barlyn – Reuters
New rules that could require certain brokers to act in the best interests of clients should enhance laws already in place for some financial advisers, a coalition of investor advocacy and trade groups wrote late on Thursday.

SEC Weighs Sanctions for Lawyers Who Advise on Fraudulent Deals
By Joshua Gallu – Bloomberg
U.S. Securities and Exchange Commission investigators are considering extending the reach of enforcement actions in cases involving complex financial transactions to lawyers who provided the legal advice on fraudulent deals, an agency official said.

Remarks Before The Agribusiness Club Of Washington, DC, CFTC Chairman Gary Gensler

Three U.S. Federal Agencies Clarify Effective Date For Section 716 Of The Dodd-Frank Act

New online ASIC Connect search service now available

ASIC accepts permanent undertaking from Adelaide adviser

New Zealand’s Financial Markets Authority Files Civil Proceedings Against Directors And Promoters Of Hanover Group

Investments – Indexes – Managed Futures – Managed Funds

EU rule may drive out hedge funds
By Sophia Grene – Financial Times
New regulation could force hedge funds and the custodian banks that serve them out of the European Union. A revised version of the rules to implement the 2011 Alternative Investment Fund Managers directive, seen by FTfm, includes provisions that could make hedge funds and private equity funds based in EU member states offer greater operational safeguards than retail investment funds.

Exclusive: Soros’ son strikes out on his own
Reuters via Yahoo! News
The upheaval within billionaire investor George Soros’ firm continues as one of his sons is separating some of his personal fortune to manage it himself. Jonathan Soros, who stepped down in September from day-to-day management of Soros Fund Management LLC, plans to hire at least one of his father’s key employees, say two people familiar with the situation.

Europe’s Sovereign Debt Insurance Plan Draws Mixed Reviews
Sovereign bond insurance, one mechanism Europe has proposed as a tool to blunt its long-running debt crisis, has finally taken sufficient shape to permit credit market observers to estimate the potential value of the coverage. The verdict is mixed, at best.

Risk not leading to reward for pension funds
Boston Globe
Searching for higher returns to bridge looming shortfalls, public workers’ pension funds across the country are increasingly turning to riskier investments in private equity, real estate and hedge funds. But while their fees have soared, their returns have not.

ISDA Announces Annual Determinations Committees Outcome
The International Swaps and Derivatives Association, Inc. (ISDA) today announced the outcome of the annual process to determine members of ISDA’s five regional Determinations Committees, which together comprise the global decision-making structure around events in the credit default swaps (CDS) industry.

Lazard Asset Management Launches Global Fixed Income Mutual Fund
Business Wire via Yahoo! News
Lazard Asset Management LLC (LAM) today announced the U.S. launch of the Lazard Global Fixed Income Portfolio. This new fixed income mutual fund is available to both institutional and individual investors.

Pay for Top-Earning U.S. Hedge Fund Managers Falls 35%, AR Says
Compensation for the highest-paid U.S. hedge-fund managers plunged 35 percent in 2011 to $14.4 billion after the European sovereign debt crisis pushed the industry to its second-worst year ever, a survey showed.

Hedge Fund Managers Who Fell Off ‘The Rich List’
In a reversal of fortune five hedge fund managers who fell off Absolute Return + Alpha magazine annual ranking of the top earning hedge fund managers, known as ‘The Rich List’. The magazine’s goal is to bring transparency to the secretive space of the hedge fund industry.

Global X Plans Hedge Fund ETFs

EMCF Celebrates Fifth Anniversary In An Ever-Changing Landscape

Boerse Stuttgart Bondm segment for medium-sized enterprises: End of subscription period for MITEC Automotive AG bond

Technology News

New real-time derivatives reporting system for SGX: First Derivatives
First Derivatives, a leading provider of software and consulting services to the capital markets industry, today announced it had delivered a bespoke solution based on its Delta Stream CEP product for real-time derivatives markets reporting – Project MARS – to Singapore Exchange (SGX).

MarketAxess Research Introduces TCA for Fixed Income
By Ivy Schmerken – Wall Street & Technology
MarketAxess, operator of a leading electronic trading platform for high-grade corporate bonds and other fixed income securities, has introduced a proprietary approach called REXIQ to calculate and analyze execution costs in fixed income securities.

Fixnetix Expands Global Managed Services Capability with NovaSparks FPGA Matrix Feed Handlers
Fixnetix and NovaSparks announced today a strategic alliance to deliver a managed FPGA market data service for exchange collocation venues in the U.S. and Europe. The service will use the NovaSparks FPGA Market Data Matrix feed handlers to offer customers the most predictable, lowest latency market data available in the market.

Media News

Pro stock traders looking to Twitter, Facebook for tips
By Walter Hamilton, Los Angeles Times
The next big stock tip might be as close as a Twitter feed. Professional traders are developing computer programs that scour Internet posts in search of the next stock market darling. Their technology analyzes everything uttered about a company — good or bad, racy or mundane — and spits out trading recommendations.

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

DBS to pay $7.2 billion for Indonesia’s Bank Danamon
Reuters via Yahoo! News
DBS Group Holdings , Southeast Asia’s biggest bank, has agreed to pay $7.24 billion for Indonesia’s Bank Danamon , offering a 52 percent premium for a middle-ranking lender with high funding costs, raising questions on the price.

Monetary Authority Of Singapore Introduces Panel For The Financial Advisory Industry Review (FAIR)

[OSE] Trading Overview of Fiscal Year 2011 (April 2011 – March 2012) & March 2012

[TFX] Trading Volumes in March 2012 and from April 2011 through March 2012

Tokyo Grain Exchange Monthly Report For March 2012

HKEx: Report On Initial Public Offering Applications, Delisting And Suspensions

Phatra Securities Chooses FlexTrade

Frontier Markets

BSE Launches Trading In BRICSMART Indices Derivatives
Press Release
BSE (formerly known as the Bombay Stock Exchange) today, in a bell ringing ceremony, launched the first phase of BRICS (Brazil, Russia, India, China and South Africa) Exchanges Alliance by commencing trading in Hang Seng Index Futures, FTSE/JSE Top40 Futures, iBOVESPA futures and MICEX Index Futures. The Consul Generals of the four nations along with Mr. Rajeev Agarwal (Whole-time member – SEBI), rang the Opening bell to mark the launch of trading in these benchmark indices.

Swiss Re Corporate Solutions Receives Insurance Licence To Operate In The Dubai International Financial Centre (DIFC)

Dubai Gold & Commodities Exchange Weekly Market Commentary – April 1, 2012

Saudi Stock Exchange (Tadawul) – Statistical Report, 1st Quarter 2012

Malawi Stock Exchange Weekly Report-30th March, 2012

Miscellaneous News

Derivatives May Still Endanger The Financial System
Robert Lenzner – Forbes
Derivative instruments held by US banks have a nominal value of $250 trillion– or about 150 times the aggregate balance sheet equity of these same banks, according to figures compiled by the Federal Deposit Insurance Corporation, the FDIC, the regulatory agency responsible for ensuring the safety of banks across America.

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

Europe digs in for a long battle with the virus

Europe digs in for a long battle with the virus

First Read $12,791/$300,000 (4.3%) Leticia Manos, Ray Mckenzie and Nils-Robert Persson ++++ Election 2020: Tight Races Set Stage for Continued Period of Volatility By Suzanne Cosgrove - John Lothian News Here's how the presidential election 2020 is unfolding in its...

Banks roll out robots as pandemic shakes up IT plans

Banks roll out robots as pandemic shakes up IT plans

First Read $11,441/$300,000 (3.8%) Thomas F. Chlada, Earle Combs, Gerry Corcoran and Martin Mosbacher ++++ Steptoe & Johnson LLP Makes Good Use of Pandemic Time with Financial Services University Video Series By John J. Lothian Matthew Kulkin of Steptoe &...

Pin It on Pinterest

Share This Story