John Lothian Newsletter: SEC Options Cases Highlight CBOE Regulation; HKEx to offer renminbi futures; Tokyo Trading Glitch Thaws Resistance to Alternative Platforms

Apr 20, 2012

As the SEC takes additional action against broker OptionsXpress, the CBOE finds itself in the middle of a much closer look at how it supervises its members. The Hong Kong Exchange announces plans to issue futures contracts for trading the Chinese yuan. Fault and strategy analysis continues at the Tokyo Stock Exchange over a systematic failure earlier this year. In the top box, John Lothian pens a salute to the S&P 500 Index Futures contract, which turns 30 this year; and OCC and OIC upgrade their support of MarketsWiki to the Partner level.

Observations – Statistics – Commentary

Happy Anniversary to the S&P 500 Index Futures

I feel old. It seems like just yesterday I was visiting the CME trading floor over on Wacker Drive, meeting a friend from Wisconsin who was a new trader in the S&P 500 pit. Now the Spoos are turning 30 years old tomorrow. Look for news about this on the CME Group’s Facebook page among other places.

Later this year, the E-mini S&Ps will celebrate their 15th anniversary, which means that I have been directly involved with electronic trading for 15 years. It was the E-mini S&P that brought me back to trading stock index futures.

As a broker, my retail clients and I could not take the risk of trading S&Ps any more in the late 1990s. At $500 a point, with huge volatility, it was sometimes possible to lose money in the S&Ps faster than you could burn the physical cash with help from a blow torch. The CME’s changing of the multiple of the S&P from $500 to $250 was a great first step. Introducing the $50x-the-electronically-traded-index emini was the next. That change in contract terms may be the greatest futures contract specifications modification of all time.

Of course, part of the reason for the change was not just the unmanageable $500 multiplier, but also that the CBOT was going to introduce a Dow Jones Industry Index futures contract with a $10 multiplier. It was some time before the CBOT finally came up with an electronic $5 version and saw volumes take off.

Let us not forget one of the reasons that the S&P 500 was such a successful contract: the litigiousness of the CBOT leaders and members. The CBOT, the largest exchange in the world in the early 1980s, wanted to trade futures on the Dow Jones Industrial Average and got into a big legal fight with Dow Jones about whether they could just do that. The fight went on for years. Meanwhile, CME and KCBOT introduced the S&P 500 and Value Line futures and had first mover advantage. I used to have customers that loved to trade the S&P 500 vs. Value Line spread.

The CBOT finally introduced the Major Market Index, a Dow Jones Industrial Average lookalike, but without the marquee brand name. The first version of the MMI contract had the opposite problem of their later Dow Jones product: they introduced a contract size that was too small, with a multiplier of $100. Later, they introduced the Blue Chip version of this contract with a $250 multiplier and had some success. It was the trading in the Blue Chip pit during the 1987 stock market crash that turned the market around when the NYSE and CME were temporarily closed.

But the S&P 500 proved to be the broad market index with the most utility for all kinds of equity players and futures market speculators. So as we celebrate the 30th anniversary of the S&P 500 futures, we must remember the litigiousness, stubbornness and lack of foresight of the CBOT leaders of the 1980s about stock index futures; the competition from the CBOT later to correct the mistake they made; and the innovative response of the CME to the unmanageable contract size and competition from the CBOT.

One of the most important lessons about the S&P 500 index futures was how it related to risk. What we learned as an industry from the S&P 500 was that if you gave customers and potential customers tools to more directly manage their specific risks, the more risk they could take. It was not long after the S&P 500 index futures were introduced that stock prices started moving higher amid the recession in the early 1980s. Fund managers were able to lay off risk of their portfolio, or take on more risk in a single trade that gave them exposure to the 500 stocks in the index. With this new tool, they started to take more risk and began to buy the market. The great rally of the 1980s started shortly after the introduction of the S&P 500 futures.

That was a very valuable lesson for the futures industry to learn and it led to a flurry of innovation in the 1980s and 1990s.

Happy Anniversary Spoos.

~John J. Lothian

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OIC and OCC Upgrades MarketsWiki Sponsorship
John Lothian News is pleased to announce the OCC and Options Industry Council have upgraded their sponsorship level of MarketsWiki to the Partner Level.

OIC and OCC have long been supporters of MarketsWiki and their pages are among the top 40 most popular pages on the site.

We appreciate the continued, and elevated, support from OCC and OIC. Their commitment to investor education is a tremendous growth driver for our markets.

~John J. Lothian

Popular pages on MarketsWiki

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NYSE Liffe U.S. Surpasses $1 Billion in BIC Trading Value
NYSE Liffe U.S., the innovative U.S. futures exchange of NYSE Euronext (NYX) today announced that it has surpassed $1 billion in notional value of Block Trades at Index Close or “BIC” trades. NYSE Liffe U.S. launched BIC trading in September 2011 as an innovative way to provide customers the ability to manage the tracking impact of executing large orders relative to the underlying index level by explicitly tying the transaction price to the closing level of the underlying index. Since that time, activity in BIC trades has steadily increased with $381 million transacted in mini MSCI EAFE Index futures and $263 million in mini MSCI Emerging Markets Index futures since March 1 alone.
http://jlne.ws/HUOYFP

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SEC Discloses New Charges On OptionsXpress, Former CFO
By Chris Dieterich and Ben Fox Rubin OF DOW JONES NEWSWIRES
The Securities and Exchange Commission on Thursday accused optionsXpress, a former officer and an optionXpress subsidiary dealer of violating registration requirements. The SEC announced administrative proceedings against OX Trading LLC, optionsXpress Inc. and optionsXpress’s former chief financial officer, Thomas E. Stern. An administrative court will determine whether civil penalties will apply.
http://jlne.ws/HUP14d

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Interactive Brokers’ Peterffy Sees ‘Gradual’ Move Toward Retirement
By Jacob Bunge Of DOW JONES NEWSWIRES
The head of Interactive Brokers Group Inc. said he plans a gradual move toward retirement from the U.S. brokerage and trading firm, though he has no immediate plans to step down.
http://jlne.ws/HUP14h

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GFI GROUP ANNOUNCES FIRST IRON ORE SWAP CLEARED VIA STP WITH SGX
GFI Group Inc. announced today that it is the first broker to execute an electronically traded Iron Ore Swap which cleared at the Singapore Exchange using STP (straight through processing). The trade was executed on GFI’s trading platform for energy and commodities – EnergyMatch Europe.
http://jlne.ws/HUP1Bq

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The SEC: Outmanned, Outgunned, and On a Roll
BusinessWeek
How the federal agency long derided as inept cracked the biggest insider trading case in history-and became the scourge of Wall Street in the process
http://jlne.ws/HUP14m

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Frequent SEC exemptions let companies skirt rules
Washington Post
At a time when the Securities and Exchange Commission is under pressure to enforce existing rules and write new ones , it has been busy giving companies permission to ignore the law. Companies that bump against legal restrictions – brokerages, stock exchanges, life insurance companies, and mutual fund managers, for example – routinely argue that no harm would come from cutting them slack.
http://jlne.ws/HUP14o

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National Futures Association presents Money Smart Week seminar – “Introduction to Futures and Options and Avoiding Investment Fraud”
National Futures Association (NFA) will present a seminar that aims to provide individuals with the resources they need to make educated investment decisions and protect themselves against investment fraud. The seminar, “Introduction to Futures and Options and Avoiding Investment Fraud,” will be held on Friday, April 27 from 11 a.m. to 12 p.m. in the CBOE Member Lounge, located at 400 S. LaSalle in Chicago, Illinois.
http://jlne.ws/HUP1kY

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JLN Interest Rates Newsletter

Volcker Rule Conformance Period Clarified
The Federal Reserve Board on Thursday announced its approval of a statement clarifying that an entity covered by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the so-called Volcker Rule, has the full two-year period provided by the statute to fully conform its activities and investments, unless the Board extends the conformance period. Section 619 generally requires banking entities to conform their activities and investments to the prohibitions and restrictions included in the statute on proprietary trading activities and on hedge fund and private equity fund activities and investments.

Section 619 required the Board to adopt rules governing the conformance periods for activities and investments restricted by that section, which the Board did on February 9, 2011. Subsequently, the Board received a number of requests for clarification of the manner in which this conformance period would apply and how the prohibitions will be enforced. The Board is issuing this statement to address this question.

The Board’s conformance rule provides entities covered by section 619 of the Dodd-Frank Act a period of two years after the statutory effective date, which would be until July 21, 2014, to fully conform their activities and investments to the requirements of section 619 of the Dodd-Frank Act and any implementing rules adopted in final under that section, unless that period is extended by the Board.

Visit the JLN Interest Rates website for the rest of the commentary and the latest headlines: http://jlne.ws/dhAkoq

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MarketsWiki Page of the Day
Swap Dealer
http://jlne.ws/HVN2vl

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MarketsWiki Recent Updates

People

Ros Krasny; Jonathan Spicer; Thomas E. Stern; Kris Carlson; Jon Robson; Paul Bowes; Robert Hegarty; Lauren Tara LaCapra; John Eustace; Chris Aspinwall; Nicholas Cotts; Susan Abbott Gidel; Robert Garfield; Julie Lerner; Samara Zwanger; Madyan Jabr; Sibel Yilmaz

Companies, Organizations and Groups

Thomson Reuters; OptionsXpress Holdings, Inc.

Miscellaneous

Major Swap Participant; Five Minutes With Jeffrey Christian, CPM Group

Statistics

22,182,178 pages viewed, 6,823 articles, 139,402 edits
MarketsWiki Statistics
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Lead Stories

SEC Options Cases Highlight CBOE Regulation
By Jacob Bunge, Of DOW JONES NEWSWIRES
The Chicago Board Options Exchange, which is facing a Securities and Exchange Commission investigation into the supervision of its members, factors into a widening SEC case against a Chicago-based brokerage and trading firm that are accused of violations of U.S. securities law. The CBOE served as the primary regulator of a trading firm alleged by the SEC on Thursday to have carried out illegal transactions, according to legal documents filed by regulators in conjunction with the accusations.
http://jlne.ws/HUP28h

OptionsXpress cases put CBOE under SEC microscope
By Lynne Marek – Crain’s
Two cases that the U.S. Securities and Exchange Commission brought against OptionsXpress this week are at the root of the federal agency’s investigation of CBOE Holdings Inc., according to unnamed sources involved in the situation.
http://jlne.ws/HUP28l

HKEx to offer renminbi futures
By Philip Stafford – Financial Times
The internationalisation of the renminbi is gathering pace, with Hong Kong Exchanges and Clearing to begin trading futures on the currency. The exchange will launch a US dollar-renminbi contract in the third quarter to give investors a hedge against their exposure to the Chinese currency.
http://jlne.ws/HUP4gy

Tokyo Trading Glitch Thaws Resistance to Alternative Platforms
Bloomberg
The Tokyo Stock Exchange’s worst breakdown in six years has forced a rethink of the role alternative trading platforms play in ensuring that shares of some of the world’s biggest companies keep changing hands.
http://jlne.ws/HUP2oP

IMF expects $400bn boost in firepower
By Claire Jones and Robin Harding in Washington – Financial Times
The International Monetary Fund is increasingly confident that its members will stump up at least $400bn in extra firepower to assure markets it can handle any fresh crisis in the eurozone.
http://jlne.ws/HUP2oQ

Spain scrapes through critical bond test
AFP via Yahoo! News
Spain scraped through a key test on the financial markets Thursday but failed to quash doubts over its future finances, analysts said after a treasury bond sale just beat money-raising targets.
http://jlne.ws/HUP2oS

Germany: the miraculous machine
By Ralph Atkins – Financial Times
Europe’s largest economy is a study in how to contain a crisis
http://jlne.ws/HUP2oT

Greek lenders to unveil dismal results
By Dimitris Kontogiannis in Athens – Financial Times
Greek lenders are expected on Friday to report huge losses for 2011 from their participation in the biggest sovereign debt restructuring in history.
http://jlne.ws/HUP2p0

A Bedraggled ‘Celtic Tiger’ Struggles to Retrain Workers
By PAUL SONNE And DAVID ENRICH – WSJ
Michael Brennan once earned as much as E1,000 ($1,300) a week as a carpenter installing roofs during Ireland’s housing boom. But after about three years without steady work, the 29-year-old is starting over in a freezing meat hall here, trying to carve out a new—and much less lucrative—future.
http://jlne.ws/HUP4x2

Say Goodbye To Blockbuster Bank Earnings, Forever
Forbes
We’re in the midst of a huge change for the financial services sector where big banks are reining in their risk and reducing debt.
http://jlne.ws/HUP14s

The Second 24 Hours After Your Termination
Forbes
It’s no surprise to see Halah Touryalai’s post yesterday welcoming former Bank of America Merrill Lynch executive Sallie Krawcheck back to Wall Street so soon after she was fired at BofA amid restructuring back in September. See Look Who’s Back: Sallie Krawcheck Gets the Goldbug.
http://jlne.ws/HUP1kM

Environmental Trading News

EU climate commissioner promises ETS fix
Environmental Finance
The European Commission aims to bring forward a proposal for agreement by member states by the end of the year to tackle the oversupply of carbon allowances in the EU Emissions Trading System (ETS), EU climate commissioner Connie Hedegaard announced on Thursday.
http://jlne.ws/I9HOeD

EU Needs Stronger CO2 Market, Germany’s Reiche Says
Bloomberg
Europe needs to strengthen its carbon program to stimulate investment in low-emission technologies after an oversupply of permits pushed prices to a record low, Germany’s deputy environment minister said.
http://jlne.ws/J6EQdK

EU climate chief: looking at China’s airline carbon plan
Reuters
EU Climate Commissioner Connie Hedegaard said on Thursday that officials were looking at a Chinese plan for its aviation carbon emissions, but did not yet have enough information to see if it could count as an “equivalent measure” under EU carbon law.
http://jlne.ws/I5RzuW

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

NYSE: All Trades In Splunk Made After Halt Will Be Canceled
By Jacob Bunge and Chris Dieterich Of DOW JONES NEWSWIRES
NYSE Euronext (NYX) said Thursday it would cancel a batch of trades in the newly issued shares of Splunk Inc. (SPLK) after the stock was halted by a circuit breaker in the morning of its public debut.
http://jlne.ws/HUP2Fk

EEX Carries Out Fifth Dutch Primary Market Auction
Today, the European Energy Exchange (EEX) carried out the fifth primary market auction of European emission allowances (EUA) on behalf of the Dutch Ministry of Economic Affairs, Agriculture %26 Innovation and the Dutch Ministry of Infrastructure and the Environment.
http://jlne.ws/HUP4x3

Quote MTF Launches QLX Hybrid Book – Europe’s First Liquidity-On-Demand Trading Venue To Empower Trading Participants Through Counterparty Selection And Information Containment.
Quote MTF, the lit trading venue for Pan-European equities, today announced details of QLX, Europe’s first Liquidity-on-Demand hybrid book. Scheduled for launch in June, QLX will offer equities trading participants increased control over how, and with whom, they trade.
http://jlne.ws/HUP4xa

Recommended Best Practices for CBOE and C2 CMi and FIX Interfaces
http://jlne.ws/HUP4xb

Program Trading Averaged 29.5 Percent of NYSE Volume during Apr. 9-13
http://jlne.ws/HUP2Fu

Updated Newsletter of the Athens Exchange ETFs For The First Trimester Of 2012
http://jlne.ws/HUP4xd

Banks, Brokers & Dark Pools

Bond trading surge boosts Wall Street banks
By Tom Braithwaite and Tracy Alloway in New York – Financial Times
Wall Street has enjoyed its best quarter for bond trading in two years, rounded off with a surge in revenues at Morgan Stanley and Bank of America, in spite of a steep decline in risk-taking and the introduction of new regulations.
http://jlne.ws/HUP2VO

Balarkas to leave Instinet Europe
By Philip Stafford – Financial Times
Richard Balarkas is stepping down as chief executive of Instinet Europe, the agency brokerage arm of Nomura after four years. Mr Balarkas, who is leaving to pursue other interests, will remain in place until a successor is appointed in coming weeks. New York-based Instinet declined to comment.
http://jlne.ws/HUP4NA

Mizuho Securities USA Strengthens Fixed Income Platform With New Head of High Yield Sales
Mizuho Securities USA, the U.S. broker-dealer subsidiary of the global Mizuho Financial Group, today announced the appointment of Jon Bass as Managing Director in the newly created position of Head of High Yield Sales in its Fixed Income Division.
http://jlne.ws/HUP2VW

Threat of Credit Downgrade Persists for Morgan Stanley
By PETER EAVIS and SUSANNE CRAIG – NY Times
Morgan Stanley’s rebuilding efforts are starting to take hold, as it posted one of its strongest quarters since the financial crisis. The bank showed healthy gains in core areas like wealth management and equity sales. Bond trading — the great profit machine on Wall Street — also kicked into high gear. In all, first-quarter profit surged 27 percent to $1.4 billion, excluding one-time accounting charges.
http://jlne.ws/HUP2W2

Bank of America trading rebound aids recovery
Reuters via Yahoo! News
Bank of America Corp posted better-than-expected first-quarter earnings on Thursday in the latest sign that the No. 2 U.S. bank is moving past the mortgage troubles that have hobbled it since the financial crisis. The lender, like rivals including JPMorgan Chase %26 Co and Wells Fargo %26 Co, made more U.S. corporate loans.
http://jlne.ws/HUP2W3

Interactive Brokers Group Announces 1Q2012 Results
Business Wire
Interactive Brokers Group, Inc. an automated global electronic broker and market maker, today reported diluted earnings per share on a comprehensive basis of $0.30 for the quarter ended March 31, 2012, compared to diluted earnings per share on a comprehensive basis of $0.41 for the same period in 2011.
http://jlne.ws/HUP2W6

UBS Hires Goldman’s Molin To Strengthen Hedge Fund Relationships
FOX Business
UBS AG (UBS) has hired Scott Molin, a 12-year Goldman Sachs Group (GS) veteran, as part of efforts to strengthen its relationship to hedge funds.
http://jlne.ws/HUP4NF

Gene Sykes Named to Goldman’s Management Committee
By SUSANNE CRAIG – NY Times
A longtime Goldman Sachs banker, Gene T. Sykes, has been named to the firm’s management committee, according to an internal memo.
http://jlne.ws/HUP3co

E*TRADE Financial Corporation Announces First Quarter 2012 Results
Business Wire
E*TRADE Financial Corporation today announced results for its first quarter ended March 31, 2012, reporting net income of $63 million, or $0.22 per share including a tax benefit of $26 million or $0.09 per share.
http://jlne.ws/HUP3cw

Goldman Sachs facing a new insider trading probe
Reuters via Yahoo! News
Federal prosecutors in California are investigating a Goldman Sachs employee for insider trading, according to prosecutors and defense lawyers who attended a hearing in U.S. federal court in New York on Thursday.
http://jlne.ws/HUP3cy

Goldman wins mortgage case appealed by German bank
Reuters via Yahoo! News
Goldman Sachs Group Inc and investment adviser TCW have survived an appeal by a German bank that sued them for fraud over a toxic derivative marketed at the height of the housing market bubble. The 2nd Circuit Court of Appeals on Thursday upheld the dismissal of the lawsuit – brought by state-owned Landesbank Baden-Wurttemberg – by a trial judge last September.
http://jlne.ws/HUP542

British investment bank Numis makes six new hires
Reuters via Yahoo! News
Numis Corporation, one of a clutch of small-scale British investment banks, announced it had hired six new staff from its rivals, as the tough market conditions afflicting the industry intensifies competition within the sector. Numis said it was making five new hires for its London equity sales and research teams.
http://jlne.ws/HUP3cD

[Video] RBS’s Gallo on Spain Sovereign Debt Crisis, Banks
Bloomberg
Alberto Gallo, head of European credit strategy at Royal Bank of Scotland Group Plc, talks about Spain’s sovereign debt crisis and the nation’s banks. He speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.”
http://jlne.ws/HUP3sQ

Barclays Chiefs Diamond, Lucas Tie 50% Bonus To Bank Profitability
FOX Business
U.K. bank Barclays PLC (BCS) Thursday said its top executives had agreed to tie 50% of their bonus awards to the bank’s future profitability, as the company joined its peers in responding to shareholder concerns over the size of last year’s pay packages.
http://jlne.ws/HUP547

Bob’s semi-apology must presage climbdown
By Jonathan Guthrie – Financial Times
Call it “The Citi Effect”. Barclays has appeased Standard Life, the highest profile objector to Bob Diamond’s hefty pay, just two days after Citigroup suffered a humiliating shareholder vote against the remuneration of its own chief executive. A turning point may have been reached in the campaign for bankers’ pay to reflect returns to owners rather than the cost of a high-maintenance lifestyle.
http://jlne.ws/HUP3sX

TD Ameritrade Institutional Launches First-of-Its-Kind Trading Platform for Advisors
Business Wire via Yahoo! Finance
Independent registered investment advisors looking to enrich their trading experience now have access to the thinkpipes platform, an advanced, highly-customizable trading-platform for advisors.
http://jlne.ws/HUP54d

Judge narrows Lehman $8.6 billion lawsuit vs. JPMorgan
Reuters via Yahoo! News
A federal judge has narrowed Lehman Brothers Holdings Inc’s $8.6 billion lawsuit against JPMorgan Chase %26 Co , potentially reducing how much creditors of what was once the fourth-largest U.S. investment bank may ultimately recover.
http://jlne.ws/HUP5ks

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.
http://www.sec.gov/news/digest.shtml

Fed Confirms Banks Must Conform to Volcker Rule by July 2014
By Ian Katz and Phil Mattingly – Bloomberg
Wall Street banks will have two years to implement the so-called Volcker rule so long as they make a “good faith” effort to comply with the ban on proprietary trading, U.S. regulators said.
http://jlne.ws/HUP5ky

Regulators: Banks Have Until July 2014 To Comply With Volcker Rule We Haven’t Written Yet
Forbes
The Volcker Rule, or section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, sets out to restrict banks from engaging in certain forms of activities and investments, chiefly proprietary trading.
http://jlne.ws/HUP3Jn

Ratings Firm Is in SEC Sights
By JEAN EAGLESHAM And JEANNETTE NEUMANN – WSJ
Securities regulators agreed to take an enforcement action against Egan-Jones Ratings Co., alleging the credit-rating firm’s regulatory filings included inaccuracies, according to the company.
http://jlne.ws/HUP5kH

Target on Manipulation, but It’s Tough to Hit
BY JERRY A. DICOLO, DAN STRUMPF AND JAMILA TRINDLE – WSJ
President Barack Obama’s announcement on Tuesday that he would pursue tougher penalties for oil manipulators shined a spotlight on commodities regulators, who have won relatively few cases in the murky world of energy trading.
http://jlne.ws/HUP14p

SEC Beware, Money Funds Can Bring System Down: Squam Lake Group
By the Squam Lake Group – Bloomberg
News reports suggest that the Securities and Exchange Commission may be backing away from a reform of money-market funds. This would be a mistake.
http://jlne.ws/HUP5AY

Volcker Rule Conformance Period Clarified
Press Release
http://jlne.ws/HUP5B5

High-frequency trader Optiver pays $14 million in oil manipulation case
By David Sheppard and Jonathan Stempel – Reuters
U.S. regulators claimed their first victory in a four-year old effort to crack down on oil market manipulation on Thursday, announcing a $14 million (8.7 million pounds) settlement with high-frequency trading firm Optiver.
http://jlne.ws/HUP5B7

New evidence gives boost to Gupta’s trial defense
Associated Press via Yahoo! Finance
Federal prosecutors gave a boost to the defense of a former Goldman Sachs board member Thursday after revealing that the billionaire hedge fund boss he is accused of tipping was receiving secrets about two public companies from a Goldman Sachs employee.
http://jlne.ws/HUP5B8

Opening Statement For Title VII Intermediaries Release – April 18, 201 By SEC Commissioner Elisse B. Walter
http://jlne.ws/HUP5Ba

SIFMA Statement On Guidance From Federal Reserve Regarding The Volcker Rule Conformance Period
http://jlne.ws/HUP400

Letter On Extraterritoriality To US Treasury Secretary Geithner And EU Commissioner For Internal Markets Barnier, From ISDA And Other Associations
http://jlne.ws/HUP405

SEC Names Diane C. Blizzard As Associate Director For Regulatory Policy And Investment Adviser Regulation
http://jlne.ws/HUP5Bd

ASIC accepts enforceable undertaking from auditor for breaching the rotation requirements
http://jlne.ws/HUP6VA

ASIC permanently bans former Melbourne CFD dealer
http://jlne.ws/HUP5Ru

New Zealand’s Financial Markets Authority Welcomes Ruling On Hotchin Asset Preservation Orders
http://jlne.ws/HUP6VI

Investments – Indexes – Managed Futures – Managed Funds

Hedge fund assets reach record levels in Q1
Reuters via Yahoo! News
Investors poured billions of dollars into hedge funds in the first quarter, helping to send total industry assets into record territory, data released Thursday shows. Investors allocated a net $16 billion to hedge funds in the first three months of the year, according to Hedge Fund Research, which tracks industry flows and performance.
http://jlne.ws/HUP6VL

Blackstone’s record assets boost earnings
Reuters via Yahoo! News
Blackstone Group LP , the world’s largest alternative asset manager, reported higher first-quarter earnings as demand for its real estate and credit funds pushed assets under management to a record and yielded more management fees.
http://jlne.ws/HUP5RD

Blackstone payouts hit as performance fees fall
By Dan McCrum in New York – Financial Times
Blackstone returned a fifth less cash to its investors in the first quarter compared with last year, even as the alternative asset manager reported strong growth in assets under management.
http://jlne.ws/HUP6VO

Renaissance Said to Start Trading New Fund With $3.5 Billion
Bloomberg
Renaissance LLC, the investment firm founded by Jim Simons, started trading its new hedge fund on March 1 with $3.5 billion in assets, mostly employees’ money, according to two people familiar with the matter.
http://jlne.ws/HUP7c4

Northern Trust named Best Administrator for UCITS Funds at 2012 HFMWeek European Hedge Fund Services Awards
Business Wire
Northern Trust has been named Best Administrator for UCITS funds at HFMWeek magazine’s European Hedge Fund Services Awards, for the second consecutive year.
http://jlne.ws/HUP7c9

ETF Adviser: Schwab could be ETF investors’ new Vanguard
Market Watch
Charles Schwab Corp. has aggressively entered the exchange-traded fund market with products that compete with both Vanguard and BlackRock Inc.’s iShares lineup. In this battle, investors win, writes Mitch Tuchman.
http://jlne.ws/HUP686

Jefferies Shuts Down Another ETF
http://jlne.ws/HUP7ce

Technology News

Broadridge Brings Insights to Web
Broadridge Financial Solutions, Inc., a technology services company focused on global capital markets, today announced the launch of their new corporate website www.broadridge.com.
http://jlne.ws/HUP7ci

CLS Investments Goes Live with Charles River IMS and Managed Services to Support Growth as Firm Doubles Assets under …
Business Wire via Yahoo! Finance
Charles River Development , a front- and middle-office investment management solutions provider, today announced that CLS Investments, LLC , one of the largest independent third party money managers in the United States, is live on the Charles River Investment Management Solution for equity and fixed income portfolio management, compliance, and trading and order management.
http://jlne.ws/HUP68c

UBS Uses IPad to Let Clients Help Design Trading Algorithms
Bloomberg
UBS AG (UBSN) will let clients design trading algorithms on Apple Inc. (AAPL) ‘s iPad, putting tailor-made tools in their hands more quickly in an effort to improve performance and capture equities market share, according to executives at the Zurich-based bank.
http://jlne.ws/HUP68f

Media News

On Twitter, Krawcheck Finds a Voice
By WILLIAM ALDEN – NY Times
Sallie L. Krawcheck may no longer work on Wall Street, but she is still in the finance fray — in 140 characters or less.
http://jlne.ws/HUP7sG

Reports

Briefing.com Economic Calendar
http://www.briefing.com/Investor/Public/MarketAnalysis/Calendars/EconomicCalendar.htm

USDA Today
http://www.nass.usda.gov/Publications/index.asp

CBOE Events Calendar
http://www.cboe.com/AboutCBOE/EventCalendar.aspx

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.
http://www.cmegroup.com/tools-information/calendars/

Asia-Pacific News

China approves new yuan ETFs in Hong Kong
Reuters via Yahoo! Finance
Chinese regulators have started licensing domestic funds to create new yuan-denominated exchange-traded funds for sale in Hong Kong, hoping to attract fresh investors to use yuan they have accumulated …
http://jlne.ws/HUP7sH

Thai Bourse’s Q1 Performance Achieves Targets – Average Daily Securities Trading Vol At THB31.25 Bln In Q1
The Stock Exchange of Thailand (SET) announces that overall performance in the first quarter achieved targets in all aspects of operations, as the exchange gears up to boost its effectiveness to cope with regional competition.
http://jlne.ws/HUP6oE

Beware: A Chinese Recession Is Coming
Forbes
It’s time for new stimulus in Beijing but in Europe austerity will mean depression and chaos.
http://jlne.ws/HUP7sP

China Rejects Millionaire’s Death Sentence
By CHUIN-WEI YAP – WSJ
A 30-year-old millionaire once labeled one of China’s richest women was spared the death penalty Friday, as China’s highest court ruled on a case that shone a spotlight on gaps in the nation’s justice and financial systems and drew sympathetic comments from Premier Wen Jiabao.
http://jlne.ws/HUP6oF

FSA extends temporary measures regarding restrictions on short selling and purchase of own stocks by listed companies
http://jlne.ws/HUP6oJ

HKEx: Changes Of Designated Securities For Short Selling
http://jlne.ws/HUP6F5

Dalian Commodity Exchange Notice On Newly Listed Contracts
http://jlne.ws/HUP6F8

Frontier Markets

Malawi Stock Exchange Weekly Trading Report-20th April, 2012
http://jlne.ws/HUP6Fc

The Egyptian Exchange (EGX) Monthly Statistical Report March 2012
http://jlne.ws/HUP7Jd

Miscellaneous News

Who is Wall Street’s Voldemort, and why is he so feared?
Washington Post
Bruno Iksil, a London-based trader for JPMorgan Chase, single-handedly moved the derivatives market last week by making huge bets on corporate bonds, panicking other hedge fund managers who took to calling him “Voldemort” for his power over Wall Street.
http://jlne.ws/HUP6Fh

Fasten Your Seatbelts: High Frequency Trading Is Coming To The Treasury Market
Zero Hedge
In what may be the gray swan that all hell is about to break loose, we read that one of the world’s largest hedge funds, British Man Group with $58 billion in AUM , is about to launch High Frequency Trading – the same high volume churning, sub-pennying, liquidity extracting, stub quoting and quote stuffing parasitic algorithms that frequently crash the equity, and as of recently the FX and commodity markets, into that most sacred of markets: US Treasurys.
http://jlne.ws/HUP6Fl

Battle Over a Chinese Company Turns Physical
By MICHAEL J. DE LA MERCED – NY Times
It may be a tiny Chinese educational company worth a little over $200 million. But the ChinaCast Education Corporation has found itself embroiled in a battle worthy of a John Grisham novel.
http://jlne.ws/HUP1kR

Shunning young investors could hurt brokerages
By Caitlin Nish – MarketWatch
Big brokerages see higher profits in getting their advisers to focus on wealthier clients and to shed those with investable assets of less than around $250,000. But, by neglecting younger middle-class clients now, the so-called wirehouses risk losing out on the next generation of rich investors.
http://jlne.ws/HUP1RO

John Lothian Newsletter

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CEO, Trading Technologies

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