John Lothian Newsletter: Hong Kong Exchange’s Arculli Steps Down After Six Years; ICE Futures wins UK carbon sales mandate; US regulators look to ease swaps rules

Apr 23, 2012

HKEx’s Ron Arculli departs as chairman today, and shares his perspective of the future for the exchange. ICE Futures Europe gets the nod in Europe to host carbon auctions for at least the next three years. US regulators are looking for ways to let foreign banks and subsidiaries to avoid new domestic swaps rules.

Observations – Statistics – Commentary

Trading Technologies Cuts About 100 From Staff
By Jim Kharouf – JLN
Trading Technologies (TT) cut about 100 engineers from its staff Friday.

TT issued a statement Friday afternoon stating “As we’ve become more focused and efficient over the past few years, we made a difficult but necessary decision to lay off about 100 employees.”

TT had no further comment on the move but sources close to the firm said that the cuts had been in the works for some time now and are uniformly distributed across TT’s offices worldwide. The firm now numbers just under 500 employees, 75 percent of which are in the software engineering and technology space at the firm.

Sources also said the staff cuts are not a result of poor financial performance, nor the recent collapse of MF Global, a large TT customer. TT is a privately held firm and does not disclose financial figures.


OTC clearing II: Who should decide what has to be be cleared?
William Mitting – FOW
From the moment the mandate was passed down, the debate over who should decide what can and can’t be cleared raged. On the one hand, regulators are keen to ensure that the market does not obfuscate contracts in order to exempt them from central clearing, however there are concerns over how a regulator can force a clearing house to clear a product without assuming some responsibility for the viability of that clearing house.


MF Global Bondholders Feel Duped, With Good Reason
By William D. Cohan – Bloomberg
Much has been written about the $1.2 billion that remains missing from the accounts of MF Global Holdings Ltd.’s customers, one of the most egregious violations of trust on Wall Street at a time when confidence in the behavior of financial executives is extremely low.


Orc Group AB: Orc Releases Next Generation Derivatives Market Making Application for Asia
Business Wire via Yahoo! Finance
Orc Market Maker, a powerful market making solution features an ultra-low latency, server based trading engine for advanced quoting, hedging and superior trading performance.


Fidessa Extends Intelligence Suite In Europe – Augments Brokers’ Abilities To Grow Revenues, Control Costs And Improve Trading Decisions
Press Release
Fidessa group plc, provider of high-performance trading, investment management and information solutions for the world’s financial community, has today launched a number of new services under its Fidessa Intelligence initiative.


Insight into Swiss commodities industry
By Javier Blas, Commodities Editor – Financial Times
The publicity-shy Swiss-based commodities industry handles around a quarter of the world’s commodities flow after experiencing strong growth over the last two decades. Yet, the industry remains largely unknown. A new book is reviewing the sector – albeit from a partisan point of view.


Gino Vicci: Deal With It: A Veteran Trader’s Take on High-Frequency Trading
The Huffington Post
The high-speed trades driven by computers are in the cross-hairs of regulators in Washington. In spite of the controversy, some in the industry say high-frequency trading should be allowed to run its course.


The Challenges in Hedging Tail Risk
If there’s one word investors use to describe the markets over the past few years, it’s unpredictable. Unforeseen events were everywhere. Last year we had the Japanese tsunami and the Arab Spring, followed by the debt ceiling standoff in the United States and the subsequent credit rating downgrade. Even for a “predictable” event, like the European sovereign debt crisis, each twist seemed to catch investors off guard.


Aviva Mistakenly Fires All 1,300 Employees at Investment Unit
By Noah Buhayar – Bloomberg
Aviva Plc, the U.K.’s second- biggest insurer by market value, mistakenly sent an e-mail dismissing the entire staff at its investment unit before retracting the message.


ISO TC68 Meet the Market Educational Event; Hosted by the Federal Reserve Bank in Chicago
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Lead Stories

Hong Kong Exchange’s Arculli Steps Down After Six Years
Kana Nishizawa and Nick Gentle – Bloomberg
Hong Kong Exchanges & Clearing Ltd., surpassed by CME Group Inc. as the world’s biggest bourse by market value, will fall behind others if it’s not vigilant, said Ronald Arculli, who steps down as chairman today.

ICE Futures wins UK carbon sales mandate
By Philip Stafford – Financial Times
IntercontinentalExchange has won a contract from the UK government to host auctions to sell carbon permits in the next phase of the European Union emissions trading scheme.

US regulators look to ease swaps rules
By Shahien Nasiripour in Washington and Tom Braithwaite in New York – Financial Times
US regulators are exploring ways to give large foreign banks and overseas subsidiaries of US lenders a reprieve from stringent new derivatives rules, potentially alleviating one of the biggest concerns facing global financial institutions.

Euro-Region Debt Jumps to Highest in History of Single Currency
The debt of the euro region rose to the highest since the start of the single currency last year as governments increased borrowing to plug budget deficits and fund bailouts of fellow nations crippled by the fiscal crisis.

IMF’S Lagarde Enjoys Funds Victory Exposing Rifts Over Europe
Sandrine Rastello and Simon Kennedy – Bloomberg
Three months after waving her purse in front of global finance chiefs, Christine Lagarde filled it up with more than $430 billion in pledges for the International Monetary Fund. She may not enjoy her victory for long.

IMF is set to get its bigger bazooka
Financial Times
Christine Lagarde, managing director of the International Monetary Fund, is a happy woman: her institution will receive at least an extra $430bn in resources. This will substantially increase the IMF’s capacity to help if the eurozone crisis takes a turn for the worse.

World’s Highest Stock Valuations Signal Japanese Recovery
Lynn Thomasson, Yoshiaki Nohara and Lu Wang – Bloomberg
Japan’s stock market, hobbled by more than a decade of deflation, is showing companies will stage a full earnings recovery from the worst nuclear crisis since Chernobyl, pricing in the biggest rise in profits compared with other countries since 2001.

Japan insider trading fears reawaken
By Ben McLannahan in Tokyo – Financial Times
Just as foreign investor interest in the Japanese stock market has picked up, old fears have reawakened over the level of insider trading ahead of deals. In late 2010, Atsushi Saito, the Tokyo Stock Exchange president, pledged a purge on insider trading, saying he could not “bear the capital market to be dirty”.

Draghi’s ECB Rejects Geithner-IMF Push for Measures
As talks of global finance chiefs ended yesterday in Washington , euro-area central bankers from Draghi to Bundesbank President Jens Weidmann argued they have done enough by cutting interest rates and issuing more long-term bank loans.

MF Customers Press J.P. Morgan for Funds
By Aaron Lucchetti – WSJ
Customers of MF Global Holdings Ltd. are pushing regulators to get tougher on J.P. Morgan Chase JPM -1.16%& Co. about money that went missing from accounts just before the firm’s collapse.

Consumers ‘to be hit hardest’ by latest commodity proposals
Rebecca Hampson – Financial News
Commodity consumers and end-users are set to pay the price for revised commodity rules outlined by the European Commission last month, traders and lobby groups have warned. The caution comes as the latest instalment of the growing row over how commodities trading is regulated.

Environmental Trading News

ICE Futures Europe Statement: UK Government Emissions Auction

On this 42nd Earth Day (the day begun with a “teach-in” by then U.S. Senator Gaylord Nelson) it’s important to acknowledge this milestone and other significant beginnings: the 1970s creation of the Environmental Protection Agency; and as our friends at Ecosystem Marketplace note, the 40 years of environmental markets launched with the Clean Water Act. They spend some time on the highlights here: This Earth Day also comes in a week that kicks off another round of climate action talks for Europe. U.K. officials, writing an op-ed in The Guardian, revive their call for a more ambitious EU emissions target and a set-aside of permits to strengthen the ETS. Soc Gen says the EU has five market battles brewing at once. Both stories are found in our Leads section below.

Commentary: My Earth Day wish: A better human brain
Dave Roberts –
I would change the human brain. Thanks to millions of years evolving in small groups on the savannah, our brains are rather maladapted to being part of a single human tribe of billions, most of whom we will never see or know, with collective effects on our global habitat that play out incrementally over centuries and are irreversible and possibly unadaptable.

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

EU Court Receives Deutsche Boerse’s Legal Challenge To NYSE Deal Veto
Dow Jones
The European Union’s General Court has received Deutsche Boerse AG’s (DB1.XE) legal challenge to the EU’s decision to block its merger with NYSE Euronext (NYX), a court spokesman said Monday.

Eurex Clearing Partners With Pirum For Its Upcoming CCP Service For Securities Lending Market
Eurex Clearing, Europe’s leading clearing house, and Pirum Systems announced today that they have entered into a Connectivity Agreement to facilitate access to Eurex Clearing’s upcoming CCP service for securities lending.

Stock exchanges urged to make ESG demands
By Mike Scott – Financial Times
There are increasing calls for stock exchanges to become more involved in efforts to encourage the companies that list on them to consider more seriously environmental, social and governance issues.

Financial Year 2011: EEX Achieves Record Result In A Difficult Market Environment

SIX: A Strong Brand For A Strong Financial Center

TOM MTF Statistics Week 16 2012

[CBOE] NATO Summit

[CBOE] Trader E-News

[CBOE] Order Origin Code Requirements

[CBOE] CFLEX 2.0 Rollout Schedule and Settings

Infoblox Celebrates Completion of IPO and First Day of Trading on the NYSE

Banks, Brokers & Dark Pools

Exclusive: JPMorgan poised to sell U.S. metal concentrate unit
Reuters via Yahoo! Finance
JPMorgan Chase & Co is close to selling its U.S. metal concentrates trading arm and could announce a deal as early as Monday, two sources who were informed of the deal told Reuters this week.

GFI Market Data, a division of GFI Group Inc. and QUICK Corp. announced today that they have taken their relationship a step further and signed an agreement whereby GFI will supply QUICK with credit derivatives market data as of April 23, 2012.

Citigroup CEO and directors sued over executive pay
Reuters via Yahoo! News
Days after being rebuked by shareholders, Citigroup Inc Chief Executive Vikram Pandit and the bank’s directors have been sued by a shareholder accusing them of awarding outsized pay to top executives.

Deutsche Bank Said to Plan Charge From Actavis Sale
The bank may say it took an impairment of 300 million euros to 400 million euros when it reports first-quarter results April 26, said the people, who declined to be identified because talks are private.

Goldman Sachs under pressure to reveal lobby ties
Market Watch
Shareholders will vote on whether the bank should let the world know what lobby groups it works with and financially backs.

Paper: UBS Head Calls Tax Flap ‘Economic War’
The CEO of Swiss banking giant UBS AG has said the nation’s tax disputes with the United States and some European nations are “an economic war” putting 20,000 jobs at risk.

E.F. Hutton Breaks Silence
A group of former officials from the old brokerage firm E.F. Hutton & Co. plan to start a new boutique financial-advisory firm under the same name. The group, led by former E.F. Hutton and Smith Barney manager Frank Campanale, plans to announce Monday that it will launch the firm in coming weeks with the hiring of financial advisers and others, according to Mr. Campanale.

ICAP Updates NYFR Fixings
ICAP, the world’s leading voice and electronic interdealer broker, announces a change to the process for calculating NYFR Fixings, a survey-based indicator of 1- and 3-month unsecured bank funding costs.

HSBC yuan bond sale oversubscribed twice over
HSBC has raised 2 billion yuan ($317 million) after selling yuan-dominated bonds in London, the first such auction outside mainland China and Hong Kong.

BofA board $20 million settlement called inadequate
Reuters via Yahoo! News
Bank of America Corp directors, who were sued by shareholders for allegedly paying too much for Merrill Lynch & Co in 2008, must defend a proposed $20 million settlement of the claims in federal court in New York, court papers show.

JPMorgan wins second victory in Lehman-linked lawsuit
Reuters via Yahoo! News
JPMorgan Chase & Co on Friday won the dismissal of a pension fund lawsuit accusing it of mishandling its money by investing in notes from its client Lehman Brothers Holdings Inc, which later went bankrupt.

New Buy-Side Research Shows That The Use Of Dark Pools Is Inextricably Linked To Other Factors In Market Structure

Nordic Growth Market NGM AB: Nordea Bank AB (Publ) Increases Their Product Range On NDX Finland To Also Include Plain Vanilla Warrants

Joint Statement By The International Monetary And Financial Committee And The Group Of 20 Finance Ministers And Central Bank Governors On IMF Resources

Communique Of The Twenty-Fifth Meeting Of The International Monetary And Financial Committee (IMFC)

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.

Tribunal highlights UBS woes
By Caroline Binham and Megan Murphy – Financial Times
The case was intended, the regulator said, to establish “a benchmark against which senior managers in medium and high-impact firms will be judged”. That benchmark may seem pretty low after the Financial Services Authority failed in its first attempt to fine a chief executive for not properly supervising his team.

SEC Charges British Twin Brothers Touting “Stock Picking Robot” in Internet Pump-and-Dump Scheme
The Securities and Exchange Commission today charged twin brothers from the U.K. with defrauding approximately 75,000 investors through an Internet-based pump-and-dump scheme in which they touted a fake “stock picking robot” that purportedly identified penny stocks set to double in price. Instead, the brothers were merely touting stocks they were being paid separately to promote.

SEC Charges Father-and-Son Hedge Fund Managers Who Agree to Pay $4.8 Million to Settle Fraud Case
The Securities and Exchange Commission today charged a Boston-based father-son duo of hedge fund managers and their firms with securities fraud for misleading investors about their investment strategy and past performance.

London’s Senior Compliance Officers Reveal ESMA Is One Of The Biggest Issues In Market And Trading Surveillance

Financial Stability Board Reports To G20 On Progress Of Financial Regulatory Reforms

ISDA Response To European Commission Discussion Paper On The Debt Write-Down Tool/Bail-In

Federal Reserve Board Announces The Formation Of The Model Validation Council

ASIC permanently bans financial adviser following fraud conviction

Notice to investors and creditors of City Index Australasia Pty Ltd

Notice to investors and creditors of Goldsmith & Associates Pty Ltd

ASIC takes action on car finance advertising under credit legislation

Investments – Indexes – Managed Futures – Managed Funds

VC investments fall in dollars, deal volume in Q1
Mass High Tech: The Journal of New England Technology
Venture capitalists invested $5.75 billion in 758 deals in the first quarter of 2012, down from the $6.7 billion invested in 861 deals in the previous year’s quarter.

Chuck Jaffe: Hedge-fund ads are a game-changer
Market Watch
A provision of the Jumpstart Our Business Startups (JOBS) Act allows hedge funds to market themselves the portion of the public that qualifies to invest in private-equity pools. That sets a dangerous precedent, writes Chuck Jaffe.

BME Market Data To Offer New Information Products
BME, through its subsidiary BME Market Data, expands its range of information products for the Spanish stock market, among which are a new family of analytics products which, in a first stage, incorporate daily data on securities lending and margin buying as well as monthly information on floating capital tranches and liquidity of stocks.

[Video] HFR’s Heinz on Hedge Fund Strategy
Ken Heinz, president of Hedge Fund Research Inc., talks about the performance of global hedge funds. He speaks with Linzie Janis on Bloomberg Television’s “The Pulse.”

Lawsuit claims hedge fund exec has ‘untouchable’ management style
Stamford Advocate
Former trader Jeffrey Kong claims his old boss Don Brownstein , founder of hedge fund Structured Portfolio Management, sometimes adopted the managerial style of movie land gangster complete with baseball bat.

Once-Reviled Bond Trader Rebuilds
Rapidly hitting the buttons on his calculator, John Devaney totes up some of the things he had to jettison as his hedge fund crashed: a $36 million jet, $10 million helicopter, $45 million art collection and $22 million yacht called “Positive Carry,” named for an investment strategy that rakes in easy money. The financial crisis cost Mr. Devaney more than $100 million of his personal fortune and wiped out every penny of the $650 million invested in his hedge fund.

Deutsche Boerse: Nine New Lyxor ETFs Launched On Xetra

RBC Launches a China Trend-Following ETN

Technology News

Global Commodities Chooses Trayport’s GlobalVision Broker Trading SystemSM For European Power And Gas Markets

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

Closing Auction Needed on Hong Kong Exchange, Deutsche Bank Says
Hong Kong Exchanges & Clearing Ltd. should reinstate a closing auction for equities to help calm price swings at the end of the day, according investors polled by Deutsche Bank AG.

Goldman Sachs Holds 4.99% of ICBC Hong Kong-Listed Shares After Stake Cut – Hong Kong Bourse
Dow Jones Newswires
Goldman Sachs Group Inc. holds 4.33 billion shares of Industrial & Commercial Bank of China Ltd. following its stake cut, according to a filing with the Hong Kong bourse Friday.

Beijing hands CIC a further $50bn
By Henny Sender in Hong Kong – Financial Times
China Investment Corp, the Chinese sovereign wealth fund, has received a further $50bn in capital from the government.
The move was disclosed late last week in Beijing by CIC officials attending a forum for sovereign wealth funds and pension funds that meets twice a year.

Craig Stephen’s This Week in China: New jail threat for Hong Kong bankers
Market Watch
Hong Kong bankers might now face jail time for any shenanigans in the IPOs they underwrite, according to new rules under consideration. But, asks Craig Stephen, are the real culprits being targeted, or only those within easy reach?

FSA extends temporary measures regarding restrictions on short selling and purchase of own stocks by listed companies

Hong Kong’s Securities and Futures Commission Fines And Revokes The Licence Of Mega Capital (Asia) Company Limited

Shanghai Stock Exchange Market Closure Schedule For 2012 Labor Day

Dalian Commodity Exchange: Notice On The Adjustments To Trading Margins And Price Limits During Trading Halts During The 2012 International Labor Day Holiday

Frontier Markets

NSE denies trading error in system
Reuters via Yahoo! Finance
National Stock Exchange said it did not spot errors in its trading systems on Friday, denying a market speculation that a sudden fall in Nifty futures of as much as 6.7 percent had been caused by a trading error.

Macquarie hedge fund exits short bets in India on tax fears
Reuters via Yahoo! Finance
By Nishant Kumar – REUTERS
Macquarie’s Asia hedge fund has exited its short positions in Indian single stock futures in response to a controversial set of proposed tax rules that could lower investment returns.

HSBC to eliminate over 300 jobs in India, Economic Times reports via Yahoo! Finance
HSBC (HBC) says it will lay off over 300 banking employees in India, reports the Economic Times.

Egypt finmin says will get IMF funds from May: paper
Reuters via Yahoo! News
Egypt’s government expects funds from a new International Monetary Fund loan to start flowing from May after it told the fund it has the backing of political forces for a deal, the country’s finance minister was on Monday quoted as saying.

African Bank Chief Says Ready to Commit $45 Million to Malawi
New York Times
The head of the African Development Bank said on Sunday he is willing to provide $45 million in budget financing for Malawi to help new President Joyce Banda revive the struggling economy.

Qatar Investment Authority Has $30 Billion to Invest in 2012
Qatar Investment Authority, the Gulf Arab country’s sovereign wealth fund, has $30 billion to invest this year, board member Hussain Al Abdulla said.

Japan to forgive Myanmar debts, restart loans
Reuters via Yahoo! News
Japan has agreed to forgive Myanmar 303.5 billion yen ($3.72 billion) in debt and overdue charges, and resume development loans to the Southeast Asian country, the two nations said on Saturday, in a move to help foster the nascent democracy’s economic development.

Closure Of Bursa Malaysia Berhad For 2012 Labor Day

Dubai Gold & Commodities Exchange Weekly Market Commentary – April 22, 2012

MCX Weekly Market Report April 13, 2012 – April 19, 2012

John Lothian Newsletter

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