John Lothian Newsletter: LCH.Clearnet in Discussion to Buy Nasdaq’s Rate Clearinghouse; Hedge fund industry fights criticism; Former MTR Chief Replaces Arculli at Hong Kong Bourse

Apr 24, 2012

LCH.Clearnet is talking to Nasdaq OMX about buying its IDCG clearinghouse. The hedge fund industry, along with continuing to grow, is continuing to fight criticism that funds don’t add much investment value. Chow Chung-Kong, formerly CEO of MTR Corp., is named to take over from Ron Arculli at HKEx. In the US, ICE debuts a web site; CME Group discards a building; and the MF Global trustee is annoyed at a regulatory loophole that helped cause the whole mess.

Observations – Statistics – Commentary

CME Sells Chicago Board of Trade Buildings for $151.5 Million
By Hui-yong Yu and Matthew Leising – Bloomberg
CME Group Inc., the world’s largest futures exchange, sold the north and south towers of its Chicago Board of Trade complex for about $151.5 million.

***** I hope my keys work today.


ICE announces the launch of new website
ICE has plugged in a new and improved look for its main website at The streamlined design speeds the access to information and features:
* New log-in and quick access to technical support.
* Fast load times and powerful search.
* Knowledge Center centralizes access to all digital resources

Comments or questions? Send email to

**** How fast is the new site? It is Jimmy John’s fast!!!!


DTCC Board Of Directors Elects Michael C. Bodson President And CEO
The Depository Trust & Clearing Corporation (DTCC) today announced that its Board of Directors has elected Michael C. Bodson, currently Chief Operating Officer, as President and Chief Executive Officer of the company, effective July 1. Bodson succeeds Donald F. Donahue who will retire at the end of July.

**** JLN editors interview Mr. Bodson yesterday. Look for the interview soon.


MarketAxess to Offer Its Trading Platform in Quebec
MarketAxess Holdings Inc., the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, high yield bonds, emerging markets bonds, credit default swaps (CDS) and other types of fixed-income securities, today announced it has received regulatory approval from the Investment Industry Regulatory Organization of Canada (IIROC) to operate its trading platform in Quebec, Canada. MarketAxess has been operating in Ontario since 2008, and is a member of IIROC and the Canada Investor Protection Fund (CIPF).

**** The barriers to entry to Quebec are extensive, including ramparts that form city walls around Old Quebec.


The Man Behind the Big Board
It fell to Duncan Niederauer, as leader of NYSE Euronext since late 2007, to gently persuade employees, investors, and the world at large that the parent of the New York Stock Exchange wasn’t especially dependent on its famous floor in New York, or even predominantly a stock exchange any more.

**** The right man for the job.


Enter the revolving regulators
By Brooke Masters, chief regulation correspondent – Financial Times
When the UK’s chief securities enforcer Margaret Cole announced last month that she would become general counsel of PwC, the professional services firm, she became one of the highest profile examples of the growing tendency of regulators to switch hats with corporate executives on the other side of the fence.

**** One of the ideas on FuturesCrowd is for a one year ban from going to work for a company you regulated.


Tabb Group agrees alliance with AsiaEx
By Jeremy Grant – Financial Times
Tabb Group has agreed an “exclusive strategic alliance” with AsiaEx Consulting, based in Singapore, as the New York-based markets consultancy expands its reach beyond the US and Europe.


A super contango in fear
Theo Casey – Financial Times/FT Alphaville
The year is 2017. Bank of England governor Sir Gordon Brown hints at a ninth round of QE. Implementation of president Herman Cain’s “999” tax policy sees US debt downgraded by Western ratings agencies. And scientists warn the hole in the ozone layer has widened as a consequence of the Swiss National Bank burning its abundance of now obsolete euros.


High-Speed Trading: My Laser Is Faster Than Your Laser
A new transatlantic cable makes high-speed trading even faster through shorter distances and better lasers


‘Tainted,’ but Still Serving on Corporate Boards
When David M. Poppe sat down a little over a week ago to write a letter to his investors, he knew he was taking an unusual step. Mr. Poppe, who manages money for the Sequoia Fund, one of the most well-respected institutional investment firms in the country, made his letter public last Thursday, setting off a debate within the upper echelons of corporate boardrooms.


Orc Releases Gateway Development Kit For Building Custom Connectivity – Demonstrates Open Orc Architecture With New Toolset That Facilitates Custom Development Of Connectivity Solutions And Systems Integration
Orc Group, the leading provider of technology and services for the global financial industry, today announced the Gateway Development Kit that enables Orc customers to build custom connectivity to exchanges, brokers, in-house order management systems and market data systems or vendors.


Barney Frank: CFTC Sef rules ‘excessive’
Peter Madigan – Risk magazine
The Commodity Futures Trading Commission (CFTC) was “excessive” in parts of its draft rules on swap execution facilities (Sefs), according to Barney Frank, the ranking Democrat member on the House Financial Services Committee.


Throwing good money after bad
By Irwin Kellner, MarketWatch
You might as well flush down the drain the $430 billion just committed to the International Monetary Fund, for all the good it will do to keep the euro zone from breaking up.


David Clelland Offers Insight Into 2012’s Hottest Alternative Investment, Scotch Whisky
Marketwire via Yahoo! Finance
Quickly emerging as 2012’s new, noteworthy alternative investment, fine and rare whisky is continuously outperforming such lucrative investments as gold, according to the whisky valuation experts.


MarketsWiki Page of the Day
Michael Bodson


MarketsWiki Recent Updates


John J. Lothian; Michael Bodson; Ronald Arculli; Bruce Goldberg

Companies, Organizations and Groups

First American Discount Corporation; Model Validation Council


22,394,135 pages viewed, 6,826 articles, 139,482 edits
MarketsWiki Statistics

Lead Stories

LCH.Clearnet in Discussion to Buy Nasdaq’s Rate Clearinghouse
By Matthew Leising – Bloomberg
LCH.Clearnet Group Ltd., the world’s largest interest-rate swaps clearinghouse, is in discussions to buy Nasdaq OMX Group Inc.’s International Derivatives Clearing Group LLC. The companies have signed a non-binding agreement, London- based LCH said today in an e-mailed statement. No terms of the deal, which is still being negotiated, were released.

Hedge fund industry fights criticism
By Sam Jones – Financial Times
The hedge fund industry has never been bigger. According to figures released last week, hedge funds now manage more than $2.13tn in assets on behalf of their clients. Gone too are the merely superwealthy: the majority of hedge fund investors are now pension funds, insurance companies or other sophisticated institutions. But this does not mean that hedge funds are better.

Former MTR Chief Replaces Arculli at Hong Kong Bourse
Chow Chung-Kong, the former chief executive officer of subway operator MTR Corp., was named as the chairman of Hong Kong Exchanges & Clearing Ltd. today and declared he would capture opportunities for Asia ‘s biggest bourse.

Loophole Irks MF Global Trustee
Giddens to Testify That Wiggle Room That May Have Increased Shortfall at Firm Should Be Ended
A bankruptcy trustee overseeing part of MF Global Holdings Ltd. urged the closing of a regulatory loophole that might have increased the shortfall in customer money caused by the securities firm’s collapse.

TriOptima service targets counterparty risk
By Philip Stafford – Financial Times
Nine of the world’s largest off-exchange derivatives dealers are working with TriOptima, the post-trade group, on a service designed to reduce exposure to counterparty credit risk emerging from new regulations that will reshape derivatives trading.

How the Euromess could roll back Dodd-Frank
Washington Post
Given the mess that Europe’s in right now, no one wants to disrupt the continent’s banking system. That’s probably part of the reason U.S. officials are thinking about giving foreign banks – and the foreign branches of U.S. lenders – a free pass when it comes to the new derivatives regulations that are coming down the pipe.

Political risk returns to eurozone debt crisis
By Richard Milne – Financial Times
The debt crisis has once more infected the core of the eurozone. Political uncertainty in France and the collapse of the coalition in the Netherlands, both countries until now regarded as relatively safe from contagion in Europe, have stoked fears the eurozone crisis could be about to intensify further.

Music Stops for Wall Street Bankers
Wall Street’s latest problem: too many bankers and not enough deals. Amid new regulation, lower profits and a dreary market for mergers and acquisitions, several banks are planning to trim investment-banking units that were built for an era of deals aplenty.

Memo to Citi Directors: Wake Up on Pay
Citigroup Inc.’s shareholders have spoken but is anybody listening? The rejection of Citi’s compensation plan at last week’s annual investor meeting is more than a stinging rebuke for its board and management. It is a shot across Wall Street’s bow on the issue bankers most care about: pay.

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

Beware the Power of Bond Indexes
What drives government bond markets? Growth, inflation and central-bank and government policy are the orthodox answers. But as both South Africa and Portugal have discovered, bond indexes have a lot of clout too, because of the sway they have over investment portfolios.

Environmental Trading News

Australia flags Asia-Pacific carbon trading market
ABC Radio Australia
Australia’s Climate Change Minister, Greg Combet, has flagged the possibility of a common carbon trading market in the Asia-Pacific.

EU may discuss use of sovereign CO2 permits in ETS
The European Commission could discuss the possibility of allowing Europe’s emitters to use some government-held Kyoto carbon permits to meet caps under the European Union’s emissions trading scheme, an EU official said on Monday.

Oilsands not a sticking point in EU trade talks
CBC News
Canada’s oilsands aren’t a sticking point in trade talks with the European Union, Denmark’s trade minister said today in Ottawa.

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

Exchange & ECN News

SIX Swiss Exchange Successfully Upgrades to INET-Based Trading Platform From NASDAQ OMX
The NASDAQ OMX Group, Inc. announces that the SIX Swiss Exchange today successfully completed its upgrade to a new trading platform based on NASDAQ OMX’s world-leading INET technology.

CME Group Announces Sale of Chicago Board of Trade Building to GlenStar Properties LLC and USAA Real Estate Company
Press Release
CME Group today announced the sale of two of the three buildings that comprise the Chicago Board of Trade (CBOT) Building Complex located at 141 W. Jackson to a joint venture between GlenStar Properties LLC and USAA Real Estate Company.

CBOE Holdings Announces Date for 2012 Annual Meeting
CBOE Holdings, Inc. today announced that its 2012 Annual Meeting of Stockholders is scheduled to be held at 9:30 a.m. Central Time, on Thursday, June 14, 2012, in the fourth floor lounge of the Chicago Board Options Exchange (CBOE), 400 S. LaSalle Street, Chicago, Illinois.

Russia’s Micex-RTS Equities Exchange Extends Trading Halt
Russia’s Micex-RTS Exchange has extended a technical halt and the situation is considered an emergency, according to a statement on its website.

BATS Chi-X Europe Connectivity Available From Interxion

Court Supports New Zealand’s Financial Markets Authority Adviser Decision

Banks, Brokers & Dark Pools

GFI Cut to Junk by S&P as Trading Volumes Dim Revenue Outlook
By Matthew Leising
GFI Group Inc. had its credit ratings cut to below investment grade by Standard & Poor’s as the broker of transactions between banks faces lower trading volumes.

CAPIS Launches Futures Trading Desk
Business Wire
Capital Institutional Services, Inc. (CAPIS), one of the industry’s top institutional agency brokerages and research providers, today announced the launch of their futures trading desk. The futures desk is part of CAPIS’ Derivatives Trading operation, a full-service trading desk providing options and exchange-traded futures.

Wells Fargo: The next big bank showdown?
CNN Money
Wells Fargo’s upcoming annual meeting could prove to be just as significant as the pay rebuke Citigroup suffered last week. Here are some of the key issues at stake.

Jefferies hires internet analysts from UBS
Market Watch
Jefferies Group Inc. JEF has hired Internet company analysts Brian Fitzgerald and Brian Pitz from UBS AG (UBS, UBSN.VX), according to people familiar with the situation. Fitzgerald will join the investment bank in late-May, while Pitz will start at the firm in the middle of June, one of these people said.

David Lu Appointed Head of Asia Investment Banking
Business Wire via Yahoo! Finance
Cowen Group, Inc. today announced that David Lu has been appointed Head of Asia Investment Banking. Mr. Lu, who is based in Hong Kong, will be responsible for leading all aspects of Cowen’s China-based investment banking platform, Cowen and Company Asia, including capital markets and financial advisory services.

UBS taps private equity chief to boost deals
Hartford Courant
NEW YORK (Reuters) – UBS AG , the Swiss bank that this month suffered the departure of some of its most senior dealmakers in the U.S., said on Monday it hired the former head of Bank of America Corp’s buyout arm to bolster its deals coverage.

HSBC Names Alexi Chan Asia Head Of Debt Capital Markets Origination
Dow Jones
HSBC Holdings PLC (HBC) Monday named Alexi Chan as head of debt capital markets origination for Asia, with immediate effect.

J.P. Morgan names Jeff Urwin CEO of Asia Pacific
Business Wire via Yahoo! Finance
J.P. Morgan today announced that Jeff Urwin, Head of Global Investment Banking Coverage, Capital Markets and Mergers & Acquisitions, will take on the additional role of CEO of Asia Pacific, based in Hong Kong.

David Weidner’s Writing on the Wall: Sallie Krawcheck: Don’t blame me
Market Watch
Why do Wall Street washouts, their fortunes in the bank, suddenly become reformers when it’s too little, too late? Sallie Krawcheck says despite appearances, she’s not one of them.

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.

SEC Charges Chinese Company and Executives with Lying About Asset Values and Use of IPO Proceeds
The Securities and Exchange Commission today charged a China-based oil field services company and two senior officers involved in a scheme to intentionally mislead investors about the value of its assets and its use of $120 million in IPO proceeds. The SEC additionally charged the company’s chairman of the board involved in a separate $40 million theft from the company.

SEC Charges Former CalPERS CEO and Friend With Falsifying Letters in $20 Million Placement Agent Fee Scheme
The Securities and Exchange Commission today charged the former CEO of the California Public Employees’ Retirement System (CalPERS) and his close personal friend with scheming to defraud an investment firm into paying $20 million in fees to the friend’s placement agent firms.

Federal Court in California Orders Forex Liquidity LLC to Pay $400,000 for Failing to Maintain Required Net Capital and Books and Records
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a consent order of permanent injunction requiring defendant Forex Liquidity LLC (FXLQ) of Santa Ana, Calif., to pay a $400,000 civil monetary penalty to settle CFTC charges that it was undercapitalized and failed to maintain required books and records (see CFTC News Release 5426-07, December 19, 2007).

FSA insists responsible executives be named
By Brooke Masters, chief regulation correspondent – Financial Times
The Financial Services Authority, the City watchdog, is insisting that banks and other financial companies identify by name which senior executive will be responsible for dealing with particular regulatory or enforcement concerns.

ISITC Europe Calls For Closer Collaboration Between Industry Bodies In Financial Services
ISITC Europe, the industry group dedicated to improving the operational efficiency of the global financial industry, is looking to promote closer collaboration with other key associations and trade bodies across Europe, North America and worldwide.

UK’s Financial Services Authority Contacts More Than 75,000 People To Warn Them They Are Being Targeted By Financial Conmen

Swedish Financial Supervisory Authority – Finansinspektionen – Revokes The Authorisation For Skandinavisk Fondkommission AB

Investments – Indexes – Managed Futures – Managed Funds

Hedge Funds Significantly Outperformed Equities, Bonds and Commodities over the Past 17 Years
Hedge funds significantly outperformed traditional asset classes such as equities, bonds and commodities over the last 17 years according to a new study by The Centre for Hedge Fund Research at Imperial College in London. The research, commissioned by KPMG, the international audit, tax and advisory firm, and the Alternative Investment Management Association (AIMA), the global hedge fund association, is the most comprehensive of its kind to date.

TABB Group Announces Strategic Alliance With Singapore-Based AsiaEx – Capital Markets Firm Expands Research And Consulting Services Across Asia
TABB Group announced today that it is expanding its research and strategic advisory services to financial firms across the Asia-Pacific (APAC) region through an exclusive strategic alliance with AsiaEx Consulting Pte Ltd. Based in Singapore, AsiaEx is led by capital markets industry veteran Chris Price.

Average fund fee down as investors seek low costs
Reuters via Yahoo! Finance
Mutual fund investor paid slightly less in average fees in 2011 as shareholders shifted money to lower-cost funds and share classes, according to two studies released on Monday.

B. Robert Williamson, Chilton Manager, Found Dead in Car at 55
B. Robert Williamson Jr., a portfolio manager at Chilton Investment Co. and co-founder of a hedge fund that closed in 2010 amid a wave of redemptions, has died during a visit to his native North Carolina. He was 55.

TriOptima Introduces Its New triBalance Service For Reducing Systemic Risk By Rebalancing Counterparty Credit Exposure For Cleared And Uncleared OTC derivatives

TRG Markets Launches As Market Structure Consulting Firm With Hirander Misra As Non-Executive Chairman

Nine new Lyxor ETFs launched on Xetra

Exchange Traded Concepts Partners with Horizons Exchange Traded Funds on Covered Call ETF Series

KBW Announces Change to Global ex-U.S. Financial Sector Index (KGXSM)

Technology News

SunGard Adds TOM MTF Connectivity to Valdi Market Access Trading Platform
SunGard’s Valdi Market Access service now provides access to TOM MTF, a multilateral trading facility located in Amsterdam, Netherlands, facilitating member participation on this new trading platform. TOM MTF offers trading in shares, derivatives and exchange-traded funds.

Global Investment In Sell-side Market-Data Distribution Technology Climbs To USD3.6B In 2012, Says TABB
According to new research from TABB Group, a battle is brewing within today’s institutional investment market data marketplace. The “need for speed” is in direct conflict with the “need to save” as cost versus performance becomes an issue for many of today’s largest market data users.

ETX Capital Launches Multiple Watchlists – Latest In A Series Of Platform Innovations Designed To Enhance Customer Experience

eClerx Launches TotalHedge3 its ‘Shrink-Wrapped’ Hedge Fund

Alpha Omega Solutions and Consultancy Services Ltd Becomes FINCAD Channel Partner in Hong Kong

Media News

Thomson Reuters to Sell Unit to Veritas Capital
Thomson Reuters Corp. will sell its health-care business to private-equity firm Veritas Capital for $1.25 billion in an all-cash deal that will help the data and analytics provider focus more on its struggling core financial-markets business.

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

DealBook: China’s Biggest Banks Are Squeezed for Capital
International Herald Tribune
Mainland Chinese banks are turning to markets to raise funds, even as they report strong profits and say their balance sheets are solid.

New H.K. stockmarket chief promises to build trust
AFP via Yahoo! News
Hong Kong’s new stock exchange chief vowed Tuesday to provide an “orderly and fair” trading platform, amid concern about low quality listings in the world’s biggest IPO market.

SMX successfully completes first physical delivery in Black Pepper Futures

Caixin Online: For reforms in China, it’s a matter of priorities
Market Watch
Financial reforms should emphasize market entities over interest and exchange rates, Lu Lei writes for Caixin Online.

Japan’s BFC Asset seeks global macro, CTA managers
Reuters via Yahoo! Finance
Japan’s independent investment adviser BFC Asset Management is seeking foreign hedge fund managers of global macro funds and managed futures to boost the total assets it helps manage, its chief told Reuters on Tuesday.

China’s Economy, Rates, Currency Policy
Michael Spencer, the Hong Kong-based chief economist for Asia at Deutsche Bank AG, talks about China’s economy, housing prices, and the country’s fiscal and monetary policies. He speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.”

Osaka Securities Exchange: Notice Of Payment Of Dividends (Concerning Commemorative Dividends For The 10 Year Anniversary Of Demutualization

Tokyo Stock Exchange Publish The Index Value Of TSE Home Price Index For February

Osaka Securities Exchange Financial Statements [FY2011 Results]

Appointment Of HKEx Chairman And Committee Members

Shanghai Stock Exchange Vice President Stresses Institutional Investors’ Role in Blue Chip Market

Tokyo Grain Exchange SPAN Parameters Effective From May 1, 2012 To May 15, 2012

Shanghai Stock Exchange: SSE 100, 150 Indices Released

HKEx: Poll Results Of The 2012 Annual General Meeting And Changes In Directorate

Hong Kong’s Securities And Futures Commission: Court Fixes Date Of Insider Dealing Trial Of Former CITIC Senior Executive

Implementing ChiNext Delisting System And Improving ChiNext Listing Rules – Shenzhen Stock Exchange ChiNext Stocks Listing Rules -Amended In 2012 – Officially Promulgated

Frontier Markets

RBC to double Mideast wealth management team: exec
Reuters via Yahoo! News
Royal Bank of Canada expects to double the number of wealth management employees in its Dubai office in the near future, and is open to opportunities for acquisitions, a senior executive said on Sunday.

Listing Of Pakistan Mercantile Exchange Gold 10 Ounces Futures Contract

Bursa Suq Al-Sila’ Expands Commodity Offerings With Rbd Palm Olein

John Lothian Newsletter

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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...

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