CME Group and IntercontinentalExchange consider joining a new trade body for resolving issues regarding derivatives data repositories. Singapore Exchange plans to reduce its minimum order size for securities trading, a move that it hopes will increase trading in blue chip stocks without increasing high-frequency trading. Even as the value of its stake in India’s MCX exchange falls, NYSE Euronext plans to sell it. CQG picks up the Most Interesting Man meme.

First Read

Lance Zinman

Lance Zinman, Katten Muchin Rosenman, SEC Hedge Fund Marketing Rule

Lance Zinman is a law partner at Katten Muchin Rosenman and head of the firm’s Chicago financial services practice. He regularly advises hedge funds, commodity pools, commodity trading advisors and proprietary trading firms on compliance and regulatory matters. He sat down with John Lothian News Editor-at-Large Doug Ashburn to discuss the SEC rule on private fund solicitation, released July 10, 2013. In the interview, Zinman cuts through the misinformation and explains the key points of the rules. He also explains how the 506 exemption may not be claimed by anyone with a “disqualifying event” and other limitations. He also highlights a few areas in which the rule is unclear or needs to be harmonized with other regulators such as the CFTC. According to Zinman, it remains to be seen whether this rule will truly usher in a new wave of marketing on behalf of hedge funds and other private funds.

Watch the video »


FIA Chicago Announces 2013 Scholarship Recipients
FIA Chicago is proud to announce the winners of our 2013 Scholarship Program. FIA Chicago has granted a total of $12,500 in scholarship awards – $2,500 to each of our five recipients. This is the 8th year in which the FIA Chicago Division has awarded scholarships and is the second consecutive year that five scholarships are being awarded. Since its inception in 2006, the FIA Chicago Scholarship Program has awarded 32 scholarships for a total distribution of $71,000.

The students are listed in alphabetical order:
Emily Ault, the daughter of William Ault of Newedge USA.
Patrick Connelly, the son of Mark Connelly of Macquarie Futures.
Kelly Fitzgerald, the daughter of Michael Fitzgerald of Deutsche Bank.
Joseph Hawrysz, the son of Joe Hawrysz of CME Group.
Erica Zak, the daughter of Sheila Zak of OCC.

For more details on each student, see the full release at


CQG 2014: The World’s Most Interesting Trading Product
Presented by Pat Kenny, The Trading Industry’s “Most Interesting Man”
September 10, 2013, 4:00 p.m.- 7:00 p.m. CT
Cantina Laredo, 508 North State Street, Chicago, IL 60654

Please join us for an informative presentation on CQG 2014. Learn about upcoming CQG Integrated Client enhancements, and enjoy cocktails and appetizers after the presentation. The presentation will begin at 4:30 p.m. This event will feature:
CQG 2014 enhancements
Mobile connectivity
Data visualization and foreign
exchange updates
Cocktails and appetizers

Space is limited, so please respond today if possible, but at the latest by September 5, 2013. Register at

***** The Most Interesting Man in the Trading Industry. Who thought up that one?


Delta Strategy Group Names Dr. James Overdahl Partner
Dr. James Overdahl, an expert in financial market litigation and the US financial regulatory environment, is joining Delta Strategy Group (DSG) as a Partner. Dr. Overdahl joins DSG from NERA Economic Consulting, a global provider of economic advice and analysis in business, legal, and regulatory matters.

***** This is a significant move for the Delta Strategy Group and opens up a lot of opportunity for them.


Cultural traditions do not excuse banks’ rule-breaking
Patrick Jenkins –
What is corruption? What is operating pragmatically within the parameters of a foreign country’s cultural norms? The distinction has been an issue for as long as international trade has existed, but all the more so since the US Foreign Corrupt Practices Act was passed in 1977. For banks – scrutinised more closely than any other sector following the financial crisis – the focus is particularly sharp these days.

***** Remember, if you are going to rob a bank, always wear a white collar.


Falcone Settles With SEC, Admits Wrongdoing
David Benoit – MoneyBeat – WSJ
Philip Falcone, a hedge-fund manager who made fortune and fame shorting the housing bubble, admitted to several allegations over how he ran his fund in a settlement with the Securities and Exchange Commission Monday.

***** Of course, the white collar should not be paid for with customer’s money.


Bitcoin recognized by Germany as legal tender
Virtual currency bitcoin has been recognized by the German Finance Ministry as a “unit of account”, meaning it is now legal tender and can be used for tax and trading purposes in the country.

***** This is a big mistake. I expect better from the German Finance Ministry.


White Paper on Block Pools: The Rise of Block Trading
Green Key Markets
The Dodd-Frank Act has led to a flurry of activity as market participants are now required to move almost all of their risk onto cleared exchanges or swap execution facilities. This white paper explores the advantages and disadvantages of exchange trading in both the equities and futures markets. It also proposes a new trading paradigm for institutional derivatives investors to access the positives of exchange trading while avoiding the negative aspects.

***** Pay attention here.


European FTT storm emits heat but little light
David Wigan – FOW
Among the regulatory initiatives to be introduced since the financial crisis, none has elicited as much passionate debate as the European Commission’s proposal to introduce a tax on financial transactions. The tax has been endlessly discussed by central banks, politicians, lobby groups and market participants, while opposition to the tax has become a cause celebre which unites the financial industry. However, with new European parliament proposals recently published, and some countries ploughing ahead with their own initiatives, there is little evidence that Europe’s politicians are ready to capitulate.

***** It is OK, the FTT will only lead to more suffering for the multitudes in the world. Nothing to worry about here.


BCS launches high-speed London-Moscow link
Tim Cave – Financial News
BCS Financial Group, one of the largest traders of securities on the Russian exchange, has today launched a new high-speed trading link between London and Moscow as it steps up its challenge to win order flow between the two centres.

***** So good luck with that.


India gripped by commodities exchange woes
James Crabtree in Mumbai –
India’s government would seem to have enough to worry about with its diving currency and growing concerns about economic stability. But the deepening anxieties are being compounded by a more local worry: the shutdown of a commodities exchange that has left prominent domestic brokerages facing potentially heavy losses and has led to broker demands for a government rescue package for the bourse.

***** Way to go Jignesh.


Money or Honesty? Which Do Investors Want Most From Managers?
U.S.News & World Report LP via Yahoo! News
People invest to make money, and always will. But getting the biggest returns is not the top concern for investors in choosing whom they want to handle their money, says a new survey from the CFA Institute. The new bottom line? Trust.

***** Return of capital is more important than return on capital. Read this newsletter and you can only come to that conclusion.


Debating the SEC, HFT, Monopolies and the Collapse of IPOs
Steve Wunsch – TabbFORUM
Steve Wunsch’s recent three-part series on TabbFORUM about the SEC’s role in the rise of HFT and the collapse of IPOs drew a sharp critique from Keith Ross, CEO of PDQ ATS. Here, Wunsch offers his response, arguing ‘that economic decline and potentially much worse has been threatening our economy ever since we ceded the stock market monopoly to government.’


Jackson Hole flying little lower this year without Fed chair
Reuters via Yahoo! Finance
Central bankers from around the globe gather later this week in Jackson Hole, Wyoming, but for once, the absence of the Federal Reserve chairman means their annual get-together is not likely to spoil the summer vacation of traders on Wall Street.



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Lead Stories

CME and ICE mull joining new European repositories body
Philip Stafford –
CME Group and IntercontinentalExchange, the US derivatives groups, are among the market participants considering taking part in a new trade body being set up to resolve issues around repositories, the new derivatives data warehouses mandated by global regulation.

SGX plans to boost blue chip liquidity
Anish Puaar – Financial News
The Singapore Exchange is consulting the market on plans to slash its minimum order size for securities trading, which it says will encourage greater trading in blue chips but will not lead to a rise in high-frequency trading.

NYSE remains keen on MCX stake sale
Philip Stafford –
NYSE Euronext is still planning to divest its stake in Multi Commodity Exchange of India, even as the value of the futures exchange has dropped dramatically in recent weeks.

CME default fund contributions likely to rise following CFTC move
Tom Osborn –
Clearing members at CME Group and other US central counterparties (CCPs) could be hit with higher default fund contributions following rule changes announced by the Commodity Futures Trading Commission (CFTC) last week.

Philippine Markets Shut By Floods Tuesday
Cris Larano – MoneyBeat – WSJ
MANILA–Philippine spot currency, bond and stock markets will remain closed Tuesday as torrential rains worsen flooding in the capital.

Banks Are Falling Short in Planning for the Worst, Fed Says
Most large banks appear to have been sailing through the annual “health checkups” they have had to undergo since the financial crisis. But on Monday, the Federal Reserve described some significant shortcomings in the banks’ responses to the so-called stress tests.

NSEL short of money for first tranche payback
Business Standard
NSEL, which was to pay out Rs 174.20 crore today as per the settlement calendar, may default as till yesterday the exchange had recieved only Rs 81.13 crore. As per regulator the Forward Markets Commission if the payout does not happen then the exchange will have to start default process against members who have not paid as per their commitment.

FMC trashes NSEL’s figures
Business Standard
National Spot Exchange Ltd on Monday found itself stuck in a familiar situation – in the line of fire from the consumer affairs ministry, as well as the Forward Markets Commission. Within hours of the exchange posting a detailed list of buyers and sellers on its website on Monday, FMC threatened serious action against NSEL for giving incorrect information. The regulator also raised doubts over reliability of the figures given by the exchange.

Will NSEL put the group’s other exchanges in a spot?
With National Spot Exchange Ltd’s Rs.5,500 crore settlement hanging fire, it’s not surprising that some trading members at the group’s other exchange, Multi Commodity Exchange of India Ltd, are getting jittery.


Obama urges regulators to enact Wall Street rules
Three years after President Obama signed a sweeping overhaul of lending and high-finance rules, scores of regulations are yet to be written, let alone enforced. In a private meeting on Monday, the president prodded bank regulators to execute the law swiftly.

Readout Of The US President’s Meeting With Independent Financial Regulators
This afternoon, President Obama hosted a meeting with lead independent financial regulators. In addition to White House staff, participants include the Comptroller of the Currency, the Director of the Consumer Financial Protection Bureau (CFPB), the Acting Director of the Federal Housing Finance Agency (FHFA), and the chairs of the Board of Governors of the Federal Reserve System (FRB), the Commodity Futures Trading Commission (CFTC), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration, and the Securities and Exchange Commission (SEC). Treasury Secretary Jack Lew also attended the meeting.

SIFMA Statement On President Obama’s Meeting With Financial Regulators

Sebi working on norms to incorporate new powers
Business Standard
The market regulator, Securities and Exchange Board of India (Sebi), is framing new regulations and operational framework to start exercising the powers that it has been newly bestowed with. A team at Sebi is said to be working on at least two new set of regulations that will enable it to conduct search and seizure operations and recover money through disgorgement, sources said. Disgorgement is to repay ill-gotten gains to those affected. Also, new systems are being put in place for early detection and crackdown of collective investment schemes (CIS).

ISDA, GFMA & IIF Response To The Consultative Document Fundamental Review Of The Trading Book Rules On Liquidity Risk

Exchanges & Trading Facilities

German Econ Min,Deutsche Boerse Sounding Out Start-Up Trading Segment
Ulrike Dauer –
Germany’s economy minister and exchange operator Deutsche Boerse AG are sounding out the possibility of launching an exchange trading segment to help finance start-up companies. On-exchange trading would enable Germany’s small but innovative start-ups to broaden their investor base and finance growth, says Florian Noell, chairman of the board of the German Start-Ups association.

Montreal Exchange Introduces Implied Pricing On CGZ, CGF & LGB
On August 19th, 2013, MX will introduce implied pricing on their Two-year Government of Canada Bond Futures (CGZ), Five-year Government of Canada Bond Futures (CGF) and Thirty-year Government of Canada Bond Futures (LGB) contracts.

Penetration Pricing in the Futures Markets: This is a Bad Thing?
Streetwise Professor
The CME has seen increased volumes in its cash settled Brent contract in the aftermath of its launch of a program that pays rewards to those who trade the contract. This is a standard way to attract volume to a contract competing against an incumbent/dominant contract. Indeed, it’s probably the only way to do it.

FIF Capacity Statistics For July 2013: One New Record Peak: SIAC CTS.
This month’s bulletin from the Financial Information Forum (FIF) finds that SIAC OPRA was down 27% to 4,817,833 mps over the 1 second interval. SIAC CTS was up 151% to a record 172,510 mps over the 1 second interval.

Equity Options Exercise Totals BRL 4.02 Billion On BM&FBOVESPA

Hedge Funds & Managed Futures

Blackstone builds Europe property fund
Henny Sender in New York –
Blackstone’s real estate arm has quietly begun raising a new European fund, targeting up to $5bn according to prospective investors, as deal flow and economic sentiment on the content improves.

KKR Taps Former Willis CEO Plumeri to Be Senior Adviser
Ryan Dezember – MoneyBeat – WSJ
Veteran finance executive Joseph J. Plumeri, who helped shepherd one of KKR & Co.’s most profitable investments, has joined the New York buyout firm to help turn around another one of its big buyouts.

Investec to Wind Down Australian Private Equity Portfolio
Gillian Tan – MoneyBeat – WSJ
South Africa’s Investec Ltd., which is restructuring its Australian arm and laying off a total of around 50 staff, will wind down its private equity portfolio as its seeks to shore up its balance sheet, according to people familiar with the matter.

Wharrier back to BlackRock
Mike Foster – Financial News
UK equity manager Mark Wharrier has quit Stephen Zimmerman’s NewSmith Capital Partners to return to his old stamping ground.

Macquarie Mexican REIT Announces Changes to Investor Relations Function
Business Wire via Yahoo! Finance
Macquarie Mexican REIT today announced that Eduardo Camarena is stepping down as Head of Investor Relations for MMREIT to pursue a new opportunity with a family office.

Visium Asset Management Launches its First Mutual Fund
Visium Asset Management, LP (“Visium”) announced the launch of the Visium Event Driven Fund (VIDVX), the first mutual fund offering for the alternative asset management firm. Founded in 2005, Visium manages in excess of $4.7 billion in assets as of June 30, 2013 across six private funds.

Banks & Brokers

Judge endorses use of fraud law against Bank of America
A federal judge has endorsed a broad interpretation of a savings-and-loan era law that the Justice Department is trying to use in cases against Wall Street banks.

Oversight Board Faults Broker-Dealer Audits
Auditors performed complete and correct audits of at least three brokerage firms last year, the Public Company Accounting Oversight Board said Monday. That amounted to only 5 percent of the 60 audits reviewed by the board, but it may still be a sign of progress.

J.P. Morgan’s Legal Pains in Charts
David Benoit – MoneyBeat – WSJ
J.P. Morgan in recent years seized Bank of America’s crown as the nation’s largest bank by assets and deposits. Now J.P. Morgan is wresting a more ignominious crown from BofA: Legal Punching Bag.

JPMorgan faces Dept of Justice probe on energy trades: WSJ
JPMorgan Chase & Co is being investigated by the U.S. Department of Justice for possible manipulation of energy markets following the company’s settlement of civil allegations last month with a separate federal energy agency, the Wall Street Journal reported on Monday, citing people familiar with the case.

Watching for Deutsche Bank’s Perpetual Call
Art Patnaude – MoneyBeat – WSJ
Deutsche Bank AG, Germany’s largest lender, has a decision to make Tuesday about a bond that soon will no longer play one of its most valuable roles at the bank.

RBC’s Co-Head of Metals, Mining in Australia Departs
Gillian Tan – MoneyBeat – WSJ
RBC Capital Markets has suffered a blow to its investment banking team in Australia after Richard Barker, its co-head of metals and mining, left the Canadian bank to pursue new opportunities.

Osmond takes senior role at UBS
Matt Turner – Financial News
The former global head of investment banking at HSBC and chief executive of LMAX has joined UBS, becoming the latest veteran dealmaker to join the Swiss bank.

BGC hiresTullett executive for China role
Michelle Price in Hong Kong – Financial News
New York-headquartered interdealer broker BGC has hired an executive from arch rival Tullett Prebon to lead its push into Greater China, the company said this morning.

UBS and the Chicagoland Business Opportunity Fund Provide Alternative Small Business Financing in Chicago
Business Wire via Yahoo! Finance
UBS Bank USA today announced the recent funding of a significant small business loan through the Chicagoland Business Opportunity Fund , demonstrating their ongoing commitment to provide access to capital to small businesses in Chicago.

New York Equity Sales Team Joins SageTrader, LLC
San Francisco-based broker-dealer SageTrader, LLC has partnered with a New York based sales team formerly with the equity clearing and execution division of ED&F Man Capital Markets, Inc. The New York group includes Sean Malloy, who will serve as SageTrader’s Global Head of Sales and who was formerly SVP of Equities and was previously the Head of Sales for Penson Worldwide. Matt Shatz will be the Global Head of Clearing and Execution for SageTrader. He was the former Global Head of Execution and Clearing and was formerly Global Head of Electronic Trading and Clearing Equities at MF Global.
(via email)

Clearing & Settlement

Japan Commodity Clearing House SPAN Parameter update effective Aug. 16

Indexes & Products

Investors’ Shifting Appetite for Gold ETFs
ETF Trends via Yahoo! Finance
old exchange traded funds are losing their luster and the 12-year gold fever induced rally finally buckles as investors shift away from the safe-haven asset. The SPDR Gold Shares (GLD) has declined 18.7% year-to-date. The fund is the least popular ETF on the U.S. market this year, with asset outflows of $20.5 billion, according to IndexUniverse data.

Moscow Exchange Indices Weekly Review: August 12-16, 2013


At the Core of Autospreader
Trade Talk – Trading Technologies
With a few blogs already posted on using Autospreader, I thought it would be good to take a step back, look at the basic functionality of TT’s Autospreader and provide some insight on how it works.

FIX Protocol Ltd Announces Rebrand And The Launch Of A New Website Designed To Create The On-Line Meeting Place For The Global FIX Trading Community
FIX Protocol Ltd, the non-profit, industry-driven standards body at the heart of global financial trading, today announced the rebranding and name-change of the organisation to “FIX Trading Community”, in addition to the launch of a new website that creates a unique platform where the global FIX community can meet and exchange knowledge.

Pershing Selects SunGard’s Valdi to Help Grow Trading Business in Canadian Markets
Pershing, a BNY Mellon company, has selected SunGard to provide market connectivity to its newest international broker-dealer in Canada. SunGard’s SaaS-based Valdi Market Access will help Pershing to connect directly to Canadian trading venues, supporting the firm’s growth plan to offer its clients enhanced trade execution in North America.

Thomson Reuters Dials up Eikon for Android

Dion Appoints Head Of Partners And Alliances For Europe
Dion Global Solutions, technology partner to the financial services industry, has appointed Robin Preston as its new European Head of Strategic Partners and Alliances. In the role, Robin will be tasked with developing key partnerships to support growing international demand for Dion’s technology across Europe’s buy and sell side markets.


ASIC continues crackdown on hybrids

Environmental & Energy

Shale Grab in U.S. Stalls as Falling Values Repel Buyers
Oil companies are hitting the brakes on a U.S. shale land grab that produced an abundance of cheap natural gas — and troubles for the industry.

GAO to review how administration developed ‘social cost’ of carbon
The Hill’s E2 Wire
The investigative arm of Congress is going to look into how the Obama administration developed its increased monetary estimate for the amount of damage caused by carbon pollution.

Greens press EPA to revoke ‘outdated’ emissions exemption
The Hill’s E2 Wire
The Obama administration is poised to rescind a little-known emissions exemption for power plants as it seeks to flex its muscle through the Clean Air Act.


China Private Equity Firms Think Big
Chao Deng – MoneyBeat – WSJ
Chinese private-equity firms are becoming more sophisticated investors, playing catch-up with their Western peers. From making bigger investments to snapping up assets abroad, top homegrown firms are no longer relying on listing firms domestically for returns.

Everbright Plunges After Trading Glitches
MoneyBeat – WSJ
Everbright Securities Co.’s trading glitches are proving to be too much for investors to bear. The midsize Chinese brokerage, which caused wild movements in the market Friday and mispriced a bond Monday, tumbled by the maximum daily limit when trading resumed Tuesday.

SGX consults public on reduced board lot size
Singapore Exchange (SGX) is consulting the public on its proposal to reduce the standard board lot size of securities listed on SGX from 1,000 to 100 units, with a view to reducing it to 1 unit in the longer term. The reduction of the board lot size to 100 units as a first step will allow SGX to assess the market impact before unitising the standard board lot.

Vietnam Sends Plan for Relaxing Foreign Ownership Limits to Dung
Vietnam moved closer to relaxing restrictions on foreign investors as the Finance Ministry submitted a plan to Prime Minister Nguyen Tan Dung for raising the cap on overseas ownership at some companies.

China’s Central Bank Chief Confident on Outlook
China’s central bank governor signaled confidence in the nation’s economic outlook with little need for major shifts in monetary policy, and raised the prospect that policy makers could accelerate reforms to the financial sector.

Macquarie Names Thailand Head
Isabella Steger – MoneyBeat – WSJ
Australia’s Macquarie Capital has named its Thailand head, a newly created position amid intensifying competition in investment banking in the country.

Singapore’s strains
It is almost 50 years since Singapore was expelled from its shortlived federation with Malaysia and began its inspiring ascent from the developing to the developed world. Two years ago, its economy overtook the US in gross domestic product per head, an incredible accomplishment in a country with few natural resources, which once depended on hostile neighbours even for its water.

Taiwan Futures Exchange August Newsletter
Taiwan Futures Exchange (TAIFEX) will add seven single stock futures (SSFs) on August 22nd to the existing list of 216, increasing the number of SSFs to 223.

Shenzhen Stock Exchange Market Bulletin 19 August, 2013 – Issue 13

Hong Kong’s Securities and Futures Commission Quarterly Report

Frontier Markets

Here’s What The Heck Is In Indonesia
Business Insider via Yahoo! Finance
Emerging markets on the whole are weak these days, but Indonesia has seen a special level of pain lately. It’s now fallen 5% on two consecutive days. So what’s going on?

Mobius: India not yet a buying opportunity
Valuations in India’s equity markets are cheap but need to fall further to represent a buying opportunity, Mark Mobius, executive chairman of Templeton Emerging Markets Group, told CNBC exclusively on Tuesday.

Securities Commission Malaysia Strengthens Cooperation With EU Authorities For Supervisory Oversight


Hiring the Well-Connected Isn’t Always a Scandal
When is a new hire on Wall Street scrutinized over possible bribery? Over the weekend, The New York Times reported that the Securities and Exchange Commission had opened an investigation into whether JPMorgan Chase had hired the children of powerful Chinese officials to help the bank win business.

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