John Lothian Newsletter: CME move highlights demand for ‘regulatory choice’; Regulator Says Broker Audits Fail to Include Required Work; Greece Readies More Cuts

Aug 21, 2012

CME Group’s European exchange is said to be part of a plan to allow traders access to its products from different locations with different regulatory controls.  An accounting oversight board, having reviewed regulatory efforts to track brokerage capital and processes, says that those regulatory efforts fail to provide comprehensive coverage most of the time. In Europe, Greece moves closer to making additional budget cuts to stave off a fresh “do we stay or do we go” eurozone crisis.

First Read

CME move highlights demand for ‘regulatory choice’
By Michelle Price – Financial News
The decision by the CME Group to establish a European exchange highlights the growing demand among trading firms for “regulatory choice”, the company has said.
http://jlne.ws/NDRgbk

“Clients should not have to choose to trade with us in the US regulatory environment, or not to trade with us at all. That is not a real choice.”

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Former CBOT chairman Cunningham ‘great mentor’ to traders
Chicago Sun-Times
Thomas Cunningham’s career at the Chicago Board of Trade went back to the days when the exchange was more like a club or a ward office. The culture was mostly Irish. If you had a connection, it was a place to seek help getting a job or even to start trading. The atmosphere placed a premium on business and political acumen, and Mr. Cunningham thrived. In the late 1960s, he borrowed $20,000 from …
http://jlne.ws/NDRgbo

**** Condolences to the family and friends of Tom Cunningham on his passing.

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Charity begins at the office
By: Claire Bushey – Crain’s
As a lawyer for the in-house legal department of United Continental Holdings Inc., Steven Fus spends most of his time handling transactions and compliance issues for the Chicago-based airline. But one morning a month he heads south on Clark Street to the Richard J. Daley Center and crosses into a different world.
http://jlne.ws/NDRgbs

**** Not financial services related, but an important reminder.

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How Long Do We Have To Wait Before Wrong Is Just Wrong?
Business Insider
A good economist will always give you a prediction or a timeframe, but never both. This applies to a great deal of people outside of economists and market pundits and I think it also has to do with the fact that asset managers generally garner more respect regarding predictions than economists do.
http://jlne.ws/NDRgrL

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Wall Street Leaderless in Rules Fight as Dimon Diminished
Bloomberg via Yahoo! Finance
Wall Street, the global financial community reeling from public outrage and increased regulation, is proving incapable of finding a champion to replace sidelined JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon.
http://jlne.ws/NDRgrO

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Why Knight Capital Was Saved And Lehman Brothers Failed
John G. Taft via Forbes
Character still counts in the financial services industry. Don’t believe me? Just compare the way Wall Street treated the recent travails of Knight Capital Group Inc. and its well-respected CEO Thomas Joyce to the way it watched, abetted and even enjoyed the slow, brutal demise of Bear Stearns and its CEO, Jimmy Cayne, and Lehman Brothers and its CEO, Dick Fuld.
http://jlne.ws/NDRi35

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Playing the food futures lottery
Rebecca Hampson – Financial News
Last week, the Minneapolis Grain Exchange launched an apple juice concentrate futures contract, causing a buzz in the global commodity futures market. It is world’s first apple juice contract and it has been launched in response to growing demand from producers and processors for a product to help hedge against price volatility.
http://jlne.ws/NDRijm

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Taming the Wolverine: How To Control the Costs of Modern Trading
Martin Hakker – Advanced Trading
As the new normal of fragmented, globalized, multi-asset trading takes hold, the costs of simply staying in the game continue to rise. Clearing, venue membership, market gateways and connectivity are becoming major cost centers, and even ‘entry-level’ technology requires a significant investment. At the same time, trading is relatively flat and commissions are under pressure.
http://jlne.ws/NDRgrV

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Some high-speed traders convinced microwave dishes serve up bigger returns
Melissa Harris’ Chicago Confidential
The Lakeside Technology Center at 350 E. Cermak Road is a regal, brick building where the Yellow Pages, Sears catalogs and Life magazines were once printed. Today all people seem to care about is its roof.
http://jlne.ws/PySJQW

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Wall Street & Washington: Prospects for Federal Shutdown
Clarke Camper – Inside the Beltway
Congressional schedule through fall; update on the progress toward the fiscal cliff; discussing recent reports of US plots to undermine the UK as a financial center.
http://jlne.ws/NDRjnw

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Examining the Ponzi Scheme Through the Mind of the Con Artist
DIANA B. HENRIQUES – NYTimes.com
Maybe “Ponzi scheme” should have its own spot in the Dewey Decimal System. Along with biographies of the schemers, a growing stack of scholarly references, legal tomes and articles aims to collect knowledge about this age-old crime. But the latest entry in the category, “The Ponzi Scheme Puzzle: A History and Analysis of Con Artists and Victims” by Tamar Frankel, takes a different approach.
http://jlne.ws/NDRjnE

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Corporate Board Member Holds IT Risk Event for Boards of Directors
The Board IT Challenge: Oversight of Cloud, Cyber Risk & Social Media
In response to increasing concerns over risks related to cyber security and IT strategy, Corporate Board Member, an NYSE Euronext Company, will hold a new event for corporate directors and general counsel. The Board IT Challenge: Oversight of Cloud, Cyber Risk & Social Media conference will be held on October 18 at the InterContinental Chicago Magnificent Mile. The goal of this one-day event is to help participants better leverage emerging technologies and make more informed strategic decisions for their boards.
http://jlne.ws/NDRizY

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R.J. O’Brien Establishes Institutional Soft Commodity Team
CHICAGO, August 21, 2012 – R.J. O’Brien & Associates (RJO), the nation’s oldest and largest independent futures brokerage and clearing firm, today announced that the firm has established an experienced team of soft commodity brokers to serve institutional clients globally from the firm’s New York office. The team includes Ron Epstein, Anthony Croce and Anthony Rizzo, who have all just joined RJO as Senior Vice President, Institutional Softs Desk.
http://jlne.ws/PBWRSc

MarketsWiki

MarketsWiki Page of the Day
CME Group, Inc.
http://bit.ly/Nfr7hz

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MarketsWiki Recent Updates

People

Bruce Blythe

Companies, Organizations and Groups

Chi-X Canada; CME Group, Inc.; Price Holdings, Inc.

Statistics

27,475,969 pages viewed, 7,072 articles, 146,622 edits
MarketsWiki Statistics

Lead Stories

Regulator Says Broker Audits Fail to Include Required Work
By FLOYD NORRIS – NY Times
The many auditors who inspect the financial statements of brokerage firms appear to be cutting corners and not doing all the work they should do, a worrisome sign after the collapse of the Peregrine Financial Group, a leading commodities brokerage firm, where a fraud had gone undetected for many years.
http://jlne.ws/NDRjE5

Greece Readies More Cuts
ALKMAN GRANITSAS and NEKTARIA STAMOULI – WSJ.com
Details of Greece’s E11.5 billion ($14.2 billion) austerity plan are emerging as Prime Minister Antonis Samaras moves to demonstrate his government is serious about cost-cutting efforts ahead of meetings with European leaders later this week.
http://jlne.ws/NDRiQq

German and Greek Officials Play Down Expectations
New York Times
The foreign ministers of both countries sought to temper hopes for drastic action at a meeting this week between the leaders of Greece and Germany.
http://jlne.ws/NDRiQr

California hedge fund founder convicted of insider trading
Los Angeles Times
Prosecutors said Doug Whitman of hedge fund Whitman Capital made nearly $1 million from 2006 to 2009 by receiving inside tips about companies’ earnings. A San Francisco hedge fund founder was convicted of insider trading Monday by a jury that rejected his claims that he was careful never to trade based on secrets he received about public companies.
http://jlne.ws/NDRjUt

Secret Libor Committee Clings to Anonymity After Rigging Scandal
Bloomberg
Who sits on the British Bankers’ Association’s Foreign Exchange and Money Markets Committee , the body that governs the benchmark for more than $300 trillion of securities worldwide, is a secret. No minutes are published.
http://jlne.ws/NDRiQx

As Dodd-Frank looms, Asian banks look to cut U.S. trading ties
Reuters
Asian banks are reviewing relationships with their U.S. counterparts to avoid being caught by tough new American rules on derivatives trading that are about to come into force.
http://jlne.ws/NDRiQE

A New and Improved Libor Could Be Next on the Financial Front
FRANCESCO GUERRERA – WSJ.com
We’ve had the Summer of Love, the Winter of Discontent and the Arab Spring. Now get ready for the Autumn of Libor. The prospect of spending months debating the London interbank offered rate isn’t as exciting as hippies preaching free love, strikes paralyzing Britain or a popular uprising in the Middle East.
http://jlne.ws/NDRj6V

Regulatory

Military Spouses Receive Fellowships to Conduct Financial Counseling
Fifty military spouses throughout the U.S. and overseas have been awarded the FINRA Investor Education Foundation’s 2012 Military Spouse Fellowship. The fellowship provides spouses with the training they need to earn the Accredited Financial Counselor designation. This accreditation will give these military spouses marketable job skills and the resources and expertise they need to help military families overcome financial obstacles.
http://jlne.ws/NDRj6Y

U.S. Department Of The Treasury: Jennifer Shasky Calvery Named As Director Of The Financial Crimes Enforcement Network
http://jlne.ws/NDRj6Z

DTCC and SWIFT Launch CFTC Interim Compliant Identifier (CICI) Utility
Business Wire via Yahoo! Finance
The Depository Trust & Clearing Corporation and SWIFT announced today that they have launched a Web portal at www.ciciutility.org to begin assigning CFTC Interim Compliant Identifiers after being designated by the U.S.
http://jlne.ws/NDRj70

Exchanges & Trading Facilities

CME to push into Europe with U.K. exchange
By JACOB BUNGE – Dow Jones
CME Group will consider tackling the near-duopoly in Europe’s listed-derivatives sector, though a new London-based exchange will focus initially on a currency-futures market untapped by European rivals, its chief executive said Monday. Chicago-based CME plans to use its first new overseas exchange to capture more clients in Europe and Asia at a time when domestic U.S. volume is shrinking.
http://jlne.ws/Sd9TX3

EDGA And EDGX To Disable Option To Post On Chicago Stock Exchange
Effective Tuesday, August 21, 2012, Direct Edge will disable the routing option to allow firms to post to the Chicago Stock Exchange (CHX) for EDGA Exchange (EDGA) and EDGX Exchange (EDGX).
http://jlne.ws/NDRj7a

The MiG Report July 2012 – Brought To You By The Market Intelligence Group At TSX And TSX Venture Exchange
http://jlne.ws/NDRm2A

Equity options exercise totals BRL 3.97 billion on BM&FBOVESPA
http://jlne.ws/NDRm2F

Hedge Funds & Managed Futures

Buffett cancelled municipal debt bet 5 years early: WSJ
Reuters via Yahoo! News
Berkshire Hathaway Inc terminated a large wager on the municipal-bond market five years early, the Wall Street Journal quoted a person familiar with the transaction as saying. In a quarterly regulatory disclosure filed this month, the Warren Buffett-owned company terminated credit-default swaps insuring $8.25 billion of municipal debt.
http://jlne.ws/NDRkbh

Career Risk Panic: Only 11% Of Hedge Funds Are Outperforming The S&P In 2012
Zero Hedge
The S&P500 may be soaring to new 2012 highs, and has its all time highs within short squeeze distance, yet paradoxically this is arguably the worst possible news to the cadre of US hedge fund managers used to beating the market year after year, thus justifying their 2 and 20 fees.
http://jlne.ws/NDRkry

Hatteras Funds Names Robert Murphy Chief Investment Officer Of The Hatteras Alternative Mutual Funds
Hatteras Funds, a boutique alternative investment specialist providing unique alternative investment solutions for financial advisors and their clients, announced that Robert J. Murphy, CFA, FRM, CAIA, has been promoted to Chief Investment Officer of the Hatteras Alternative Mutual Funds.
http://jlne.ws/NDRkrB

Stonegate Capital Partners Announces the Release of its Most Recent White Paper, “7 Keys for Starting a Hedge Fund …
PRWeb via Yahoo! News
Domestic and offshore fund formation specialists, Stonegate Capital Partners, LLC announces the release of its most recent white paper, “7 Keys for Starting a Hedge Fund – Structural Considerations” which highlights a number of important aspects of starting an investment fund.
http://jlne.ws/NDRkrD

Scranton to court hedge funds
The Scranton Times-Tribune
Shunned by conventional banks and the municipal bond market, Scranton City Council is looking toward lenders of last resort – hedge funds – for $18.5 million needed to close a budget gap.
http://jlne.ws/NDRmj6

Platts To Announce 2012 Top 250 Global Energy Company Rankings October 23 – Annual Roster To Be Unveiled At Awards Dinner During Singapore International Energy Week
http://jlne.ws/NDRmjg

S&P Capital IQ’s Money Market Directories Increase Coverage of Asian-Pacific Institutional Funds – Newly expanded database includes over 10,000 contacts in Asia, Oceania and the Middle East
S&P Capital IQ’s Money Market Directories (MMD), a leading source of financial research and data on the institutional investor market, announced the expansion of data on Asian-Pacific institutional funds to its online application, MMD WebAccess
http://jlne.ws/NDRmjl

Banks & Brokers

UBS Seeing Moat of Secrecy Run Dry Vows Results to Lure Wealthy
Bloomberg
UBS AG Chief Investment Officer Alexander Friedman is masterminding a push by Switzerland’s biggest bank to develop a performance track record that will attract rich clients as Swiss secrecy erodes.
http://jlne.ws/NDRkI0

Barclays in talks to combine African operations
Reuters via Yahoo! News
Barclays is in talks about combining its African operations with that of majority-owned subsidiary Absa Group in a move aimed at accelerating expansion on the continent, the British bank said on Tuesday.
http://jlne.ws/NDRmzE

Losses deepen to $1.2bn at Nomura International
Giles Turner – Financial News
Nomura International, the London-based broker dealer arm of Japanese bank Nomura, has reported a pre-tax loss of $1.2bn for its last fiscal year, which it blamed on the continuing eurozone crisis.
http://jlne.ws/NDRmzK

In U.S. Tax Matters, Swiss Bankers Fume Over Privacy
ANITA GREIL and MARTA FALCONI – WSJ.com
Since this spring, Swiss banks have provided U.S. officials with the names of thousands of their employees, as they seek to fend off any criminal prosecution over allegations that they helped Americans evade taxes.
http://jlne.ws/NDRmzR

Citigroup CEO: Company is Back To The Basics of Banking -FT
Dow Jones Newswires
Vikram Pandit, the chief executive of Citigroup (C), said the company has gone back to “a tried and proven strategy”–the basics of banking–after having sold many of the units stemming from the 1998 merger with Travelers, the Financial Times reported Monday.
http://jlne.ws/NDRmzU

IIF Taps Deutsche Bank’s Jain for Board
FOX Business
Anshu Jain, the new co-head of Deutsche Bank AG, has been appointed to the board of the Institute of International Finance, the group that helped push Greece’s debt swap over the finish line earlier this year.
http://jlne.ws/NDRkYx

E-Trade’s management shakeup isn’t ad related
Crain’s New York Business
There’s a lot changing at E-Trade. It’s searching for a CEO and refocusing on its core brokerage business. But one thing that’s not going away is its cheeky talking baby.
http://jlne.ws/NDRmQ9

JPMorgan Plans $1.1 Billion Perpetual Preferred Shares Sale
Bloomberg
JPMorgan Chase & Co. , the largest U.S. lender by assets, is planning to issue $1.1 billion of perpetual preferred shares after selling $2.5 billion of bonds earlier this month.
http://jlne.ws/NDRmQd

Clearing & Settlement

LCH.Clearnet model ‘not appropriate’ for Australian market, say domestic banks
Risk.net
Despite the absence of a location requirement for central clearing in recent legislation put forward by the Australian government, local market players are heavily in favour of using a domestic central counterparty (CCP), arguing the current structure of LCH.Clearnet’s service is too focused on the needs of international banks.
http://jlne.ws/NDRkYE

Indexes & Products

S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices – A Weight Change For CGI Group Inc. In The S&P/TSX Composite Index
http://jlne.ws/NDRkYF

China Fund Managers Prepare Gold ETFs
ETF Trends
Several fund companies in China are readying ETFs to follow gold prices that would let more individuals invest in the precious metal, according to reports. Guotai Asset Management, Bosera Asset Management, E Fund Management and Hua An Asset Management are preparing gold ETFs, Reuters reports.
http://jlne.ws/NDRkYI

Technology

Industry Veteran Michael Sacks To Head Bonds.com Technology
http://jlne.ws/NDRmQo

TMX Atrium Offers Ultra-Low Latency Access To Moscow – Extends Network Coverage To 12 Countries
http://jlne.ws/NDRn6F

Neonet Partners With Marco Polo Network – Neonet Becomes New Marco Polo Network Destination, With Client Benefits From Extended Access To Emerging Markets
http://jlne.ws/NDRkYL

Corvil First To Market With Latency Management Solution Leveraging Intel Sandy Bridge
http://jlne.ws/NDRkYM

Jose Contin Appointed To Lead Broadridge City Networks Expansion In EMEA
http://jlne.ws/NDRkYP

Enforcement

NFA Enforcement and Registration Actions
Titan Capital Group III LP
http://jlne.ws/NDRn6N

Insider dealers ordered to pay £1.5m in confiscation
In a case brought by the Financial Services Authority (FSA) and heard at Southwark Crown Court, Confiscation Orders (the Orders) totalling £1,534,000 were made today against Christian Littlewood and Angie Littlewood. They were each ordered to pay £767,000 representing the benefit obtained by each of them from insider dealing.
http://jlne.ws/NDRlf7

[ASIC] Brisbane financial adviser banned for five years
http://jlne.ws/NDRn6V

Ex-Dresdner Banker, Wife to Pay $2.5 Million to U.K. FSA
Bloomberg
Christian Littlewood, who is serving a 40-month jail sentence after he pleaded guilty last year to eight counts of insider trading, and his wife, Angie, agreed with the Financial Services Authority to forfeit the amount they profited.
http://jlne.ws/NDRlfc

Environmental & Energy

California suspends CO2 market rule on electricity imports
Reuters Point Carbon
California’s air regulator said on Thursday it would delay by 18 months a controversial part of its carbon market rules addressing imported electricity after coming under pressure from a Washington official who warned it threatened to disrupt western U.S. power supply.
http://jlne.ws/MHKZhO

California’s carbon price rollout
Climate Spectator
Australia is certainly not going it alone on a carbon price – the latest cab off the rank will be California, which begins its cap-and-trade scheme in January 2013. Erwin Jackson from The Climate Institute talks to George Peridas from the US Natural Resources Defense Council on how the scheme will work, and how similar it is to Australia’s carbon laws.
http://jlne.ws/NCBJbG

Can natural gas help tackle global warming? A primer.
The Washington Post
This winter, the United States reached a striking milestone. Carbon-dioxide emissions from the energy sector sank to their lowest levels in 20 years. At a glance, the country appears to be making major progress in tackling climate change. And many analysts give credit to the recent flood of cheap natural gas, which is shoving aside coal as America’s top source of electricity.
http://jlne.ws/TQAmtD

Asia-Pacific

ITG launches Indonesia dark pool
Jeremy Grant in Singapore – FT.com
Investment Technology Group, the US-based broker, has become the latest foreign trading group to launch a “dark pool” in Indonesia, underscoring the gradual spread of automated dealing technology common in the US and Europe into key Asian markets.
http://jlne.ws/NDRnnl

Euro woes tilt financial power in Asia’s favour
Reuters via Yahoo! Finance
As European banks retrench to recover from the global financial meltdown, they are finding ready buyers in Asia for everything from loans to entire insurance and broking operations.
http://jlne.ws/NDRlfk

Tokyo Commodity Exchange: Regarding The Trading System – License To Use NASDAQ OMX System Extended To May 2019
On April 20, 2012, the Tokyo Commodity Exchange, Inc. (“TOCOM” or the “Exchange”) concluded an agreement with Nasdaq OMX. This agreement allows the Exchange to use the current trading system, of which license period expires in May 2014, for a maximum extended period of 5 years, or until May 2019.
http://jlne.ws/NDRnno

Citigroup Issues Sole-Brand China Credit Card as Rules Ease
Bloomberg
Citigroup Inc. became the first Western bank to issue credit cards in China without co-branding from a local financial institution as the government relaxes restrictions in the world’s second-largest economy.
http://jlne.ws/NDRlvC

Stock Exchange Of Thailand Hosts Asian And Oceanian Stock Exchanges Federation Meeting
The Stock Exchange of Thailand (SET) recently hosted a meeting for Asian and Oceanian Stock Exchanges Federation’s (AOSEF) working committee in Bangkok with 14 member exchanges joining the meeting and a workshop on “Cross-border cooperation of exchanges,” including ASEAN Link, organized by SET. The representatives were welcomed by SET President Charamporn Jotikasthira.
http://jlne.ws/NDRlvF

Shanghai Stock Exchange 5-Year China Treasury Note (Futures Deliverables) Index And Other Two Indexes To Be Launched
http://jlne.ws/NDRlvI

Taiwan Futures Exchange Monthly Newsletter – August 2012
http://jlne.ws/NDRnDP

Hong Kong’s Securities And Futures Commission: Hontex’s Independent Shareholders Approve Share Repurchase Scheme
http://jlne.ws/NDRlvP

Osaka Securities Exchange: Approval Of Application To Withdraw Trading Qualifications: Instinet Japan Limited
http://jlne.ws/NDRlvR

Shenzhen Stock Exchange: SINO Real Estate Index Is Launched Today
http://jlne.ws/NDRlM5

Three Thematic Indices: Shenzhen Stock Exchange SME Dividend Index And The other Two Indices Are Launched Today
http://jlne.ws/NDRlMd

Osaka Securities Exchange SPAN Parameter Updated – Aug. 27, 2012 – Aug. 31, 2012
http://jlne.ws/NDRlMj

Frontier Markets

Myanmar could be mid income nation by 2030: ADB
AFP via Yahoo! News
Strong economic growth could lift Myanmar to the rank of middle income nation by 2030 if the formerly army-ruled country overcomes a host of reform challenges, the Asian Development Bank said Monday.
http://jlne.ws/NDRoHN

Miscellaneous

How London Can Stay Competitive: Expert
CNBC
In times of a growing euro zone debt crisis, and tightening financial regulation, London has to keep up its competitiveness, Chris Cummings, CEO of TheCityUK, told CNBC.
http://jlne.ws/NDRnUe

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