After a head-fake in the direction of Martin Pratt, HKEx names Garry Jones to be the new CEO of the London Metal Exchange. The EU’s official guidance on financial regulation falls in the circular file in the UK, as that nation’s regulators chart their own, separate course. The SEC instructs Nasdaq and NYSE Euronext to explain last week’s market outage in detail, but the two exchanges have different stories.
HKEx picks Garry Jones to head LME
Jeremy Grant in Singapore – FT.com
Garry Jones, former chief executive of NYSE Liffe, has been appointed head of the London Metal Exchange. The decision to hand the job of running the venerable London metals bourse to an executive with extensive experience of the derivatives markets highlights the push by the LME’s parent, Hong Kong Exchanges & Clearing, to diversify into commodity derivatives.
***** This is an excellent hire. Garry Jones is a terrific choice. He is a super-experienced derivatives executive with global outlook. Congratulations Garry on your new job!
Is BATS-Direct Edge the next owner of the NYSE?
Bob Pisani – CNBC
The BATS/Direct Edge merger may seem like a deal between two sleepy exchanges, but in one fell swoop the combined entity has become a potentially bigger story: it is a logical buyer for the NYSE’s cash equity business
***** No, the next owner of the NYSE will be ICE. Then we shall see what they do with the cash equities business. I am all for Jeff Sprecher and ICE trying to re-engineer it.
Greenwich Hires McPartland for Market Structure Role
Matthew Leising – Bloomberg
Greenwich Associates has hired Kevin McPartland, formerly a director at BlackRock Inc., as a principal in its market structure and technology advisory service. McPartland, 35, will research derivatives and the financial technology sector and how regulatory changes around the globe are affecting those industries, he said in a telephone interview last week.
***** See, you need to hire a market structure specialist just to understand how the markets work today. Congrats to Kevin on his new gig.
Peregrine accountant barred from working for firms overseen by CFTC
Douwe Miedema | Reuters
The U.S. futures regulator on Monday barred Jeannie Veraja-Snelling from working as an accountant for firms it oversees after she failed to detect the massive fraud at failed brokerage Peregrine Financial Group.
****** OK, so you hire a lone accountant working from home to handle your FCM’s audit. Then she does the bad job you hired her for, but your crime is figured out and you go to jail. Your accountant gets banned from doing business in the futures industry, perhaps the only FCM she audited anyway. And the real penalty for this is what? Being stupid is not a crime, but staying stupid is. We were all at least a little stupid in the PFG case. Have we learned our lesson?
Follow The Money
By Sal Arnuk and Joe Saluzzi – Wall Street & Technology
Follow the money. If you want to know why the US equity market is overly and unnecessarily complex, just follow the money. And if you want to know why “glitches” will continue to happen, then just follow the money.
***** How about follow my money? How about, “who can explain to me why there are hundreds of types of orders, and where my order goes, and most importantly, WHY DOES IT GO THERE??”
Caution on High Frequency Pays Off in Asia
Michelle Price – MoneyBeat – WSJ
While U.S. and European stock market operators spent much of the last 10 years pushing for increased competition and faster trading speeds, regulators in Asia Pacific slammed on the brakes. The decision to go slow, once criticized as an unnecessary delay to the start of a new era in trading, now looks to have been an astute strategy.
***** A lack of competition is good?? Someone please slap me with a trout.
New regulatory outlook: SEFs versus Blocks
Green Key Markets
Will SEFs will go down in history next to DTEFs and lose the battle for OTC market share to block transactions on DCMs? In this month’s regulatory outlook, attorney Jim Falvey of Green Key Markets examines the uphill battle facing SEFs and the push for block trading of futures.
***** SEFs will get business the old fashioned way, they will earn it.
Say ‘no’ to extreme work culture
The tragic death of Moritz Erhardt, a 21-year-old intern at Bank of America Merrill Lynch, has cast a spotlight on the extreme work culture in the financial industry.
***** The doctor at the hospital working the 72 hour shift schedule is the extreme work culture. The young lawyers working 100 hour weeks are in an extreme work schedule. When did smart people get so stupid?
Rethinking investment risk
Financial innovation is supposed to reduce risk — in theory, at least. Yes, new financial instruments based on the housing market helped cause the financial crisis of 2008. But in the abstract, those same instruments have the potential to spread risk more evenly throughout the marketplace by making it possible to trade debt more extensively, rather than having it concentrated in a relatively few hands. Now a paper published by MIT economist Alp Simsek makes the case that even in theory, financial innovation does not lower portfolio risk. Instead, it raises portfolio risks by creating situations in which parties sit on opposing sides of deep disagreements about the value of certain investments.
****** Isn’t that a market? People with different views on what something is worth?
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Companies, Organizations and Groups
43,185,564 pages viewed, 7,629 articles, 163,720 edits
Hong Kong Exchange names former NYSE Liffe executive as LME CEO
The Hong Kong Stock Exchange named industry veteran Garry Jones as the CEO of the London Metal Exchange, selecting a former top executive at the NYSE Liffe to help drive its expansion into commodities and beyond.
UK markets supervisor rejects EU regulatory guidance
Brooke Masters, Chief Regulation Correspondent – FT.com
The new UK markets supervisor has for the first time rejected formal EU guidance on financial regulations this summer, adopting alternative rules that favour bankers and brokers.
Exclusive: Nasdaq, NYSE at odds on outage cause as SEC seeks facts
U.S. regulators have asked Nasdaq OMX Group and NYSE Euronext to come up with a timeline of Thursday’s three-hour trading disruption, but the rival exchange operators have been unable to agree on the details, according to several sources familiar with the situation on Monday.
BATS and Direct Edge merger creates second-largest US exchange
Arash Massoudi in New York – FT.com
US stock trading is set to be dominated by three companies after BATS Global Markets and Direct Edge agreed a merger that will make the combined exchange operator a rival to the New York Stock Exchange and Nasdaq.
Swiss government to decide soon whether to keep seeking US tax deal: top diplomat
Switzerland will decide soon on whether to keep pursuing a tax agreement with the United States, an outgoing top diplomat said on Monday, or risk extending a long, costly dispute over banks that shelter tax evaders.
Ex-JPMorgan employee arrested in Spain over ‘London Whale’ charges
Former JPMorgan (JPM.N) employee Javier Martin-Artajo, who is wanted by the United States on fraud and tax crime charges, was arrested in Madrid on Tuesday morning, Spanish police said in a statement.
Five Years After TARP, Misgivings on Bonuses
ANDREW ROSS SORKIN – NYTimes.com
“There was such a total lack of awareness from the firms that paid big bonuses during this extraordinary time.” That is what Henry M. Paulson Jr., the former Treasury secretary, said last week.
Regulator on Bitcoin: Same Rules Apply
JEFFREY SPARSHOTT – WSJ.com
WASHINGTON—The top U.S. anti-money-laundering regulator on Monday told a Bitcoin trade group that exchanges for the virtual currency must follow the same rules as established financial institutions, highlighting the government’s efforts to keep tabs on a small but growing segment of the financial world.
NSEL faces another payout default
Pressure is mounting on Jignesh Shah and Financial Technologies, the promoter of National Spot Exchange (NSEL), as the bourse stares at yet another payout default with borrowers having paid just 11.90 crore to the bourse against the Rs 174 crore it has to pay back investors every week.
Promoters may be declared unfit to run NSEL
Tuesday will be a crucial day for Jignesh Shah’s two big ventures, Multi-Commodities Exchange (MCX) and National Spot Exchange Ltd (NSEL).
NSEL and MCX set to reconstitute boards
After a slew of resignations from the board of National Spot Exchange Ltd (NSEL) in the wake of its payment crisis, a new set of names is to be announced soon. There were seven members, including a chairman. After the resignations, including that of chairman Shankarlal Guru, only two remain.
The Greenspan of NSEL crisis?
After the global financial crisis of 2008, Time magazine published a list of 25 people who could be blamed. Third on the list was Alan Greenspan. Explaining the rationale for putting him on the blameworthy list, Time said “…the super-low interest rates Greenspan brought in the early 2000s and his long-standing disdain for regulation are now held up as leading causes of the mortgage crisis.”
Justice Dept. Again Signals Interest to Pursue Financial Crisis Cases
PETER J. HENNING – NYTimes.com
Patience is a virtue, and waiting for cases from the financial crisis has certainly called for such a temperament. In a recent interview, Attorney General Eric H. Holder Jr. indicated that the wait might be over, but it is unlikely to satisfy those who have found the Justice Department’s response to be tepid at best.
Financial Conduct Authority publishes preliminary findings of review into mobile banking
The Financial Conduct Authority (FCA) has published a report exploring some early findings of a review into mobile banking services, setting out the possible risks to consumers and areas that firms should consider when developing their services.
Sebi starts rule-making process for newly granted powers
Market regulator Sebi has started the process of framing new regulations and putting in place infrastructure to exercise newly granted powers, including those related to information collection, search and seizure operations and disgorgement orders.
NFA Notice to Members I-13-23
Reporting Requirements for Labor Day
[Austria] FMA proposes amendment to Regulation on Investments facilitating direct loans to companies by insurers
[Japan] FSA publishes Weekly Review No.60
Exchanges & Trading Facilities
Bats CEO Sees Value of Stock Data Rising From Merger
Combining Bats Global Markets Inc. with Direct Edge Holdings LLC should help the company compete with larger exchange operators selling market data, Chief Executive Officer Joe Ratterman said.
Direct Edge’s William O’Brien on the Bats Merger
Anthony Malakian – WatersTechnology
After early speculation on Friday, it was made official that Direct Edge would merge with Bats. Direct Edge’s CEO William O’Brien hopes that this will help the newly combined company, which will go forward under the Bats name, to break into the Brazilian market as well as the listings business.
Eurex Futures Exchange Halts Trading on Technical Glitch
A technical glitch halted trading on Eurex, Europe’s largest derivatives market, for about 60 minutes, adding to this month’s tally of exchange breakdowns following a three-hour shutdown of the Nasdaq Stock Market.
Swedish IPO Appetite Improves as Stockholm Exchange Nears High
The appetite for initial public offerings is growing in Sweden and more companies are dusting off plans to sell shares as Stockholm’s OMX All-Share Index approaches a record high and market volatility fades.
[SIX] CHF-denominated bonds: seizing the opportunities
A guest contribution by Commerzbank shows that many first-time issuers are discovering the benefits of the Swiss bond market.
NYSE MKT Issues Short Interest Report
NYSE Group Inc. Issues Short Interest Report
NASDAQ Announces Mid-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date August 15, 2013
CBSX to Replace AMD and MU with AAPL and GOOG for Select Symbol Pricing
Hedge Funds & Managed Futures
Junk Debt Exceeds $2 Trillion in Central Bank Repression
It took three decades for the amount of speculative-grade debt to reach $1 trillion. It took about seven years to reach $2 trillion as investors sought relief from the financial repression brought on by near-zero interest rates.
Deconstructing hedge funds: book provides a useful guide
Hannah Keenan – Risk.net
Hedge fund lawyer Timothy Spangler offers a comprehensive guide to the what, why and how of hedge funds and private equity for the uninitiated in his debut book, One Step Ahead, published in September
Gold’s Allure Draws Back Cautious Investors
David Winning – MoneyBeat – WSJ
Gold is glittering again for some investors. Hours after the precious metal rose above $1,400 a troy ounce for the first time since early June, mid-sized Australian gold miner Silver Lake Resources Ltd. said investors had sought significantly more shares than were offered in an equity raising.
Foreign funds pour $1bn into Kinnevik
Henry Mance – FT.com
While some fund managers are waiting patiently for Europe’s next big technology listing, others are jumping the queue.
Argentina offers bond swap to skirt U.S. court rulings
By Alejandro Lifschitz and Brad Haynes – Reuters
BUENOS AIRES – Argentina’s government is proposing a voluntary bond swap on its foreign debt, shifting payments to Buenos Aires, if it cannot overturn U.S. court rulings that threaten to trigger its second debt crisis in just over a decade.
Banks & Brokers
Goldman losses from options glitch in tens of millions: source
Goldman Sachs Group Inc (GS.N) lost tens of millions of dollars after a computer glitch led to a flood of erroneous options trades last week, a source close to the matter said on Monday.
Lloyds Sells Australia Loans Portfolio Worth $332 Million
Isabella Steger – MoneyBeat – WSJ
Lloyds Banking Group PLC’s divestment of its Australian loan portfolio continues, with a Bain Capital LLC affiliate snapping up a portion of those assets.
ECB Spokeswoman Heads to Deutsche Bank
Todd Buell – MoneyBeat – WSJ
The European Central Bank’s top spokesperson will leave the central bank to join Germany’s largest lender.
Judge Rules Against JPMorgan in Suit Over Billionaire’s Losses
A New York state judge found JPMorgan Chase liable to the Russian-American billionaire Leonard Blavatnik for breach of contract for placing risky subprime mortgage securities in an investment account he held, and ordered the bank to pay more than $50 million in damages, including interest.
U.S. judge tosses BofA suit vs FDIC over $1.7 billion investor losses
A federal judge on Monday threw out Bank of America Corp’s lawsuit against the Federal Deposit Insurance Corp over $1.7 billion of investor losses stemming from the collapses in 2009 of a large regional bank and a large mortgage lender.
Key JPMorgan lawyer leaves for smaller bank
A JPMorgan Chase & Co lawyer responsible for litigation and government investigations is leaving the lawsuit-laden bank.
E*TRADE Financial Corporation Appoints Richard J. Carbone to Board of Directors
Clearing & Settlement
Tullett Prebon Files SEF Application with CFTC
Marina Daras – WatersTechnology
New York-based interdealer broker Tullett Prebon has announced it is applying to the US Commodity Futures Trading Commission (CFTC) to become a swap execution facility (SEF).
CMEGroup – COMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (HX, OG, SO) Effective Tuesday, August 27, 2013
CMEGroup – NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (OB, OH, I, ON) Effective Tuesday, August 27, 2013
Indexes & Products
Nothing screams shadow banking quite like a leveraged loan ETF
Tracy Alloway | FT Alphaville
They are billed as a quick and easy way for investors to gain access to higher-yielding assets while still providing some protection if interest rates start to rise. They are ETFs which track portfolios of (floating-rate) bank loans. And they are on fire.
Interim report Orc Group Holding AB January 1 – June 30, 2013
FixSpec Launches Central – A Radical New Platform For Improved Customer Service and Monitoring
FixSpec announces the immediate availability of Central, a new enterprise platform designed for brokers and exchanges to deliver improved customer service, monitoring and operational efficiency when making and maintaining trading connections.
Strike Technologies Microwave Network Enables 4.17 Microsecond Latencies Between CME And NASDAQ Datacenters
Upgrades To StrikeNET Includes New Discretionary Bandwidth Packages
CFTC Permanently Bars Accountant, Jeannie Veraja-Snelling, for Failing to Properly Audit Peregrine Financial Group, Inc.
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed and settled charges against Jeannie Veraja-Snelling, d/b/a Veraja-Snelling & Company (Veraja-Snelling), a certified public accountant and sole practitioner from Glendale Heights, Illinois, barring her from practicing before the Commission. The CFTC’s Order charges Veraja-Snelling with failing to audit Peregrine Financial Group, Inc. (Peregrine) in accordance with CFTC Regulation 1.16.
Federal Court in Maryland Orders Sidney J. Charles, Jr. and his Company, The Borrowing Station, LLC, to pay over $600,000 to Settle CFTC Forex Fraud Action
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court consent Order of permanent injunction requiring Defendants Sidney J. Charles, Jr., formerly of Bowie, Maryland, and his company, The Borrowing Station, LLC (Borrowing Station) of Bowie, Maryland, jointly and severally to pay $254,236 in restitution and a $350,000 civil monetary penalty in connection with an off-exchange leveraged foreign currency (forex) Ponzi scheme.
Velocity Futures, LLC Agrees to Pay a $300,000 Penalty to Settle Charges that It Failed to Comply with Its Minimum Financial Requirements
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Velocity Futures, LLC (Velocity), a registered Futures Commission Merchant (FCM) headquartered in Houston, Texas, for failing to comply with the minimum financial requirements for FCMs.
SEC Charges Indiana Resident With Conducting Ponzi Scheme Targeting Retirement Savings of Investors
The Securities and Exchange Commission today charged a Noblesville, Ind., resident and his company with defrauding investors in a Ponzi scheme that targeted retirement savings. The SEC alleges that John K. Marcum touted himself as a successful trader and asset manager to raise more than $6 million through promissory notes issued by his company Guaranty Reserves Trust.
UBS agrees to pay $4.6 million in settlement over sales assistants
A unit of UBS AG will pay nearly $4.6 million to settle allegations by multiple state securities regulators that unregistered sales assistants accepted clients’ orders to buy and sell securities, New Jersey’s highest law enforcement agency announced.
[ASIC] Former financial adviser pleads guilty to dishonest conduct
Workers to gain access to entitlements after ASIC employs new powers
ASIC surveillance prompts brokerage to stop new margin loans
Environmental & Energy
REGULATION NATION: Obama bypassing Congress on climate
The Hill’s E2 Wire blog
The success of President Obama’s second-term climate agenda hinges on a set of regulations now in the works at the Environmental Protection Agency.
*RKB — So we gave Quote of the Day to the President, but here’s an equally strong candidate, also found in the above blog. Credit this to Brookings fellow Phil Wallach: “The more you have these changes coming from executive action and executive interpretations of statutes, you’re going to, on the one hand, get lots of opponents denouncing the changes as sort of ‘Oh, it’s the imperial presidency,’ but more importantly you’re going to have a lot of people who have standing to sue.”
Energy secretary defends ‘social cost of carbon’ boost
The Hill’s E2 Wire
Energy Secretary Ernest Moniz on Monday defended the Obama administration’s decision to increase the estimated benefits of regulations that curb carbon emissions.
Rudd admits carbon error
Prime Minister Kevin Rudd has admitted Labor did not have a mandate from voters to introduce a carbon tax.
HSBC Joins SGX Securities Market As Trading And Clearing Member
Singapore Exchange (SGX) today welcomed The Hongkong and Shanghai Banking Corporation Limited (HSBC) to its securities market as a Clearing Member, and HSBC Securities (Singapore) Pte Limited as a Trading Member.
South Korea Scraps Privatization Plan for Korea Development Bank
South Korea plans to keep a controlling stake in Korea Development Bank to support domestic industry, scrapping a five-year-old plan to privatize the country’s biggest policy lender.
HKEx Welcomes Its First ETF On A CESC Index
ASIC releases report on emerging market issuers
Following the high profile collapse of some emerging market issuers overseas we have undertaken a review of these types of entities here in Australia.
Dubai Financial Market (DFM) Holds International Investor Roadshow In New York On 24-25 September In Collaboration With Bank Of America Merrill Lynch