Two big European brokerages have pulled away from Deutsche Börse’s dark pool, on concerns that trading information could be exposed to other parties. Singapore Exchange is increasingly relying on derivatives trading for its future growth. The CFTC is investigating a curious pre-report spike in trading in treasury futures contracts at the CME that briefly caused a halt in trading.
Class Action Lawsuit Filed Against LME and Goldman Sachs Alleging Aluminum Manipulation
Sarah Rudolph – JLN
An aluminum processing company has launched a class-action lawsuit against Goldman Sachs and the London Metal Exchange alleging that they conspired with each other to restrain supplies of aluminum in the LME warehouses and inflated aluminum prices. The complaint accuses the two companies of violating the Sherman Anti-Trust Act by agreeing to operate in “an extremely inefficient manner” and to “provide extremely low quality of service” in the warehousing arena.
Obama Nominates GFI Group’s Giancarlo to Serve on CFTC
Silla Brush – Bloomberg
J. Christopher Giancarlo, executive vice president at interdealer broker GFI Group Inc. (GFIG), was nominated by President Barack Obama to serve on the Commodity Futures Trading Commission, according to the White House.
CBOE profit tops estimates as volatility pumps up trading
Ann Saphir | Reuters
CBOE Holdings Inc, operator of the Chicago Board Options Exchange, reported a higher second-quarter profit, beating analysts’ expectations, as stock market volatility climbed and trading in CBOE’s lucrative exclusive contracts surged.
***** And don’t forget the guest editing of JLN by CBOE CEO Ed Tilly. I am sure that had something to do with this.
Borsa Istanbul embarks on significant changes
Roger Aitken – FOW
Today, derivatives exchanges in Turkey begin operations under the newly created entity of Borsa Istanbul (BIST) that replaces the branding of the Istanbul Stock Exchange and follows the merger of the country’s capital markets.
***** If you want to know more about changes in Turkey’s exchange sector, check out our Special Report
Wall St falls out of love with commodities trading
Gregory Meyer in New York and Jack Farchy in London – FT.com
Blythe Masters was triumphant. The JPMorgan Chase executive had just sealed a deal that would propel her bank to the top of Wall Street’s commodities league table.
***** It is OK to fall out of love. There is always another waiting, or there is the make-up trading and hook-ups with the ex.
CME Group lacks adequate trade monitoring procedures, CFTC says
CME Group Inc should improve the way it polices its Chicago exchanges to ensure that traders are not using certain types of trades to disguise rule breaking, U.S. regulators said in a report released on Friday.
***** Here is the thing about trying to disguise rule breaking. It never works. Someone always pulls off the fake beard and yep, there the rule breaking is.
Bridging the Week: July 29 – August 2, and August 5, 2013
Gary DeWaal and Associates LLC
This week on Gary DeWaal’s Bridging the Week, Gary discusses:
– The US CFTC’s criticism of the CME over its monitoring of so-called off-exchange EFRP transactions and what this may mean for industry participants;
– The SEC’s new capital and customer funds’ protection rules;
– FERC’s suit against and settlement with JP Morgan over its alleged manipulation of California and Midwest electricity markets;
***** I am thinking Gary DeWaal should have been a dentist.
Chicago pits going quiet, 165 years after shouting began
On a recent morning in the Chicago Board of Trade’s soybean futures pit, the trading action looked like this: One trader hiked up a leg onto a metal railing, stretching his hamstring; another passed time bouncing a green rubber ball; a third yawned.
***** Going quiet? When was the last time anyone needed to shout?
Wall Street watchdog to review tactic for cleaning broker records
Wall Street’s industry-funded regulator, FINRA, will review a controversial practice in arbitration cases that critics say makes it too easy for brokers to scrub some black marks from their records, according to an official with the organization.
***** How about we disguise rule breaking and get the regulator to approve the practice?
From Boston hero to goat, billionaire John Henry takes on Globe challenge
Tim McLaughlin | Reuters
As recently as five years ago, billionaire John Henry, could do no wrong in Boston, but since then the image of the man who agreed to buy the Boston Globe on Saturday has taken a beating.
***** How bad is the CTA space? John Henry closes his CTA and buys the Boston Globe for $70 million, down from $1.1 billion 20 years ago. Maybe he is buying the bottom, or maybe he is the hero type. Good luck with this one, Mr. Henry.
The Sweetness of Time Off
TONY SCHWARTZ – NYTimes.com
A growing body of evidence suggests that more overall vacation time – intense effort offset regularly by real renewal — fuels greater productivity and more sustainable performance.
***** These are the kinds of stories my staff plants in the newsletter in August.
***JM: I am one of the staff plants.
MarketsWiki Recent Updates
42,449,275 pages viewed, 7,608 articles, 162,749 edits
Sellside rallies to challenge Deutsche Börse– Liquidnet tie-up
Tim Cave and Anish Puaar
Two of Europe’s largest brokers have pulled out of a dark pool run by German exchange Deutsche Börse, after it launched a partnership with buyside-only venue Liquidnet in a bid to boost volumes on both platforms. The backlash is a further sign of the growing tension between exchanges and brokers over the issue of trading in off-exchange, dark-pool platforms.
Singapore Bourse Embracing Derivatives Over M&A
Singapore Exchange Ltd. , Southeast Asia ’s biggest bourse, is relying on derivatives for growth amid a dearth of merger and acquisition candidates in Asia.
CME Treasury Futures Trade Paused Just Before Jobs Report
Jacob Bunge – MoneyBeat – WSJ
Trading in some Treasury futures contracts was briefly halted by market operator CME Group Inc. just before Friday’s U.S. job report, after big buy orders hit the market.
Commodities revenues plummet at top banks
Suzi Ring – Financial News
The world’s 10 largest investment banks suffered a 25% plunge in their commodities revenues in the first half of the year as the units continued to suffer from regulatory scrutiny and lower market volatility.
Hackers to Exchanges: You’re Next
Phil Albinus – Wall Street & Technology
We all know that hackers have had retail banks in their sights for ages and they have no limit to their wickedness. They have done – and are doing nearly everything: stealing customer account info, phishing for PINs, creating bogus IDs in order to steal money, and even creating elaborate devices that withhold cash when a customer uses an ATM. But now hackers have broadened the scope of their attack. They are looking at stock exchanges and the very foundation of modern capital markets.
House Republicans Call for Corzine Perjury Investigation
Jamila Trindle – MoneyBeat – WSJ
U.S. House Republicans called for the Department of Justice to investigate whether former Senator and MF Global Holdings Ltd. Chief Executive Jon Corzine lied to Congress when he was called to hill to testify about the collapse of the firm in 2011.
Goldman Named in Suit Over Aluminum Supply
The London Metal Exchange and Goldman Sachs have been named as co-defendants in a class-action lawsuit in the United States charging anticompetitive behavior in aluminum warehousing, Hong Kong Exchanges and Clearing Limited, which owns the London market, said on Sunday.
HSBC drops dozens of London missions
LONDON – HSBC bank has told dozens of foreign missions in London that will close their bank accounts, an official said Sunday, news that has sent diplomats across the capital scrambling to find a new place to put their money.
Risk Technology Greatest Concern Amid Regulatory Crackdowns
Becca Lipman – Wall Street & Technology
With increasing crackdowns by the SEC and other regulatory bodies, expect risk management technologies to flood the market — especially those that address complicated regulatory demands.
Did The CFTC Do The Right Thing With EC Swaps Deal?
Is the CFTC’s recent deal with the European Commission on swaps regulation a bad deal? Recent press coverage maintained that outgoing CFTC Chairman Gary Gensler caved to the wishes of Europeans and big swap dealer banks. It’s not that bad.
Fed Should Reverse Commodity-Trading Policy, CFTC’s Chilton Says
The Federal Reserve should reverse a decade-old ruling that allows banks to trade physical commodities, said Bart Chilton, a Commodity Futures Trading Commission member.
Education and Good Governance Fund – AMF grants over $1.5 million for 11 projects
Excellence program – AMF announces new university scholarship recipients
ASIC releases small business booklet
[Japan] FSA publishes Weekly Review No.57
Exchanges & Trading Facilities
CFTC Releases Rule Enforcement Review of the Chicago Mercantile Exchange and the Chicago Board of Trade
The Commodity Futures Trading Commission (Commission) has notified the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT) (collectively, the Exchanges) of the results of a rule enforcement review completed by the Commission’s Division of Market Oversight (Division). The review covered the target period from November 1, 2010 to October 31, 2011. The Division assessed the Exchanges’ compliance with Core Principles 4 and 5, pre- and post-Dodd–Frank Act, relating to the Exchanges’ market surveillance program. The Division’s findings and recommendations were limited to CME and CBOT and their respective products, and did not address the market surveillance program at any other CME Group exchange.
ICE Reports July Daily Futures Volume; $1.8 Trillion in CDS Cleared by Buyside and $43 Trillion in Total CDS Cleared to Date
IntercontinentalExchange, a leading operator of global markets and clearing houses, today reported futures volume for July 2013. ICE’s average daily volume for futures and options was 3,001,782 contracts, a decrease of 2% from the prior July. Total volume in July 2013 was 66 million contracts.
MarketAxess Announces Monthly Volume Statistics for July 2013
MarketAxess Holdings Inc., the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced total monthly trading volume for July 2013 of $57.8 billion, consisting of $37.1 billion in U.S. high-grade volume, $15.1 billion in other credit volume, and $5.5 billion in liquid products volume.
SGX derivatives volumes grow in July
Singapore Exchange (SGX) today said its derivatives volumes increased from a year earlier. Total securities turnover was S$27.5 billion, up 2% year on year; securities daily average value (SDAV) was down 3% to S$1.2 billion year-on-year. Total futures and options volume increased 52% year-on-year to 8.8 million contracts. A total S$5.3 billion notional of new OTC financial derivatives transactions were cleared, a decline of 23% year-on-year.
Key figures for SIX Swiss Exchange and Scoach Switzerland: July 2013
Since the start of 2013, a total of 20,700,401 transactions have been conducted on SIX Swiss Exchange and Scoach Switzerland. This marks a year-on-year increase of 6.0%. There were 19,271,707 trades in the equities including funds + ETPs segment, equating to a rise of 6.1%. The ETF segment is also performing strongly, with a total of 580,385 trades. This marks a year-on-year increase of 26.8%.
CME fines Glencore for violating COMEX copper trading rules
Glencore Ltd was fined $25,000 and ordered to pay back $66,200 in profits for trading copper contracts in a way that violated COMEX exchange rules, according to a notice posted on the CME Group Inc website on Friday.
Moscow Exchange Launches Securities Incentive Program
On August 1, 2013 Moscow Exchange launched an incentive program for its Securities market trading members operating in the mode T+2. The program is aimed at boosting securities liquidity and enhancing broker activity.
BOX Options Exchange August 2013 InBOX
This is the August issue of InBOX, your news source from inside the BOX Options Exchange. This monthly publication will provide convenient summaries of recent developments at BOX.
Trading On The Warsaw Stock Exchange: July 2013
CBOE Holdings, Inc. Reports All-Time Record Quarterly Results For Second Quarter 2013
TOM MTF Statistics Week 31, 2013
NZX July 2013 Shareholder Metrics
[CBOE] Trader E-News
Hedge Funds & Managed Futures
Debut funds struggle to attract wary investors
Michael Wursthorn – Financial News
UK mid-market private equity firm Blue Water Energy defied the weak maiden fund market when it closed its first fund at $861 million. Consultants and placement agents say first-time funds have been facing an uphill battle as investors pare down the number of relationships in their portfolios and focus increasingly on mitigating perceived portfolio risk.
Pimco Total Return Fund suffers $7.5 bln outflow in July
The Pimco Total Return Fund, the world’s largest mutual fund, suffered an outflow of $7.5 billion in July, following record outflows in June, estimated data from Morningstar showed on Friday.
Getting to Pimco’s Core
Helen Thomas – MoneyBeat – WSJ
Bill Gross’s Total Return Fund is known as Pimco’s flagship. And, in turn, it sits within what Allianz – the German insurer that owns Pimco – calls the asset manager’s core business. Yet in the second quarter, as rising bond yields hit performance of fixed-income funds, it was Pimco’s non-core products that shone. Those funds tend to offer investors specific outcomes, like inflation protection or higher levels of income.
KKR Sets Sights on Debt Investments in Asia Pacific
Gillian Tan – MoneyBeat – WSJ
U.S.-based private-equity giant KKR KKR -0.48% & Co. is keen to invest in alternative assets in Asia Pacific, particularly corporate debt, the head of KKR Australia said Monday.
Man Group unveils further cost savings
Harriet Agnew – Financial News
In his first full quarter as chief executive of Man Group, Europe’s largest listed hedge fund manager, Manny Roman unveiled $75 million in cost savings, but redemptions resulted in a 9% decrease in funds under management over the first six months of the year.
Paper Gains Help Berkshire Hit 46% Rise in Earnings
Berkshire Hathaway, the conglomerate run by the billionaire Warren E. Buffett, said its second-quarter profit rose 46 percent as the company reported big paper gains on the value of its investments and derivative contracts.
Head of Minnesota retirement fund heads for retirement
ST. PAUL – Wanted: Prudent, investment-savvy individual to manage $65 billion in state assets. Decisions scrutinized by top Minnesota leaders. Results affect pension accounts for thousands of retired public workers. A nationwide hunt is on for a successor to Howard Bicker, who is leaving his post as State Board of Investment executive director this fall.
BondDesk Market Transparency Report
Based on customer buy transactions on the BondDesk platform in July, median yields were up for Agencies and CDs while down for Treasurys, Corporates and Municipals. Trade volumes were down for all asset classes except CDs and the buy-to-sell ratio was up for all asset classes except Treasurys.
CFTC Commitments Of Traders Reports Update
Banks & Brokers
Broker Marex Spectron in talks to buy JPMorgan’s warehousing arm: report
London commodities broker Marex Spectron is in talks to buy the metals storage unit owned by JPMorgan Chase & Co., the Times of London reported.
J.P. Morgan’s Commodities Chief at a Crossroads
DAN FITZPATRICK AND CHRISTIAN BERTHELSEN – WSJ.com
J.P. Morgan Chase & Co.’s surprise decision to put its physical-commodities business up for sale dismantles a portion of the empire Blythe Masters spent the past seven years building. But the commodities chief was among the first executives to suggest the move, said people close to her.
RBS boss McEwan dusts off clan motto: ‘I grow strong again’
New Zealander Ross McEwan shocked Royal Bank of Scotland (RBS.L) investors in March with a blunt message in his first presentation in London: there are no good British banks.
Bond Salesman Who Wasn’t Reveals RBS Human Errors
KK Ho appeared out of nowhere last year on the Royal Bank of Scotland Group Plc’s London trading floor.
Barclays’s Jerry Donini to Step Down as COO of Investment Bank
Barclays Plc’s Jerry Donini will step down, less than a year after being named chief operating officer of its corporate and investment banking division.
Bank of New York Mellon Wins Sex Bias Case
SUSAN ANTILLA – NYTimes.com
A federal jury in New York decided on Friday that a woman who was one of 11 people in her division at Bank of New York Mellon laid off in 2010 was not a victim of sex discrimination. The case was unusual in that it even went to trial.
TD Ameritrade CEO Tomczyk signs new contract at $6.5 million a year
The chief executive of discount brokerage firm TD Ameritrade Holding Corp (AMTD.N) has signed a four-year employment agreement guaranteeing an annual base salary of $900,000 and target annual cash and stock incentives of $5.6 million through October 1, 2017.
Investment banks in UK face capital shortfall: central bank
Foreign investment banks in Britain face a shortfall of up to 29 billion pounds to meet new EU capital rules aimed at shielding taxpayers from having to rescue banks again, the Bank of England said on Friday.
HSBC Profit Rises 23%; Caution on China
MAX COLCHESTER – WSJ.com
HSBC Holdings PLC on Monday posted a 23% increase in net profit for the first half of the year, as a three-year cost-cutting plan bears fruit and loan impairments fell.
Morgan Stanley Traders Lost Money on 12 Days in Quarter
Morgan Stanley , which posted the biggest second-quarter jump in trading revenue among U.S. banks, lost money in those businesses on 12 days in the period, down from 15 a year earlier.
Morgan Stanley sets aside $199 million more for litigation costs
Morgan Stanley set aside an additional $199 million for expected litigation expenses in the second quarter, much higher than the $4 million increase it reported in the year-ago period, the bank said on Friday.
HSBC Names PwC Auditor, Drops KPMG After More Than Two Decades
HSBC Holdings Plc , Europe’s largest bank, appointed PricewaterhouseCoopers LLP as auditor, dropping KPMG LLP after more than two decades.
So You Want To Work At Goldman Sachs? From Sergey Aleynikov To Fabulous Fab
Going to work at Goldman Sachs used to mean money and prestige. Now, it can also mean going to jail and being the lone target of federal regulators.
ICAP Electronic Broking: July 2013 Volumes
Indexes & Products
China Gold ETFs Fail to Shine in Debuts
Francesca Freeman and Yue Li – MoneyBeat – WSJ
China’s first two gold exchange-traded funds made less-than-auspicious debuts this week, a reminder of gold’s diminished allure and the difficulties in getting Chinese to invest in alternative assets.
Bulgarian Stock Exchange – Sofia Added To FTSE Mondo Visione Exchanges Index
Moscow Exchange Indices Monthly Review: July 2013
SunGard Announces Second Quarter 2013 Results
SunGard, one of the world’s leading software and technology services companies, today reported results for the second quarter ended June 30, 2013. For the second quarter, revenue was $1.0 billion, down 4% year over year. Currency had no material impact on reported revenue for the quarter compared to the prior year. Operating income was $111 million in the quarter, up 5% year over year, driven by a 5% decline in total costs and expenses, and the operating margin was 10.7%, up 0.9 points year over year. Adjusted EBITDA was $298 million, up slightly year over year, and the adjusted EBITDA margin was 29.0%, up 1.3 points year over year.
Thomson Reuters to Expand Eikon Instant Messaging
WILLIAM LAUNDER – WSJ.com
Thomson Reuters Corp. plans to expand its Eikon instant-messaging platform to include customers of FX Alliance LLC, an electronic foreign-exchange trading platform acquired last year. The move is Thomson Reuters’s latest effort to break Bloomberg LP’s hold on the messaging market, seen as a key function among financial-data terminal providers.
Using Java In Low Latency Environments
Something I’ve noticed amongst financial service companies in London is a growing use of Java in preference to C/C++ for exchange systems, High Frequency Trading and over low-latency work. InfoQ has a good written panel discussion with Peter Lawrey, Martin Thompson, Todd L. Montgomery and Andy Piper.
CFTC Obtains Default Judgment against Christopher Smithers of Florida for Fraud in Connection with Futures Contracts, Fraud in Connection with Contracts of Sale of a Commodity in Interstate Commerce, and Violations of a U.S. District Court’s Prior Orders
The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Kenneth A. Marra of the U.S. District Court for the Southern District of Florida entered an Order of default judgment and permanent injunction against Christopher Smithers of Jupiter, Florida.
SEC Charges Former Green Mountain Coffee Employee And Friend In $7 Million Insider Trading Scheme
The Securities and Exchange Commission today announced insider trading charges against a former systems administrator at Vermont-based Green Mountain Coffee Roasters who repeatedly obtained quarterly earnings data and traded in advance of its public release. The SEC also charged his friend who illegally traded along with him.
‘Fabulous Fab’ verdict is vindication for SEC lawyer
As the head of litigation for the U.S. Securities and Exchange Commission, Matthew Martens’ main job is to oversee other lawyers. In his three years at the agency, he had not tried a case himself.
Illegal practice as a dealer – AMF charges Solange Poncelet-Leroy and Gilbert Asselin
[AMF] René Adam barred from acting as adviser
[ASIC] Former Gunns chairman pleads guilty to insider trading
ASIC permanently bans insurance broker
Environmental & Energy
Australian carbon price forecasts
Thomson Reuters Point Carbon has announced its initial forecasts for emission volumes and price developments in the Australian cap-and-trade scheme:
We forecast Australian Carbon Units will trade at AUD8.8/t (EUR6.2/t) on average between 2015- 2020. This represents an eight percent discount to EUAs. We base our price forecast on the assumption that the cap-and-trade program will survive the next federal election and begin in 2014.
Protectionist shadows over solar power
By Jeffry Frankel – NST
AS July ended, a settlement was reached in the world’s largest anti-dumping dispute, with China agreeing to a minimum price for the solar panels that it exports to the European Union.
**JK – A point made here is that charging China a minimum price for solar panels is bad for consumers. So is subsidising and dumping your products on a market.
BMW Introduces Its First All-Electric Car
Douglas Cobb – Guardian
BMW introduces its first all-electric car with the new BMW 13 after a lot of time spent on prototypes and testing. The i3 uses BMW’s most advanced technologies to date. The debut of their new all-electric car occurred simultaneously in three cities including, Beijing, London, and New York. It is expected to retail for just $24,000.
**JK – We’ve followed Tesla and electric cars for years. BMW may have a winner here at this price point.
HKMEx founder Barry Cheung sued for HK$40m debt
South China Morning Post
Former executive councillor Barry Cheung Chun-yuen sank deeper into trouble yesterday as he was sued for HK$40 million arising from loans his company took out. The lawsuit, mounted by the director of a listed company, is the latest twist to a saga over his failed Hong Kong Mercantile Exchange (HKMEx).
China broker buys Natixis commodities arm
Jack Farchy in London – FT.com
One of China’s largest securities brokers has acquired the commodities division of French bank Natixis in the latest move by a Chinese group to expand into overseas derivatives markets.
HKEx Announcement – Legal Proceedings Involving A Subsidiary – London Metal Exchange
The London Metal Exchange (“LME”), a subsidiary of Hong Kong Exchanges and Clearing Limited (“HKEx” or “Company”), was named as a co-defendant in a class action lawsuit filed in the US District Court for the Eastern District of Michigan on 1 August 2013. LME management’s initial assessment is that the suit is without merit and LME will contest it vigorously.
Dubai bourse volumes soar as CEO celebrates anniversary
Suzi Ring – Financial News
Trading volumes on the Dubai Mercantile Exchange increased 36% year-on-year in July, with the bourse having seen growth in 11 of the past 12 months, as its chief executive celebrates one year in the role.
Former Egypt stock exchange chief to reassume post
The Egyptian stock exchange chairman, who left the post on June 30 when his term ended, will be reappointed, a government official said on Sunday.
Emerging-Market Funds Return to Gains in July
Prabha Natarajan – MoneyBeat – WSJ
Emerging-market stock and bond funds made a comeback in July, posting gains for the first time since March on rebounding investor confidence.
Egyptian Exchange Forms An Advisory Committee From National & International Market Participants
The Egyptian Exchange (EGX) is forming an advisory committee to develop and promote market strategies of the coming 10 years. The committee will be also responsible of proposing mechanisms and new tools to activate the market. Forming this committee is one of the steps EGX is taking to develop the capital market domestically and internationally.
European Commission Recognises DFSA’s Audit Oversight System
The European Commission (Commission) announced its decision, recently, to grant the Dubai Financial Services Authority’s (DFSA’s) audit monitoring system ‘equivalent status’ with European Union (EU) member states.
Malawi Stock Exchange Weekly Trading Report – Week Ending 2nd August, 2013
MCX Weekly Market Report July 26, 2013 – August 01, 2013
Norway Gets U.S. Help Chasing Citizens Dodging Income Law: Taxes
Norway is catching more tax dodgers abroad with fresh help from the U.S. legal system.