The SEC’s Robert Khuzami is said to be planning his exit in the near future; possibly as early as next month. Exchanges owned by NYSE Euronext in Europe could attract interest from local rivals as part of the industry shift related to the N-ICE merger. Morgan Stanley takes a stake in Eris Exchange, as standardized derivatives trading looks increasingly like a growth area.
John Lothian & Company, Inc. to Move Offices….Again
We are moving to new offices in the CBOT, just a little more than a year after moving into our own offices in the CBOT Building on the 30th floor. We are moving to suite 1602 in the CBOT Building, sub-letting the space from Kottke Associates, LLC. Our one-year sublease from Trading Technologies is up and so is their lease. We will miss the beautiful panoramic view from our 30th floor offices, looking South, East and West. However, our new offices have stunning views of the LaSalle Street canyon. We never did have an office warming party, but with a smaller space and the same number of computers, every day will feature a warm office. We move offices tomorrow and should be operational by Wednesday.
One other note: We will not be publishing a newsletter on Monday, Christmas Eve, due to the impending holiday and the move. We will be back on Wednesday. Have a Merry Christmas and enjoy the spirit of the season.
One last note: MarketsWiki passed the 32.5 million page view mark yesterday, which means we have seen 15 million page views during 2012. Meanwhile MarketsReformWiki has passed the 2.9 million page view mark, which means it will do more page views during its first 2 years than MarketsWiki did back in 2008-09.
Bernie Dan’s Father Passes Away
John Lothian – JLN
The father of Sun Holdings, LLC President Bernie Dan passed away early this week. Below are the details on services as published in the Chicago Tribune:
*** Our condolences to the Dan family.
With NYSE Deal, ICE Assumes Bulk Of Global Softs Trade
BY Sarah Rudolph, Christine Nielsen and Jim Kharouf – JLN
Sometimes it’s the little things in a big deal that are interesting to note. There is much to analyze in the IntercontinentalExchange’s $8.2 billion purchase of NYSE Euronext – from OTC interest rates and credit default swaps to securities to futures. But with its acquisition of the New York Board of Trade (NYBOT) in 2007, ICE is now dominant in the global trading of soft commodities, as it acquired the lion’s share of the world’s sugar, coffee and cocoa derivatives trade. While the likely increase in contract volume once the deal has closed is not staggering, the geographical reach is impressive.
**** Members of the JLN team analyze the ICE/NYSE deal’s impact on the softs trade.
Rosenthal: Shivers in Chicago as ICE plans takeover of NYSE Euronext
Phil Rosenthal – chicagotribune.com
Never mind that winter is upon us. It is the chill of ICE from Atlanta descending on New York causing goose bumps for those connected with Chicago’s trading exchanges.
**** More like a shrug than a shiver.
CME Seen Next Predator as Speculators Mull NYSE: Real M&A
IntercontinentalExchange Inc.’s deal to buy NYSE Euronext is pressuring CME Group Inc. , the world’s largest operator of futures exchanges, to mount a response.
**** CME likes to make friends. Predator is just a little unfriendly.
New Restoring Customer Confidence Video
The fifth video in our Restoring Customer Confidence series deals with broker ratings. Each week we will post a new idea answering the question – how do you restore customer confidence and bring traders back?
|Restoring Customer Confidence||More ideas»|
Ratings: How Does Your Broker Rate?
If you knew the financial health of your futures broker, would that help you decide which firm to work with? James Gellert, President and CEO of Rapid Ratings, says futures broker ratings could make for more informed retail and professional investors. Gellert explains how ratings of public brokers and voluntary ratings of private brokers would provide transparency for the FCM community and its customers. Rapid Ratings uses dozens of financial ratios, based on audited financial reports, to provide a score for each firm.
In this video, a simple animation and interview with Gellert help explain broker ratings.
About the Restoring Customer Confidence video series
The Restoring Customer Confidence video series answers that question by exploring potential solutions using expert interviews and simple animations.
John Lothian News interviewed more than a dozen professionals in the industry to get their ideas and solutions. As these ideas become practice, or as new concepts are adopted by the industry, we will continue to add them to the site.
Visit the video series page on MarketsWiki.tv over the next several weeks for new ideas and solutions.
OCC: US Options Volume
While options volume in 2012 will see a decline from the record level of 2011, at about 9:15 am CST today OCC saw volume surpass the 3.899 billion contract level of 2010. This volume level makes 2012 the second best year for options trading in the 39 year history of listed options.
Commodity trader hedge funds outsmart standalone rivals
Hedge funds owned by commodity giants including Cargill and Louis Dreyfus have outwitted their standalone rivals in a year of market volatility that has disrupted traditional models for oil and metals trading.
***** Commodity traders do it best!
How well did Goldman’s top trades do in 2012?
Every December, the analysts at Goldman Sachs publish their top macro trades for the coming year – an event that attracts much hype among the investment community. But how did the bank’s trades for 2012 pan out?
Wall St. Downsizes Holiday Parties
MICHAEL KAPLAN – NYTimes.com
In the year of Hurricane Sandy, looming fiscal austerity and global scrutiny of banks, Wall Street is just not in a celebratory mood. Banks that once took over entire floors of Manhattan nightclubs and reserved Midtown steakhouses are continuing to follow restrictions on the office holiday party, many of which have been in place since the 2008 financial crisis.
***** Our holiday party is to move our offices.
Allan Schoenberg on the Evolution of CME Group’s Social Media Strategy
Allan Schoenberg, Executive Director of Corporate Communications at CME Group, highlights new social media initiatives and describes how their social media strategy has evolved since they first created a Facebook page five years ago. In this conversation with JLN Publisher John Lothian, he explains how CME Group increasingly utilizes social media as a content distribution platform to discuss market issues with customers, partners and other stakeholders.
Schoenberg cites relationships with BM&FBOVESPA, MexDer, Dubai Mercantile Exchange and exchange partners in Asia that help CME Group distribute regional, language specific content to unique international audiences. Specifically, CME Group has used Weibo.com (a Chinese language micro-blogging site) and Youku (a Chinese language video sharing site) to initiate discussions with potential financial market participants in China.
Schoenberg contrasts Twitter’s broad appeal with StockTwit’s ability to focus conversations on specific topics and products. He also discusses how CME Group has leveraged their historical exchange photos and research images to create image based stories on Pinterest over the last year.
JLN Interest Rates
U.S. Banks Face Interest-Rate Shocks as Economy Mends, OCC Says
The biggest U.S. banks will face interest-rate shocks to their already tight margins in coming years, according to a report from the U.S. Office of the Comptroller of the Currency.
TIPS Sale Draws Demand Despite Record Low Yield
The Wall Street Journal
The U.S. government borrowed money at a record-low cost as lenders eagerly accepted a negative payment on five-year notes that protect them from the threat of inflation.
Analysis: Central bankers rethink their devotion to slaying inflation
Reuters (via Chicago Tribune)
A subtle shift in monetary policymaking is afoot with a new generation of central bankers, striving to secure global economic recovery, prepared to challenge the old doctrine of inflation-fighting at all costs.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
32,555,756 pages viewed, 7,299 articles, 151,425 edits
SEC Enforcement Chief Khuzami Said to Leave Agency Next Month
Robert Khuzami, who led the U.S. Securities and Exchange Commission Enforcement Division’s pursuit of financial industry wrongdoing related to the subprime mortgage crisis, plans to step down as early as next month, three people with knowledge of the matter said.
Rivals Could Study Euronext Bids if IPO Plan Doesn’t Materialize
Margot Patrick, Ulrike Dauer and Vladimir Guevarra – Dow Jones Newswires
Four European stock exchanges currently owned by NYSE Euronext could attract interest from European and Asian rivals, analysts said Thursday, as a fresh round of consolidation hit the global exchanges industry in the form of an agreed purchase of NYSE Euronext by rival IntercontinentalExchange.
Morgan Stanley Stake in Eris Exchange Spotlights Market Shift
BRETT PHILBIN AND KATY BURNE – WSJ.com
Morgan Stanley said it will invest in Eris Exchange, becoming the latest heavyweight trading partner to bet on the exchange ahead of an expected increase in standardized derivatives trading.
Decent legal outlook for NYSE deal
Jacob Bunge, Tom Osborn and Brent Kendall – WSJ
Some potential tie-ups between exchanges crumbled in the last two years as regulators stood in the way. But analysts and lawyers give the $8.2bn deal announced yesterday between IntercontinentalExchange and NYSE Euronext decent odds of happening.
NYSE Cedes Autonomy to 12-Year-Old Market That Expanded Fivefold
Inyoung Hwang & Nina Mehta – Bloomberg
The owner of the New York Stock Exchange, whose trading floor helped fuel Warren Buffett’s fortune and financed industries from shipping to semiconductors, is about to be bought by a 12-year-old energy market operator founded with money from a legal settlement.
Sprecher’s NYSE Win Caps 11-Year Buying Spree to Change Markets
Matthew Leising – Bloomberg
In 2001, power company executive Jeffrey Sprecher wandered the exhibits of the futures-trading industry’s annual convention in Boca Raton, Florida with an idea nobody wanted to hear. “I was just looking for help” to develop an electronic trading system for energy and metals, Sprecher recalled in a 2007 interview. Even with backing from Goldman Sachs Group Inc. and Morgan Stanley, “I just couldn’t get people interested in what we were trying to do,” he said.
ICE Chief: A ‘Chess Master’ With Sharp Elbows
JACOB BUNGE – Dow Jones
The takeover deal for NYSE Euronext could put a former race-car driver behind the wheel of the Big Board. The play by Atlanta-based IntercontinentalExchange Inc., a commodities-market operator that is far less known than the New York Stock Exchange, was masterminded by ICE founder and Chief Executive Jeffrey Sprecher, an executive known for his down-to-earth Midwestern demeanor and sharp elbows when it comes to business and deal making.
DealBook: Exchange Sale Reflects New Realities of Trading
New York Times
The takeover of the New York Stock Exchange’s owner illustrates starkly how trading in commodities and derivatives has become much more lucrative than trading in corporate shares.
Regulatory ‘Whale’ Hunt Advances
DAN FITZPATRICK AND JOANN S. LUBLIN – WSJ.com
The first regulatory ripples from the “London Whale” trading fiasco are about to hit J.P. Morgan Chase & Co. The Office of the Comptroller of the Currency, led by Comptroller Thomas Curry, is preparing to take a formal action demanding that J.P. Morgan remedy the lapses in risk controls that allowed a small group of London-based traders to rack up losses of more than $6 billion this year, according to people familiar with the company’s discussions with regulators.
OSE’s Year-to-Date Derivatives Trading Volume has Exceeded 200 Million Units
Osaka Securities Exchange Co., Ltd. (OSE) is pleased to announce that the total derivatives trading volume since January 2012 to December 20 (including Night Session) achieved 200,032,663 units (preliminary estimates) as the first exchange in Japan.
EU regulators accept Thomson Reuters concessions, drop probe
European Union regulators dropped an antitrust investigation into Thomson Reuters on Thursday after the company made it easier for customers using its financial instrument codes to switch to competing services.
CFTC’s Division of Swap Dealer and Intermediary Oversight Issues No-Action Relief for Certain U.S. Banks Wholly Owned by Non-U.S. Swap Dealers, for Purposes of Making Calculations Under the Swap Dealer Definition
The Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) today issued a no-action letter that provides relief for certain U.S. banks that are wholly owned by non-U.S. swap dealers.
Ring-Fence Needs Electrification, Says U.K. Banking Commission Report
The Parliamentary Commission on Banking Standards has today published its first report. The report contains the Commission’s consideration of the Government’s draft Financial Services (Banking Reform) Bill and associated proposals which give effect to the recommendations of the Independent Commission on Banking (ICB).
Exchanges & Trading Facilities
MIAX Selects Equinix for New Options Exchange Trading Platform
Business Wire via Yahoo! Finance
Equinix, Inc. , the global interconnection and data center company, today announced that the MIAX Options Exchange has selected Equinix International Business Exchange data centers for its primary, backup and disaster recovery sites for its new options exchange trading platform.
London Stock Exchange Group Launches Inaugural Yearbook – 2012 Yearbook Offers Insight And Perspectives On The Global Markets
From Today, Poland Has A Gas Exchange
Today, first clients of brokerage houses have submitted orders to the gas exchange launched on the Polish Power Exchange. The gas exchange is an important step in the liberalisation of the gas market in Poland. For many consumers, it opens a great opportunity to participate in transparent market-based trade in gas.
Vienna Stock Exchange On The Rise: ATX Climbs By 28 Per Cent In 2012
Equinix Sees Accelerating Globalisation In Financial Markets In 2012 – Top Exchanges Expanding Customer Access Models, Tapping
Trading On IMKB Futures & Options Market Started Today
BME To Distribute The Second 2012 Interim Dividend For E50 Million On 27 December – It Represents A Gross E0.6 Per Share
CME Group Inc. Announces Date Of Fourth-Quarter, Year-End 2012 Earnings Release, Conference Call
Program Trading Averaged 30.7 Percent of NYSE Volume during Dec. 10-14
SIFMA Confirms Year-End Market Close Recommendations In The US, UK, And The Japanese Markets
Cyprus Stock Exchange Monthly Bulletin – November 2012
Direct Edge Trading Notice #12-60: Market Holiday Reminder – Christmas
Hedge Funds & Managed Futures
Time to stop addiction to momentum trading
Gillian Tett – FT.com
In recent decades, Harold Ehrlich has enthused about America’s hedge fund world. No wonder: not only is he an adviser to JPMorgan’s fund of hedge funds, but he used to run Bernstein-Macauley, the asset management group. But these days Mr Ehrlich is disenchanted.
Beating Billionaire ‘Pirates’ Triggers Steepest Debt Gain
Argentina’s victories against billionaire Paul Singer in courts from Manhattan to Hamburg are propelling the nation’s bonds to the biggest return in emerging markets.
SunGard’s Asset Arena 360 Survey Identifies Factors Shaping the Growth of Institutional Boutique Asset Managers
The SunGard Asset Arena 360 Boutique Asset Manager survey recently examined the prospects for institutional boutique asset managers, the obstacles that lay ahead, as well as strategies for growth in an increasingly challenging cost-pressured industry.
UBS Willow Management Sued by Investor Over CDS Strategy
UBS Willow Management LLC was sued by an investor in its Willow Fund who claims it deviated from an announced strategy of investing in debt securities by trading in credit default swaps.
Losses narrow at Terry Smith boutique
Mark Cobley – Financial News
Fundsmith, the investments firm founded by Terry Smith, chief executive of broker Tullet Prebon, reduced its losses by nearly 80% to £327,000 during its last financial year, suggesting the vocal critic of the funds industry is on course to prove his mettle as an asset manager.
Rothschild joins SME lending drive
Kiel Porter – Financial News
Rothschild, the independent investment bank, has appointed two mezzanine specialists to run a fund that will seek to provide direct lending to small and medium-sized enterprises, becoming the latest non-banking institution to enter the lending arena.
Banks & Brokers
Deal for Knight to Create Trading Powerhouse
JENNY STRASBURG And JACOB BUNGE – WSJ.com
Knight Capital Group’s takeover by rival Getco LLC, confirmed on Wednesday, creates a brokerage powerhouse with control over a large chunk of all U.S. stock trades. But it also raises a question voiced by one of Knight’s biggest customers during the deal talks: Will the combination be good for small investors?
UBS Appoints Sam Kendall as Global Head of Equity Capital Markets -Memo
UBS AG has promoted its head of equity capital markets in Asia, Sam Kendall, to global head of the unit, according to an internal memo seen by the Wall Street Journal.
U.K. Banks Seen Sacrificing Lending to Meet BOE Demand
U.K. banks, under pressure from the Bank of England to increase capital, may do exactly what the central bank doesn’t want them to do: Cut lending.
Making It Easier to Estimate Libor Losses
PETER EAVIS – NYTimes.com
The potential victims of the Libor scandal are starting to estimate the costs to their bottom lines. In its settlement with Barclays earlier this year, the Justice Department said that those who manipulated interest rates at the bank knew their activities hurt others.
Adoboli Fraud in UBS Recklessness Deflates Thatcher Deregulation
When Oswald Gruebel, chief executive officer of UBS AG, stepped off a plane in Zurich at dusk on Sept. 14, 2011, he had an urgent message on his mobile phone from investment-banking head Carsten Kengeter.
JPMorgan Said to Buy Daily Deal Site Bloomspot for $35 Million
JPMorgan Chase & Co. agreed to acquire online coupon site Bloomspot Inc. for $35 million to bolster its credit card division, according to a memo obtained by Bloomberg News.
BOJ Member Deposit Plan Would Unleash $373 Billion: Japan Credit
The proposal by a Bank of Japan board member to scrap interest paid on lenders’ deposits raises the prospect of a flood of cash into a bond market where yields are near a nine-year low.
Green Investment Bank signs first direct deals
Mark Cobley – Financial News
The UK’s Green Investment Bank, formally launched in October, has made its first direct investments, in deals also involving a series of private-sector institutions including UK banks, fund managers and a Dutch pension fund.
Clearing & Settlement
Clearstream Publishes Pricing Model For TARGET2-Securities
T2S Pricing For Customers Of The German CSD Applicable From 1 April 2013 – Clearstream Will Charge T2S Settlement At The Price Of The European Central Bank – T2S Adaptation Cost As Co-Investment With Upscale Potential
Indexes & Products
Need for Speed Means ETF Trading Outpaces Bonds: Credit Markets
Trading in exchange-traded funds that buy junk bonds is increasing at a faster pace than transactions in the underlying debt as buyers seek a faster way to take advantage of a market returning 15.5 percent this year.
S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices – A Deletion From The S&P/TSX Global Mining Index
Madoff brother gets 10 years in Ponzi scheme
Peter Madoff will serve 10 years in prison for his role in his older brother’s multibillion-dollar Ponzi scheme, a U.S. judge said Thursday.
SEC Charges Eli Lilly and Company with FCPA Violations
The Securities and Exchange Commission today charged Eli Lilly and Company with violations of the Foreign Corrupt Practices Act (FCPA) for improper payments its subsidiaries made to foreign government officials to win millions of dollars of business in Russia, Brazil, China, and Poland.
[ASIC] Accountant committed to stand trial
South Australian mining exploration company fined for failing to lodge annual reports with ASIC
UK’s Financial Services Authority Decides To Fine And Ban Gracechurch Investment’s CEO, Bans Its Compliance Officer And Censures The Firm
Environmental & Energy
IntercontinentalExchange to Acquire NYSE for $8.2 Billion
IntercontinentalExchange Inc., the 12-year-old energy and commodity futures bourse, agreed to acquire NYSE Euronext (NYX) for cash and stock worth $8.2 billion, moving to take control of the world’s biggest equities market.
**RKB — From the article, derivatives market details: Liffe will be merged into London-based ICE Clear Europe. “Putting ICE and Liffe together would create a major London-based derivatives exchange, specializing in interest rates, commodities and credit,” said Richard Perrott, exchange analyst at Berenberg Bank in London.
ICE to buy NYSE Euronext for $8.2 billion
In October, Jeff Sprecher, chief executive of upstart IntercontinentalExchange, approached NYSE Euronext CEO Duncan Niederauer with a modest proposal to team up on clearing trades in London.
**RKB — Carbon trading mart NYSE Euronext’s Bluenext closed earlier this month, leaving rival EEX to navigate declining carbon market value. See the related price article from Reuters Point Carbon below.
EU carbon market seen shrinking by a third in 2012
Europe’s carbon market is set to lose a third of its value this year as an oversupply of permits worsened, battering average prices and increasing pressure on European governments to provide support.
**RKB — A 70 percent drop this year in the average price of United Nations carbon credits, which can be used to comply with the ETS, also impacted the EU market’s value.
Jim Rogers on China: Keep the Faith
Never mind the slowdown, his kids are still learning Mandarin
China Approves Trading in Rapeseed Futures as Imports Increase
Regulators in China, the biggest consumer of rapeseed after the European Union, approved trading in rapeseed and rapeseed meal futures to help companies manage risks amid rising imports and declining domestic production.
Thai Bourse Announces Organization Restructuring
The Stock Exchange of Thailand (SET) announces an organization restructuring to boost its strength and competitiveness, reinforcing the Exchange’s commitment to match the right financial opportunities for investors and cope with competition on the regional and international stages, effective from January, 2013.
Maybank Kim Eng Joins SGX Derivatives Market
HKEx Report: Stock Exchange Participants’ Market Share Report
Tokyo Commodity Exchange Reminder – Mini Contract Design Modifications Effective From December 25, 2012
Tokyo Grain Exchange SPAN Parameters Effective From January 4, 2013 To January 15, 2013
Japan’s Financial Services Agency: Final Report By
Hong Kong’s Securities And Futures Commission: Court Continues Interim Injunction To Freeze Assets Of Titan’s Senior Staff Member
DIFC Authority introduces New Non Profit Incorporated Organisations Law And amendments To The Employment Law, Data Protection Law And Real Property Law
IMF: Regional Workshop On Building An Enabling Environment For Islamic Banking And The Development Of The Government Sukuk Market
Malawi Stock Exchange Weekly Trading Report – 21st December, 2012
MCX – COMDEX Weekly Market Report December 14, 2012 – December 20, 2012
The Palestine Exchange (PEX) Holiday On Christmas And New Year