John Lothian Newsletter: Trustees settle over MF Global assets, Top 10 (or 12) 2013 Predictions, 2013 will be a watershed for financial reform, Madoff, in Christmas Eve Letter

Dec 26, 2012

December 26, 2012:  We’re back after a short Christmas holiday. Today’s issue features a number of predictable prediction stories for 2013, including one from former IMF economist Simon Johnson and another from Forbes.  There is also a  break though in the bankruptcy case for MF Global customers as trustees announced a major settlement.  Also, if you missed it yesterday, take a look at the ongoing Restoring Customer Confidence series with James Gellert, who talks about rating FCMs, and our Allan Schoenberg video interview, as he explains how CME Group increasingly utilizes social media as a content distribution platform to discuss market issues with customers, partners and other stakeholders.


Top 10 (or 12) 2013 Predictions
Andrew Klausner – Forbes
Number 5 – The stock market will be down for the year, perhaps by 10%. I think January is going to be a very tough month as realty sets in that the country’s finances are in real trouble.

2013 will be a watershed for financial reform
Simon Johnson
Here’s an odd prediction for the coming year: 2013 will be a watershed for financial reform. While the financial crisis erupted more than four years ago, and the Dodd-Frank financial reforms were adopted in the United States in 2010, not much has changed about how Wall Street operates – except that the large firms have become bigger and more powerful. Yet there are reasons to expect real progress in the new year.

Trustees settle over MF Global assets
By Philip Stafford in London
The trustees fighting over the estate of MF Global have reached a settlement over its assets, in a move that paves the way for an earlier-than-expected return of more money to the failed US futures broker’s customers.

MF Global $500 Million Pact Heralds Customer Payments
By Linda Sandler & Dan Hart – Bloomberg
MF Global Inc. (MFGLQ) settled a legal dispute with a U.K. affiliate in a deal that will bring the failed brokerage $500 million to $600 million, allowing it to pay customers more money after a judge approves the settlement, a trustee said.

MF Global Overseers Reach Accord Over Claims
The officials supervising the wind-down of MF Global’s remains said on Saturday that they had reached a broad settlement over claims among the entities they oversee.  The trustees representing the failed firm’s main brokerage arm and its holding company, James W. Giddens and Louis J. Freeh, agreed to settle claims with the administrators of MF Global’s London arm.

Were Alternative Mutual Funds A Good Deal?
Juliette Fairley – Financial Advisor
The rise of hedge funds in the bear markets of 2003 and 2008 have prompted mutual fund firms to launch funds that mimic hedge fund strategies.
** Also from this well-researched piece: According to Morningstar, in 2007 there were 112 alternative mutual funds available to advisors and investors, compared with 357 through December 11, 2012. Well over half — 207 of them — were created post-2008.

Barney Frank: ‘I’m tired’
More quality time with his husband is just one of the many things Rep. Barney Frank is looking forward to in retirement.

Risky futures that banks can do without
Opinion – Lead – The Hindu
Diverting resources from essential developmental activities to speculative commodities trade could weaken an otherwise stable banking system

More Regulation, ETFs, Outsourcing for Mutual Funds in 2013
Hung Tran – Financial Advisor
So what are three elements that are going to shape the mutual fund landscape in 2013?
The answer lies in regulation, exchange-traded funds and operational outsourcing, according to a report from Deloitte.
The firm believes that fund companies will shift part of their focus back to the operations side of the business in 2013 in the form of outsourcing.

Israel Hedge Funds Defy Iran Threat Multiplying in Tech Center
By Sharon Wrobel & David Wainer
Tal Keinan, an Israeli fund manager, was ready for the question he’s always asked when he met with investors in New York in October: Why put your money with a manager whose country Iran has threatened to obliterate.

LSE agrees cut-price LCH.Clearnet deal
By David Oakley and Philip Stafford
The London Stock Exchange has agreed to buy LCH.Clearnet, the European clearing house, in a deal worth about €340m, shaving more than €100m off the original offer price.

CME Job Opening
Senior Director OTC Product Solutions – NY
CME announced today it is looking to hire a senior executive for its OTC business.  Below is the job description:
– The Senior Director, CME Direct Product Management role will focus on managing the CME Direct and CME Direct Messenger (Pivot) product lines. CME Direct offers an array of trading, clearing and straight-through-processing services that depend on the nature of the product clients trade; from pure OTC instrument to EFPs, Blocks and Substitutions into Futures and Options.
– This role will require special knowledge of the Energy Options markets, as a key area of growth for CME Group.
– This role will report into the OTC Product & Services group.

‘Banks Are Wondering Which Investment Banking Activities They Should Keep’
HITC Business
Fees for advising on mergers, share listings and bond issues have fallen again in 2012, forcing investment banks to cut jobs and start overhauling business models they had stuck by in times of crisis over the past decade.

Madoff, in Christmas Eve Letter, Says Insider Trading Has Gone on ‘Forever ‘
The recent rash of insider trading cases may be a shock to some on Wall Street, but not to one long-time market player: Bernie Madoff.
In a Christmas Eve letter from the medium security federal prison in North Carolina where he is serving a 150-year sentence for running a massive Ponzi scheme, Madoff tells CNBC that insider trading has been around “forever.”

The Strongest Currency Rally in the World
By Ney Hayashi and Patricia Lara, Bloomberg
Brazil’s real rallied the most in the world among the U.S. dollar’s counterparts as the central bank intervened to stem the currency’s decline and contain inflation in Latin America’s biggest economy.


CFTC Approves Final Rule Requiring Recording of Oral Communications
Katten Muchin Rosenman
On December 17, 2012, the Commodity Futures Trading Commission (CFTC) adopted final rules amending CFTC Regulations 1.31 and 1.35. The final rules require certain market participants to record oral communications that lead to the execution of a commodity interest transaction. All such recordings must be kept for a period of one year in a form and manner that is identifiable and searchable by transaction.

CFTC Classifies Certain Securitization Vehicles as Not Being Commodity Pools
K&L Gates
In a no-action letter issued on December 7, 2012, the CFTC provided limited exclusions from commodity pool regulation for certain categories of securitization vehicles and no-action relief to certain securitization vehicles created before October 12, 2012. It also extends to March 31, 2013 the date by which operators of securitization vehicles that are commodity pools and that do not qualify for an exemption must register with the CFTC as commodity pool operators (“CPOs”).

A Fascination of Wall St., and Investigators
YOU want the headquarters of Steven A. Cohen, one of the most successful financial speculators of our time, to look like Dr. Evil’s secret lair. But it is just another office-park building, a low-slung affair of tinted glass and red brick, on the southern fringes of Stamford, Conn.

SEC going high-tech with real-time trade data
By Dina ElBoghdady, Washington Post
As computing power and big data have revolutionized stock trading in recent years, one market player has lagged far behind: the Securities and Exchange Commission, whose job policing the markets has been hampered by a serious technology gap.


Analysis: In ICE-NYSE deal, one CEO steps back, the other rises
By John McCrank and Jonathan Spicer
(Reuters) – Duncan Niederauer, the chief executive of New York Stock Exchange operator NYSE Euronext, once boldly proclaimed that his company could not be acquired.
Last year, even when Niederauer was prepared to sell his company to Deutsche Boerse, he insisted that he be chief executive of the combined company. The deal ended up being quashed by German regulators.

Pension fund sues NYSE over ICE deal
A pension fund that holds shares of NYSE Euronext has sued the exchange operator over its proposed $8.2 billion sale to IntercontinentalExchange Inc., saying the deal undervalues the company’s stock.


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