John Lothian Newsletter: Miami Options Exchange Gets SEC Approval; Eurex Exchange launches derivatives trading system; Interest-Rate Swap Futures Surpass $130 Million at CME Group

Dec 5, 2012

New options exchange MIAX gets a green light from the SEC, and will be able to open its doors as planned on December 7. Eurex Exchange launches the next generation of its derivatives trading system, beginning the months-long process of migrating its offerings onto the new platform. CME Group’s new interest rate swap futures contracts sees solid interest from traders.

First Read

New Restoring Customer Confidence Video
The third video in our Restoring Customer Confidence series deals with confirmation of segregated funds. 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»
Confirmations: Made in China - Gary DeWaal

Confirmations: Made in China
MarketsWiki.tv

Gary DeWaal, group general counsel at Newedge, noted that Peregrine Financial Group (PFG) was able to dodge regulatory audit checks of its customer segregated funds for more than 20 years. DeWaal says that simply wouldn’t happen if the US adopted the system used in China’s futures markets called the China Futures Margin Monitoring Center Co. Ltd. (CFMMC). In November 2012, the National Futures Association and CME Group did just that, hiring AlphaMetrix to take on the job of confirming the money FCMs say they have in their segregated accounts, with money that is held at the bank.

In this video, a simple animation and interview with DeWaal help explain the CFMMC model.

Watch the video »

This video is sponsored by:
SunGard

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About the Restoring Customer Confidence video series
In the aftermath of the MF Global collapse, fraud at Peregrine Financial Group and high profile high-frequency trading shocks, John Lothian News asks – how do you restore customer confidence and bring traders back?

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.

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Regulators pledge to avoid cross-border clashes over derivatives
Reuters
Derivatives regulators from major trading centres promised on Tuesday to minimise cross-border clashes over their new rules to rein in risks in the $640 trillion sector and give industry extra time to adjust.
jlne.ws/VC6nGl

**** They promise to wax over their differences.

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Russian Billionaire Unearthed With Soybean Meal Fortune
Alex Sazonov – Bloomberg
In 1993, Alexander Lutsenko abandoned a fledgling military career in the Russian army to test an economic adage he learned while studying at the Political College of Arms in Minsk. Even in the most difficult times, the saying went, a well-managed agriculture business is always profitable.
jlne.ws/VC6nWF

***** Soybean Meal is agriculture’s version of gold.

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Simpler Remedies Needed for Banks
FRANCESCO GUERRERA – WSJ
“A bad idea whose time had come.” The zinger, used by Sen. Warren Rudman to describe a much-hated budget law he backed in 1985, is an apt description of the current regulatory zeal to slim down big banks. Four years after encouraging several lenders to get bigger by gobbling up rivals weakened by the financial crisis, U.S. and European authorities want to put banks on a crash diet through a plethora of weight-loss programs.
jlne.ws/VC6r8W

**** More competition is the answer.

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Todd Fulton

Todd Fulton of Pioneer Futures on CTA Fees, Capacity Caps and Managed Futures Mutual Funds (Part 2/2)
MarketsWiki.tv

Todd Fulton, vice president, managed futures at Pioneer Futures, has been around the CTA space for more than 20 years. In Part 2 of our conversation, he spoke with JLN Managed Futures editor Jim Kharouf about emerging managers’ impact on the managed futures space as well as the effect of capacity caps have on various funds. He also discussed how flexible CTAs can be on fees. Fulton says some clients can get ‘zero and 25’ fee structures. And he discussed the potential for managed futures mutual funds, the plusses and questions that still remain for that product.

Watch the video »

Also see: Todd Fulton of Pioneer Futures on What Investors Want in Emerging Managers (Part 1 of 2)

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Time for a Bold Choice for S.E.C. Head
RICHARD E. FARLEY – NYTimes.com
Much has been said about the unfinished business that Mary L. Schapiro will leave behind as she steps down as chairwoman of the Securities and Exchange Commission after nearly four years. But it did not have to be this way.
jlne.ws/VC6nWN

**** Who would be bold enough?

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A Market Test for High Speed Trading
CNBC
Andrei Kirilenko’s study of the source of profits for high frequency traders deals has a very obvious bias: it deals with the costs of HFT to other investors without taking into account the benefits. In other words, headlines like the one the New York Times is running—”High-Speed Trades Hurt Investors, a Study Says”—are highly misleading. The study says no such thing.
jlne.ws/VC6rpr

**** Bad New York Times, Bad.

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How Regulations Led to High-Frequency Trading
John Carney – CNBC
The great irony of the report on the costs to regular investors of high frequency trading is that high frequency trading is largely a product of regulation.
jlne.ws/VC6nWX

**** Absolutely positively!

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S.E.C.’s Fair but Futile Stance on China-Based Auditors
JOHN FOLEY, REUTERS BREAKINGVIEWS – NYTimes.com
China’s shaky accounting practices are a sound target for U.S. regulators. Or at least, they would have been 10 years ago.
jlne.ws/VC6odh

**** They had me at SEC and Futile.

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U.S. Investors Already Dodged $6 Billion In Fiscal Cliff-Related Taxes
The Huffington Post | By Mark Gongloff
For all of the noise they make about the federal budget deficit, U.S. companies are not exactly doing much to help. In fact, many of them have been making the problem worse in recent weeks by quickly shoveling cash to investors to take advantage of low tax rates before they rise, potentially costing the government billions of dollars in much-needed tax revenue.
jlne.ws/XopibA

**** Big story. Lots of money flowing early.

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Mr. Burns Explains The Fiscal Cliff In ‘Simpsons’ PSA (VIDEO)
Huffington Post
Are you confused about the “fiscal cliff” everyone’s ben talking about? Well, let Springfield’s resident billionaire Mr. Burns clear things up for you.
jlne.ws/VC6odk

**** Even the FOX cartoon the Simpson’s tries explaining the Fiscal Cliff.

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A Mighty Wind Can Blur Economic Picture
SPENCER JAKAB – WSJ
As many executives can attest, bad weather is a horrible thing to waste. There are few more convenient excuses for a lousy quarter than a heat wave, storm or flood. So expect to hear Sandy feature prominently in the next round of quarterly earnings releases. Just five weeks after it made landfall, the storm already is rearing its head in economic data.
jlne.ws/VC6odq

**** Where is the big ponzi scandal unearthed as a result of Sandy?

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Thomson Reuters Tie-Up Pressures Canadian Scion, David Thomson
ALISTAIR MACDONALD, ANUPREETA DAS AND RUSSELL ADAMS – WSJ.com
When Thomson Corp. negotiated its $17 billion deal for Reuters Group PLC, Thomson Chairman David Thomson stayed on the sidelines through 18 months of talks, speaking to Reuters top management only on the day plans for the deal were announced in 2007.
jlne.ws/VC6rG1

**** Time to get back in the game, Mr. Thomson.

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Facebook to Join Nasdaq-100
MICHAEL DRISCOLL – WSJ.com
Facebook Inc. will join the Nasdaq-100 Index at the start of trading next Wednesday, Nasdaq OMX Group said late Tuesday. The Menlo Park, Calif., company will take the slot freed up by Indian technology consultant Infosys Ltd., which announced Friday it was moving its listing to the rival New York Stock Exchange, operated by NYSE Euronext.
jlne.ws/VC6rG8

***** Nasdaq 100 Friends Facebook.

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MarketsWiki.tv

Rick Lane

Rick Lane of Trading Technologies Talks Mobile Trading and Legacy Systems (Part 1/2)
MarketsWiki.tv

Rick Lane, chief technology officer of Trading Technologies is overseeing a major overhaul of how Trading Technologies develops its solutions. In part 1 of this two-part conversation with JLN editor-in-chief Jim Kharouf, he talks about mobile trading trends, the legacy challenges for the futures industry and rebuilding Trading Technologies’ entire architecture — and how this will all come together. In Lane’s view, rethinking the way technology is built and delivered means finding a balance of buying existing software and combining it with new solutions, a departure from the firm that traditionally built everything in-house.

In part 2 of our interview (coming soon), Lane will talk about how Trading Technologies is addressing regulation and its technology, the move of OTC into futures markets, Trading Technologies Algo Design Lab’s growth and what’s next in the futures markets.

Watch the video »

JLN Forex

Geronimo Redux or: How I Learned to Stop Worrying and Love the Fiscal Cliff
by Douglas Ashburn

With less than a month to go before the end of the year, there is still no deal to be reached to avoid the fiscal cliff, a $540 billion combination of automatic tax hikes and spending cuts set to kick in at year’s end.

A couple months ago I wrote a column on the fiscal cliff (Geronimo!, JLN Forex, August 21, 2012) in which I laid out the argument for simply taking a swan dive off the cliff, accepting the inevitable pain, and then get to work rebuilding the economy from scratch. Needless to say, my advice has not been heeded, nor is it expected to anytime soon, since it requires both bold action and honesty, two traits that are sorely lacking in Washington these days.

Since the publication of that column, I have been patiently biding my time, waiting for a “deal” to be reached so that I may blast it for kicking the can down the road by offering short-term window-dressing, while promising to make hard choices and steep cuts after the next election cycle.

On Monday afternoon, Republican leaders in Congress submitted their counter-offer to President Obama’s previous offer. We now have fuzzy math and vague promises from the GOP, in a bill that the President won’t sign, to counter the fuzzy math and vague promises from the left, in a budget that would not have passed the House.

For the rest of the commentary, visit the JLN Forex blog at jlne.ws/UDHzPG

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Lead Stories

Miami Options Exchange Gets SEC Approval, Will Start Dec. 7
Nina Mehta – Bloomberg
MIAX Options Exchange plans to start trading on Dec. 7 as the 11th U.S. equity derivatives market. The Securities and Exchange Commission approved the exchange yesterday. MIAX is owned by Miami International Holdings Inc., based in Princeton, New Jersey.
jlne.ws/VC86eC

Eurex Exchange launches derivatives trading system
Hedgeweek
Eurex Exchange, the derivatives arm of Deutsche Börse Group, has launched what it believes to be the world’s most advanced trading system.
jlne.ws/TC1j2D

Interest-Rate Swap Futures Surpass $130 Million at CME Group
Matthew Leising – Bloomberg
CME Group Inc. (CME) has recorded trades of more than $130 million in notional value on interest-rate swap futures it started offering yesterday.
jlne.ws/VC6rWs

CME Deliverable ‘Swap Futures’ See Comfortable Debut
Katy Burne – Dow Jones
CME Group Inc. saw 782 trades Monday in its debut of new interest-rate swap futures. The launch, while comfortable, was dwarfed by the 4,517 trades CME saw when kicking off its “ultra T-bond” Treasury futures Jan. 11, 2010, one of the latest CME launches that was a new contract rather than a product extension.
jlne.ws/VC6rWy

Ex-Trader at Rochdale Is Arrested After $1 Billion Trade in Apple
SUSANNE CRAIG – NYTimes.com
A former trader at Rochdale Securities has been arrested and charged with fraud after his well-publicized purchase of $1 billion worth of Apple stock, a trade that put the firm in financial peril.
jlne.ws/VC6oKs

MF Global trustee issues second interim report
Futures Magazine
James Giddings, the trustee for MF Global Inc.’s bankruptcy, has filed the second interim report in the case. This report provides an update on the progress in the liquidation proceedings over the past six months.
jlne.ws/VC6ul5

European Banks to Repay Cheap Loans
DAVID ENRICH – WSJ.com
Nearly a year ago, hundreds of European banks borrowed a total of more than E1 trillion ($1.3 trillion) from the European Central Bank as it scrambled to defuse an escalating crisis. Today, in a sign of the industry’s partial healing, some of Europe’s biggest banks are preparing to repay those loans.
jlne.ws/VC6sd2

Schäuble puts brake on bank union plan
Alex Barker and Peter Spiegel in Brussels – FT.com
Plans to create a eurozone banking union hit a brick wall on Tuesday after Germany’s influential finance minister cautioned over moving too quickly, casting doubts over whether the EU would seal a deal by the end of the year.
jlne.ws/VC6ulf

The era of central bank independence is over
Matthew Lynn – MarketWatch
For the last decade there has been one principle that everyone has agreed on. Independent central banks free of political interference are a good thing. But now that is under attack everywhere.
jlne.ws/VC6uBz

Regulatory

Regulators wrestle with swaps reform risk
Ralph Atkins and Philip Stafford in London – FT.com
Environmentalists worry nuclear power plants pose risks that are not fully understood – or controllable. The capital market equivalents could become institutions processing hundreds of trillions of dollars of trades in complex financial products.
jlne.ws/VC6sdc

Europe dallies on derivatives regulation
Philip Stafford – FT.com
Market participants are unlikely to face mandatory clearing of derivatives in Europe before the middle of 2014 – around 18 months later than initially intended – one of the region’s senior markets regulators has said.
jlne.ws/VC6stt

Derivatives Regulators List Potential Problems
Jamila Trindle – Dow Jones
International derivatives market regulators have identified potential problems in new rules for the market and agreed to seek solutions, they said in a joint statement issued Tuesday following a meeting last week. U.S. regulators met with counterparts from the European Union, Japan, Singapore, Australia and Brazil on Nov. 28 in New York to discuss coordination of the market overhaul that they agreed to implement after the financial crisis.
jlne.ws/VC6uS6

CFTC’s Division of Swap Dealer and Intermediary Oversight Issues a No-Action Letter for Business Development Companies
The Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) today issued a no-action letter to operators of business development companies.
jlne.ws/VC6stD

CFTC Approves Order to Remove Interest Rate Asset Class from the Provisional Registration of ICE Trade Vault, LLC as a Swap Data Repository
The U.S. Commodity Futures Trading Commission (CFTC) on December 3, 2012, pursuant to section 21 of the Commodity Exchange Act and part 49 of the Commission’s regulations, approved an order for ICE Trade Vault, LLC, a provisionally registered swap data repository, to remove the “interest rate” asset class as an asset class for which ICE Trade Vault, LLC will accept data.
jlne.ws/VC6sJX

SunGard Enhances its Protegent Market Abuse Solution to Help Customers Address Latest Dodd-Frank Rules
SunGard has extended the capabilities of its Protegent market abuse solution to help firms comply with the Dodd-Frank Act’s anti-manipulation requirements, including the latest rules from the U.S. Commodity Futures Trading Commission.
jlne.ws/VC6v8O

Hedge-Fund Ads Might Spawn Frauds Unless SEC Takes Action
Bloomberg
Congress probably didn’t mean to turn the $2.3 trillion hedge-fund industry into a breeding ground for fraud when it passed a law designed to make it easier for small companies to raise capital. That may well be the result unless the Securities and Exchange Commission steps in with new rules.
jlne.ws/VC6v8T

Time to Fire the SEC’s Khuzami: Fails to Act on Whistleblower Tips Under Dodd Frank Program
Naked Capitalism
As we’ve detailed in numerous posts, the performance of SEC enforcement chief Robert Khuzami has been abysmal. It was bad enough that the SEC was weak before the crisis. But the fact that the agency hasn’t upped its game in the wake of the biggest financial markets debacle in history is a colossal fail.
jlne.ws/VC6t0u

Woolley plots capital markets revolution
William Hutchings – Financial News
Governments should withdraw tax exemption rights from charities, pension schemes and other investors if they fail to hold their investments for more than three years, according to a new plan for improving the capital markets for the benefit of society.
jlne.ws/SuE1Nz

Finra studies firms’ disaster backup plans after Sandy
The Wall Street Journal
Securities market regulators are seeking details on the performance of banks’ and brokers’ disaster recovery plans during Superstorm Sandy, including firms’ ability to effectively trade when the New York Stock Exchange is down.
jlne.ws/VC6t0x

Division Of Corporation Finance Director Meredith Cross To Leave SEC
The Securities and Exchange Commission today announced that Meredith B. Cross, Director of the Division of Corporation Finance, will leave the SEC at the end of the year to return to the private sector.
jlne.ws/VC6t0C

Former UK FSA chief Sants may join Deloitte: source
Reuters via Yahoo! News
LONDON – Hector Sants, a former head of Britain’s financial watchdog, may join Deloitte and become the latest in a string of regulators to join one of the ‘Big Four’ accounting and consultancy firms, a source said.
jlne.ws/VC6vFF

ESMA Finalises Guidelines On Repo Arrangements For UCITS Funds
jlne.ws/VC6th3

[Canada] AMF part of international discussions on reforming OTC derivatives market
On November 28, 2012, Louis Morisset, Superintendent, Securities Markets at the Québec Autorité des marchés financiers (“AMF”) took part in a meeting held by leaders of authorities with responsibility for the regulation of the over-the-counter (OTC) derivatives markets in Australia, Brazil, the European Union, Hong Kong, Japan, Ontario, Singapore, Switzerland and the United States to discuss reform of the OTC derivatives market as agreed by the leaders at the G-20 Pittsburgh Summit in September 2009.
jlne.ws/VC6th6

Remarks Before the 2012 AICPA Conference on Current SEC and PCAOB Developments by Jenifer Minke-Girard – Senior Associate Chief Accountant, Office of the Chief Accountant, U.S. Securities and Exchange Commission
jlne.ws/VC6vFP

“Rebuilding Investor Trust In EU Capital Markets” – Speech By Steven Maijoor, ESMA Chair, At The DSW Conference In Wiesbaden
jlne.ws/VC6txA

“ESMA’s Role In Markets Reform” – Speech By Verena Ross, ESMA Executive Director At The ICI Global Trading And Market Structure Conference In London
jlne.ws/VC6vWd

Joint Press Statement Of Leaders On Operating Principles And Areas Of Exploration In The Regulation Of The Cross-Border OTC Derivatives Market
jlne.ws/VC6vWm

Federal Reserve Governor Daniel K. Tarullo: At The Brookings Institution Conference On Structuring The Financial Industry To Enhance Economic Growth And Stability, Washington, D.C. – Industry Structure And Systemic Risk Regulation
jlne.ws/VC6vWq

“Trimming The Tree—Regulation And Recovery” Speech Before The Information Management Network, Global Indexing And ETFs Conference, Phoenix, AZ, By CFTC Commissioner Bart Chilton
Statement On International Implementation Of Derivatives Reform By CFTC Commissioner Bart Chilton
jlne.ws/VC6tO4
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ASIC warns comparison websites
jlne.ws/VC6tOf

Exchanges & Trading Facilities

CME, ICE trading fell in November on lower volatility
Reuters
Trading fell last month at CME Group Inc and IntercontinentalExchange Inc, the two biggest U.S. futures exchange operators, as smaller market swings caused investors to pull back.
jlne.ws/VC6wcS

CME Group Volume Averaged 11.0 Million Contracts per Day in November 2012
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that November 2012 volume averaged 11.0 million contracts per day, down 16 percent from November 2011, but up 12 percent from October 2012. Total volume for November 2012 was more than 231 million contracts, of which a record 88 percent was traded electronically.
jlne.ws/VC6wcV

ICE Reports 5% decline in November Futures Volume; Up 10% YTD
IntercontinentalExchange, a leading operator of global markets and clearing houses, today reported futures volume for November 2012. ICE’s average daily volume (ADV) for futures and options was 3,198,341 contracts, down 5% from the prior November. Year-to-date through November 30, ADV was 3,415,552 contracts, up 10% compared to the first eleven months of 2011. Total volume in November 2012 was 67.2 million contracts. All prior period contract volumes have been adjusted to include the converted futures contracts, which previously traded as swaps in ICE’s OTC markets.
jlne.ws/VC6wtb

MarketAxess Announces Monthly Volume Statistics for November 2012
Business Wire via Yahoo! Finance
MarketAxess Holdings Inc. , the operator of a leading electronic trading platform for U.S. and European corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced total monthly trading volume for November 2012 of $54.7 billion, consisting of $34.8 billion in U.S.
jlne.ws/VC6wtl

LME announces new trading records for November
The London Metal Exchange (LME) experienced record volumes in November, with 14.51 million lots traded. Average daily volume is up 8.4% from 2011 with 632,800 lots trading per day. Up to the end of November 2012, 147.44 million lots traded, the equivalent of $13.36 trillion in notional turnover, which is up 10.2% from the corresponding period last year (133.78 million lots).
jlne.ws/VC6wJH

TMX Group Consolidated Trading Statistics – November 2012
Trading volume on Toronto Stock Exchange in November 2012 increased 5% from October 2012, though it was down 18% compared to the same month a year earlier. Volume on TSX Venture Exchange was down 10% in November 2012 compared to October 2012 and was down 9% compared to November 2011.
jlne.ws/VC6x0e

Singapore Exchange (SGX) today said securities and derivatives trading grew in November from a year earlier
The securities market turnover and daily average value (SDAV) both grew 8% year-on-year to S$27.3 billion and S$1.3 billion respectively. Compared with October, turnover was up 5% and SDAV was up 10%. However, exchange traded funds turnover was down 39% year-on-year to S$327 million. Financial Derivatives: Volume increased 23% year-on-year to 7.19 million contracts and daily average volume increased 22% to 342,506 contracts.Commodities: AsiaClear volume increased 47% to 28,264 contracts; iron ore swaps clearing volume increased 65% to 20,877 contracts while volume of energy swaps cleared more than doubled to 1,048 contracts.
jlne.ws/11CsNvp

NZX Monthly Metrics – November 2012
jlne.ws/VC6wJP

Vienna Stock Exchange Monthly Statistics Derivatives Market November 2012
jlne.ws/VC6x0p

Trading On The Warsaw Stock Exchange: November 2012
jlne.ws/VC6xgM

CBOE Increases Connectivity And Trading Agility With Move To Equinix New York Data Center Campus
jlne.ws/VC6xgR

BATS Chi-x Europe Expands Access To Risk Management And Kill Switch Tools – Tools Now Available To All Trading Participants At No Charge And Without Additional Latency
jlne.ws/VC6xgT

IntercontinentalExchange Sets Date of February 6 for Fourth Quarter and Full Year 2012 Earnings Announcement
jlne.ws/VC6zVZ

NYSE Euronext Announces Date for Fourth Quarter 2012 Earnings Release and Conference Call
jlne.ws/VC6xh0

BM&FBOVESPA hosts Ibero-American Federation of Exchanges (FIAB) seminar with focus on financial education
The “Exchanges and the Market Popularization Initiatives for Retail” international seminar was held last afternoon at BM&FBOVESPA headquarters and was attended by representatives from Latin American exchanges, brokerage houses, regulatory bodies, self-regulatory organizations and financial education institutes.
jlne.ws/VC6xxe

ASX Group Monthly Activity Report – November 2012
jlne.ws/VC6xxp

ASX Compliance Monthly Activity Report – November 2012
jlne.ws/VC6Acr

Boerse Stuttgart Generates Turnover Of Almost EUR 7 Billion In November 2012
According to its order book statistics, Boerse Stuttgart generated turnover of more than EUR 6.8 billion in November 2012, slightly lower than the previous month.
jlne.ws/SuE1gz

EPEX SPOT & EEX Power Derivatives: Power Trading Results In November 2012
In November 2012, a total volume of 29.2 TWh was traded on EPEX SPOT’s Day-Ahead and Intraday markets (November 2011: 25.3 TWh). During the same period, the volume in power derivatives trading on EEX Power Derivatives amounted to 92.9 TWh (November 2011: 76.1 TWh).
jlne.ws/VC6AcG

NASDAQ OMX Friends Facebook – Facebook, Inc. To Join The NASDAQ-100 Index Beginning December 12, 2012
jlne.ws/VC6AcH

Consolidated Audit Trail In-Person Event December 10, 2012 New York, NY
jlne.ws/VC6AsU

All-Or-None (AON) Orders in Open Outcry
jlne.ws/VC6xNZ

Direct Edge Regulatory Notice #12-09: Consolidated Audit Trail In-Person Event On December 10, 2012 In New York, NY
jlne.ws/VC6At7

Hedge Funds & Managed Futures

Och-Ziff fund assets rose to $32 bln in November
Market Watch
NEW YORK–Hedge-fund manager Och-Ziff Capital Management Group LLC OZM said its four main funds rose modestly last month, increasing assets it manages to $32 billion as of Dec. 1. The net increase of $200 million since Nov. 1, which takes into account both price appreciation, capital inflows and redemptions, brings Och-Ziff’s assets closer to its 2007 peak of $33.4 billion.
jlne.ws/VC6Atc

Paulson Said to Blame Bet Against Europe for Most of Loss
Bloomberg
John Paulson, manager of $20 billion in hedge funds, told investors that the bulk of his losses this year came on bets that the European sovereign-debt crisis would worsen, according to a person familiar with the matter.
jlne.ws/VC6AJE

Apson joins hedge fund casualty list
Harriet Agnew – Financial News
A hedge fund boutique seeded by Howard Marks’ Oaktree Capital Management has become the latest manager to announce its closure, after failing to make money in an environment characterised by “lack of trends and low volatility”.
jlne.ws/VC6AZX

F&C promotes Wilson to CEO
Sophie Baker – Financial News
F&C Asset Management has appointed an internal candidate to replace chief executive Edward Bramson, who Financial News reported last week will relinquish day-to-day management of the UK investment firm at next year’s AGM.
jlne.ws/VC6ykR

Private equity firms battle for funds
Kiel Porter and Paul Hodkinson – Financial News
A UK secondaries private equity firm is facing an uphill struggle to reach its fundraising target, as two of Europe’s largest managers rush to collectively raise E4bn in just three months.
jlne.ws/VC6ykT

Markit Adds Rapid Ratings Research to Markit Hub
Markit, a leading, global, financial information services company, today announced that research from Rapid Ratings International Inc. is now available on Markit Hub. Markit Hub aggregates research, strategy and news content from leading global banks, independent providers and news agencies.
jlne.ws/TDJrbd

MS “Deutschland” plans bond issue in Entry Standard
jlne.ws/VC6BgA

Nordic Growth Market Is Pleased To Announce That As From Today, December 5 2012, Bull & Bear Certificates With Leverage 10 Is Available At NGM
jlne.ws/VC6Bx2

Banks & Brokers

Ex-HBOS head was ‘dishonest’ or ‘delusional’
Brooke Masters, Chief Regulation Correspondent – FT.com
Lord Stevenson, the former chairman of HBOS, stood accused on Tuesday of living in “cloud-cuckooland” after it emerged that he had assured the City watchdog that his bank was “as secure” as it could be – just six months before it collapsed.
jlne.ws/VC6Bxc

JPMorgan realigns executives in corporate and investment banking
Reuters via Yahoo! News
JPMorgan Chase & Co said it was recasting responsibilities of some of its executives in corporate and investment banking after deciding in July to put two key business segments into one.
jlne.ws/VC6yBz

JPMorgan to continue building branch offices, CFO says
Reuters via Yahoo! News
NEW YORK – Despite the prospect of low lending rates for years to come, JPMorgan Chase & Co will continue to build new branch offices to take in more deposits to make loans and support some of its business franchises, a top bank executive said on Tuesday.
jlne.ws/VC6BND

ICAP announces electronic broking volumes of US$678.8bn for November
ICAP, the world’s leading interdealer broker and provider of post-trade risk and information services, announces today that average daily volumes on the BrokerTec and EBS platforms for November 2012 were $678.8bn, 1% higher than in October 2012 and 12% lower than November 2011.
jlne.ws/UFvE3F

UBS closes branches in Germany, cuts up to 35 staff
Reuters via Yahoo! News
ZURICH – Swiss bank UBS is closing four branches in Germany that serve wealthy clients and cutting up to 35 jobs as it seeks to improve profitability.
jlne.ws/VC6BNJ

UBS Planning Bid for GE’s Swiss Lending Unit -Reuters
Dow Jones
UBS AG (UBS) is one of two possible bidders for General Electric Co.’s (GE) Swiss consumer lending business GE Money Bank in a deal that could fetch as much as 1.5 billion francs ($1.6 billion), Reuters reported Tuesday, citing two people familiar with the matter.
jlne.ws/VC6yS4

Barclays Deferred Prosecution Ends After Judge’s Scrutiny
Bloomberg
Barclays Plc ’s deferred prosecution for improper dealings with sanctioned countries ended after the judge overseeing the U.S. case weighed whether the bank’s admissions in a probe involving manipulation of the London interbank offered rate should affect the deal.
jlne.ws/VC6C48

Client services head exits Getco
Tim Cave
The head of Getco’s execution services business, which sells tools and technology to other investors and has become a strategic focus of the firm, has joined the list of senior departures from the trading group in 2012. Michael Blum, who has served as Getco’s global head of execution services for nearly four years, left the firm last week, according to sources familiar with the situation.
jlne.ws/VC6EZJ

Skadden Knocks Out ‘Double Derivative’ Suits over Merrill CDO Deals
Law.com
The U.S. Court of Appeals for the Second Circuit threw out two derivative suits over Merrill Lynch’s role in the financial crisis on Tuesday, allowing the company’s parent, Bank of America Corp., to dodge at least one strain of Merrill-related litigation without resorting to a costly settlement.
jlne.ws/VC6EZP

Leonardo & Co revamps management
Dan Dunkley – Financial News
European boutique investment bank Leonardo & Co has unveiled changes to its management structure and a rebranding effort as it seeks to boost its presence in M&A and private equity advisory across Europe.
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UBS MTF Market Notice N3/2012: Trading Holidays
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Clearing & Settlement

ABN Amro Clearing names new London chief
Tom Osborn – Financial News
ABN Amro Clearing, one of the largest clearing brokers to the global securities markets, is set to name a new head for its London operations, as clearing service providers gear up for a projected rise in business following a regulatory overhaul of derivatives trading.
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UBS And HSBC Choose Euroclear Bank And HKMA For First Cross-Border RMB Repo
UBS AG London and HSBC, Hong Kong branch, conducted their first ever renminbi (RMB) triparty repo using Euroclear Bank and the Hong Kong Monetary Authority (HKMA) as collateral management agents, respectively. The bilateral agreement in place between the HKMA and Euroclear Bank has enabled the seamless transfer of securities as collateral from UBS AG London’s account in Euroclear Bank, via Euroclear’s global ‘Collateral Highway’, to the HSBC Hong Kong branch’s account in HKMA to support the RMB repo.
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DTCC Receives CFTC Approval To Add Commodities To Its U.S. Swap Data Repository
The Depository Trust & Clearing Corporation (DTCC) announced today that the Commodity Futures Trading Commission (CFTC) has approved a request by DTCC Data Repository (U.S.) LLC (DDR) to amend its multi-asset class swap data repository (SDR) in the U.S. to include commodity derivatives.
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Citigroup selected in Quebec as primary clearing agent for OTC transactions
Theflyonthewall.com via Yahoo! Finance
Citi has been designated by Caisse de dépôt et placement du Québec to serve as one of its primary clearing agents for over-the-counter, or OTC, derivative transactions.
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CME Group Clearing Advisory: Clearing Application Special Update- New Release
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Indexes & Products

Boost targets sophisticated investors with 100 new ETPs
Sarah Krouse – Financial News
Boost ETP, the new exchange-traded product venture launched by former ETF Securities partners, is planning to unveil up to 100 leveraged and short ETPs over the next 18 months.
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PowerShares To List VIX-Hedged S&P ETF
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Technology

Cidron Delfi Intressenter AB and Orc Group invite to an investor meeting on December 19
Cidron Delfi Intressenter AB and Orc Group AB invite you to attend an investor telephone conference (in English) on December 19, 2012. CEO Torben Munch and CFO Tomas Ljunglöf will present and comment on the group´s interim report for January–September 2012.
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SIX Deploys Tufin SecureApp to Automate Application Connectivity Management
Marketwire
Swiss Financial Services Infrastructure Powerhouse Enlists Tufin to Tackle Its Biggest Firewall Management Challenge: Managing Application Connectivity
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Enforcement

CFTC Files Complaint in Federal Court against Eric Moncada, BES Capital LLC, and Serdika LLC Alleging Attempted Manipulation of Wheat Futures Contract Prices, Fictitious Sales, and Non-Competitive Transactions
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a complaint in the U.S. District Court for the Southern District of New York charging Eric Moncada (Moncada), a CFTC-registered floor broker, BES Capital LLC (BES), and Serdika LLC (Serdika) with attempted manipulation of prices of the December 2009 #2 Soft Red Winter Wheat futures contract (December 2009 Wheat Futures Contract) traded on the Chicago Board of Trade (CBOT). The CFTC complaint alleges that Moncada engaged in this unlawful conduct as an employee or agent of both BES and Serdika on numerous days in October 2009.
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Ex-Fed Programmer Gets Home Confinement for Theft
Bloomberg
A computer programmer who worked for a contractor at the Federal Reserve Bank of New York was sentenced to six months of home confinement for stealing U.S. Treasury Department software used to track federal collections and payments.
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Big Lots Chief Probed by SEC
SUSAN PULLIAM AND JEAN EAGLESHAM – WSJ.com
The Securities and Exchange Commission launched an inquiry into a $10 million sale of stock by Big Lots Inc. Chief Executive Steven Fishman before the company announced news that sank its stock, a person familiar with the inquiry said.
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[ASIC] Former investment bank employee and friend sentenced for insider trading
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BCSC panel sanctions OTC Bulletin Board company and two directors
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Environmental & Energy

U.S. Could Cut Power Plant Pollution 26%, NRDC Says
Bloomberg
President Barack Obama could cut greenhouse-gas emissions from U.S. power plants 26 percent by 2020, the Natural Resources Defense Council said in a plan that puts pressure on the administration to issue new rules.
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**RKB — Obama could use Clean Air Act, with a more appetizing national plan hinging on state-specific rules. More coverage below.

Group pitches targeting US power plant emissions state by state
Reuters
The United States could shed more than a third of its carbon pollution by 2025 by giving states the flexibility to use a variety of measures to reduce or offset their emissions rather than setting a uniform national performance standard for existing power plants, an environmental group said.
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**RKB — The findings are given some context here and in the Wash Post blog posting below.

How to cut U.S. carbon emissions by 10 percent — without Congress
The Washington Post Wonk Blog
President Obama and his advisers keep suggesting that they’d like to do more about climate change, but Congress just won’t cooperate.
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Asia-Pacific

SEC Probe May Spur More Chinese Delistings, Dorsey Says
Bloomberg
More U.S.-listed Chinese companies are under the threat of going private or being delisted after U.S. regulators accused accounting firms’ affiliates of blocking probes into potential fraud, Dorsey & Whitney LLP said.
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HSBC Sells Stake in Chinese Insurer for $9.4 Billion
NEIL GOUGH – NYTimes.com
HSBC Holdings, one of the biggest banks in Europe, said Wednesday that it would sell its entire stake in a leading Chinese insurer to a Thai conglomerate for 72.7 billion Hong Kong dollars ($9.4 billion).
jlne.ws/VC6Gkx

Abe can turn round Japan’s fortunes
Peter Tasker – FT.com
No sooner has a new leader been appointed in China, than Japan faces change at the top too. When it comes to transitions of power – as in so much else – the gulf between the two Asian superpowers is as wide as the East China Sea.
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Shenzhen Stock Exchange Promulgates Implementation Rules For Bond Trading
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Frontier Markets

Middle East needs to tackle regulatory fragmentation
Sophie Baker – Financial News
Regulators in the Middle East must come together and coordinate on regulatory changes if the countries in the Gulf are to benefit from domestic and foreign fund manager participation, according to fund managers operating in the region.
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JSE Expands Commodity Derivatives Product Range To Include Zambian Grain Derivative Contracts
The JSE has secured the approval from the South African Reserve Bank (SARB) to offer trade in Zambian grain traded and cleared in US Dollars, in collaboration with the Zambia Agricultural Commodities Exchange (ZAMACE). The two exchanges are confident the proposed Zambian derivative contracts will complement each other and ultimately strengthen the Zambian grain market.
jlne.ws/VC6GB4

Indonesia imposes higher capital adequacy for some banks
Reuters via Yahoo! Finance
Indonesia’s central bank has imposed higher capital adequacy requirements for some commercial banks, in its latest policy effort to increase the stability of the financial system in Southeast Asia’s largest economy.
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[Video] Egypt Seen as `Fantastic’ Investment Opportunity
Bloomberg
Dec. 4 — Sven Richter, managing director of frontier markets at Renaissance Asset Management, discusses investing in Egypt, Nigeria, Kenya and Indonesia. He talks from Johannesburg with Guy Johnson on Bloomberg Television’s “The Pulse.”
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LME Visits India For education Tour
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Miscellaneous

O Tannenbaum! Trees Fly Free with Air Berlin
Archibald Preuschat – WSJ
In an effort to lure customers in a cramped European air-travel market, German low-cost carrier Air Berlin is turning to alternative solutions. And its Christmas-season strategy seems the least conventional of all.
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