John Lothian Newsletter: After a Delay, MF Global’s Missing Money Is Traced; Brussels blocks DB-NYSE merger; NYSE board stands by Niederauer

Feb 1, 2012

MF Global investigators declare that they have traced nearly all of the missing money, but they are so far unwilling to share the details for fear of harming their investigation. In Europe, regulators made their heavily-telegraphed announcement to block the DB-NYSE Euronext merger; reactions are relatively undramatic, including a thumbs-up to NYSE-E CEO Niederauer from his board.  In the top box, John Lothian writes about the need to make MF Global customers whole, pointing out that one way or another, payment will be extracted from the industry for MF Global’s sins.

Observations – Statistics – Commentary

Pay Now or Pay Later
By John J. Lothian

So far the number one voted-on question on FuturesCrowd.com is “The Number One Priority: Make the Customers Whole.”

I put that question on the site.  I have heard lots of people express this sentiment: that in order to restore customer’s confidence in the futures markets, those that are out money in the MF Global bankruptcy need to get the money back.  First that; then comes any changes in structure or industry plumbing in order to prevent future occurrences.

I did not suggest any particular mechanism for the clients getting their money back.  However, there is an idea that has been floated by several people and I have championed in private circles in order to accomplish this number one priority.  That idea is fronting insurance.

Fronting insurance is a type of solution used where, when you have an event, you raise the money first and pay for it going forward.  My thought was that the industry through some organization or body should sell some bonds, pay off the impacted MF Global customers, and then step in their place for the bankruptcy.  Whatever the ultimate shortfall, should there be one, it would be paid off through higher fees by said organization or body.

In the private circles where I promoted this, the idea was discarded.  Moral hazard, some people said.  What if there was another bankruptcy, other said.  It sets a bad precedent.  Clients of MF Global should have been aware that they were dealing with the low cost broker and that presented certain risks which they assumed.  They had ample time to move their accounts once the MF Global news broke, they said.

I disagree with all of this on a number of levels.  First, I believe the industry will pay for this loss one way or another.  Either we pony up the money somehow to make the customers whole, or the loss of confidence will lead to lower volumes and lower profits for exchanges and market makers, and higher liquidity costs for the hedgers that remain.

You could say that the prudent thing to do, after seeing MF Global’s rating service downgrade, was to liquidate your positions and request a check for your balance.  I had someone do that. They ended up with a check that was no good and had to go through extra hoops to get the 72 percent  back.

You could say clients should have known they were dealing with the low cost provider of services.  But only the proprietary trading firms, those who get the lowest cost commissions, really know those numbers.  The average retail customer at MF Global was not paying prices that would lose MF Global money.  They were paying prices that make up for some of those break-even-at-best deals MF Global did with some proprietary trading firms.

You could say customers should have known the risks they were taking, sending money into an FCM.  But the truth is that every other time customer segregated funds had been at risk in brokerage bankruptcies, the exchanges or clearinghouses or brokerages chipped in the money to make the customers whole.  There was a myth, believed and promoted by many in the industry, that your money was safe in a segregated account.  It was not true, we so sadly learned.   And because of this pattern of protecting the customer segregated funds, clients had little reason to do due diligence outside of checking the government reports about FCM financial rankings.

There was an expectation in the industry, even to the highest levels of the exchanges and the regulators, that MF Global would be sold and all the accounts would seamlessly move to the new firm.  There was an expectation, that even if MF Global went bankrupt, the positive balance accounts would be moved to new clearing firms and customers would hardly miss a beat in their trading.

How wrong we all were.

The futures industry does not have an in insurance scheme like SIPC.  It has a history of dealing with each problem separately and uniquely.  Some of this information is in the public record, like when the CME and CBOT or their clearing houses paid $1 million a piece to make the customers of Stotler whole.  Or when Volume Investors went bust at the COMEX or Klein at the NYBOT.

In each of these instances, the exchanges, the clearinghouses or related trust funds stepped up and took care of the problem in order to maintain the reputation of the industry, and ultimately perpetuated the myth.

The difference today is that the major US exchanges are mostly all owned by one company, which is public and for profit.  And the number is really big.  The CME Group would face an onslaught of shareholder lawsuits should they step up to pay a potential $1.2 billion shortfall.  That is simply not an option.

Tomorrow, I will share with you an idea of mine that could become an option.  Stay tuned.

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John F. Moore III
AGE: 61 – New York
John F. Moore III, 61, of New York, N.Y., passed away on Friday, Jan. 27, 2012. A New York commodities trader, he was born in Brooklyn in 1950 and moved to Monmouth County in 1963. After graduating from Matawan Regional High School in 1968 and Rutgers College in 1972, he joined the floor trading firm of Harmon, Lichtenstein & Co. John became a member of Commodity Exchange, Inc. (COMEX) in 1974 and the New York Mercantile Exchange (NYMEX) in 1976.
http://jlne.ws/wVjdnB

**** Former Comex Chairman passes away too young.

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‘Little Child’ CFTC Ignores Futures Oversight Role, O’Malia Says
By Silla Brush – Bloomberg
Jan. 31 (Bloomberg) — The U.S. Commodity Futures Trading Commission is fixating childishly over Dodd-Frank Act rules while ignoring its traditional responsibility for overseeing futures markets, Commissioner Scott O’Malia said today.
http://jlne.ws/zcHtxB

**** Congress gave the CFTC a big lollipop in Dodd-Frank and that sticky mess has them fixated.

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Neonet demonstrates superior trading performance using Smart Order Routing and extended market access
Stockholm, Sweden, February 1, 2012 – Neonet, the independent equity execution services provider, today announced findings from a series of benchmarks that illustrate the benefits from implementing Smart Order Routing (SOR) and extending market access from primary exchanges to Multilateral Trading Facilities (MTFs).
http://jlne.ws/yr3bc1

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NFA Signs Agreement with MarketAxess to provide Regulatory Services to MarketAxess’ Swap Execution Facility
January 31, 2012, Chicago and New York – National Futures Association (NFA) and MarketAxess Holdings Inc. today announced that they have entered into an agreement that paves the way for NFA to perform regulatory services for MarketAxess’ planned swap execution facility (SEF).
http://jlne.ws/wgMETI

**** If NFA were a business, would you buy or sell its stock after announcements like this?  Business on the upswing.

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MarketAxess Reports Fourth Quarter 2011 Revenues of $45.1 Million, Pre-Tax Income of $18.9 Million and Diluted EPS of $0.29
Press Release
NEW YORK–(BUSINESS WIRE)– MarketAxess Holdings Inc., the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the fourth quarter and full year ended December 31, 2011.
http://jlne.ws/wKyjsA

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CFTC – Notice and order authorizing National Futures Association to perform registration functions with respect to swap dealers and major swap participants.
The CFTC Notice and Order authorizes the National Futures Association (NFA) to perform the full range of registration functions with regard to swap dealers and major swap participants. The CFTC also simultaneously publishes separate final rules establishing the process for registering swap dealers and major swap participants (77 FR 2613).
http://jlne.ws/wmUDVu

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Bloomberg aims to bypass Thomson Reuters
By Philip Stafford in London and Andrew Edgecliffe-Johnson in New York – Financial Times
Bloomberg, the US financial data and information provider, is set to launch a new front in its war with Thomson Reuters by offering a free and open software interface that aims to bypass its rival’s lucrative code for identifying securities on terminals.
http://jlne.ws/yKo51A

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Former Regulators Propose a Watchdog for Financial Watchdogs; Milken Institute Review Excerpts Their New Book
Marketwire
LOS ANGELES, CA–(Marketwire – Jan 31, 2012) – The standard prescription for curing what ails financial regulation — seemingly applied after each spectacular systemic failure — is to layer on more regulations and more regulators to enforce them. Three experts on banking regulation, James Barth (Milken Institute), Gerard Caprio (Williams College) and Ross Levine (Brown University), offer a …
http://jlne.ws/w76v0d

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Free-market evangelists face a lonely fate
By David Rothkopf – Financial Times
Much has been made of the fact that last week in Davos, business leaders were forced by recent events to consider issues such as inequality and the future of capitalism. While such public acts of introspection by elites deservedly generate the kind of cynicism that is also produced by other Davos traditions, including high-powered dinners to discuss world hunger and invitation-only discussions to consider the plight of the disenfranchised, the focus on the future of capitalism offered up a side order of irony to go with a generous helping of summit scepticism.
http://jlne.ws/xW9ytZ

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Frank Petrilli
http://jlne.ws/A3UlHM

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Lead Stories

After a Delay, MF Global’s Missing Money Is Traced
By BEN PROTESS and AZAM AHMED – NY Times
Investigators have determined what happened to nearly all of the customer money that disappeared from MF Global around the time of its bankruptcy last Oct. 31, but have not publicly disclosed their progress, fearing that doing so might cripple efforts to recover the cash and pursue potential wrongdoing, people briefed on the investigation said.
http://jlne.ws/xtZKNO

“A significant impediment has been clashes among the parties trying to resolve the MF Global mess: three federal agencies and two bankruptcy trustees.”

**** I can’t help but applaud this story after that terrible piece of journalism from the Wall Street Journal about the MF Global money “vaporizing.”  I can’t help but wonder if my Monday commentary “This was not a bank robbery” had any influence on this story.  It seems like the perfect response to it, but more importantly to the WSJ piece.  Thank you New York Times.

**** Whatever authority gave the “vaporizing” information to the WSJ reporters for that story should be fired.

**** We need the investigators to tell us where the money went.  The public has the right to know.

Brussels blocks DB-NYSE merger
By Alex Barker in Brussels and Jeremy Grant in London – Financial Times
Brussels has blocked the proposed tie-up between Deutsche Börse and NYSE Euronext, the German and US exchange operators, scuppering the most audacious element of a year-long wave of exchange consolidation.
http://jlne.ws/xKNw2Q

NYSE board stands by Niederauer
By Jeremy Grant in London – Financial Times
The board of NYSE Euronext is “fully supportive” of Duncan Niederauer remaining as chief executive of the US exchange group despite the failure of its attempted tie-up with Deutsche Börse.
http://jlne.ws/y4RAET

Automated Trading Firms Join Agribusiness Companies In Regulatory Push
By Jacob Bunge Of DOW JONES NEWSWIRES
PALM BEACH, Fla. -(Dow Jones)- Electronic trading firms are working more closely with agribusiness and energy companies to influence commodity market regulation around the world, according to the chairman of the Commodity Markets Council, an industry body.
http://jlne.ws/ArxIQQ

MF Global: Money on Foreign Exchanges Remains Frozen
By Aaron Lucchetti – WSJ
While many MF Global customers grapple with the harsh reality that they may never get all their money back, there are some who are even worse off. The bankruptcy trustee of MF Global’s U.S. brokerage unit has returned about 72% of the money in customer’s U.S. accounts when the New York firm filed for bankruptcy at the end of October. By contrast, all the money of U.S. customers invested on foreign exchanges remains frozen.
http://jlne.ws/yPDUAi

Rivals snap up brokers – and clients – from bankrupt MF Global [subscription required]
By Lynne Marek – Crain’s
The sudden death of MF Global Holdings Ltd., which cost more than 600 Chicago employees their jobs, is sparking a feeding frenzy among competitors eager to snap up top futures brokers—and their loyal clients. The most aggressive hirer is R.J. O’Brien & Associates LLC, which has added 125 former MF Global employees to its head office in Chicago, expanding by a third and absorbing 20,000 customer accounts. Reliance Capital Markets 2 LLC, Straits Financial LLC and Advantage Futures LLC also have scooped up out-of-work personnel.
http://jlne.ws/yPNTjQ

MF Global risk chief urged caution on trades
By Shahien Nasiripour in Washington – Financial Times
MF Global’s chief risk officer urged senior executives and the company’s board to pare back its $6.3bn proprietary bet on the debt of troubled European nations roughly three months before the futures broker declared bankruptcy, according to his prepared congressional testimony.
http://jlne.ws/zpWf6B

Deal Professor: A Debt Market’s Slow Recovery Is Burdened by New Regulation
New York Times
Collateralized loan obligations, an important source of capital for many businesses, have made a modest comeback since the financial crisis. Now their revival is under threat from well-intentioned regulators, the Deal Professor says.
http://jlne.ws/xmnV64

U.S. Regulators Weigh Volcker Exemption for Sovereign Debt
BusinessWeek
U.S. banking regulators are exploring whether they can exempt sovereign debt from the Dodd-Frank ban on proprietary trading after foreign governments complained that the rule could raise borrowing costs and impede the flow of capital, a person familiar with the talks said.
http://jlne.ws/yXP3JF

Environmental Trading News

EU Would Benefit From Australia’s Flexible Carbon-Permit Cap, Lobby Says
Bloomberg
The European Union carbon market, where prices have plunged by half in the past year, should consider installing a more flexible cap such as that proposed in Australia, said the Carbon Market Institute.
http://jlne.ws/yvmGU3 

Houston poised to become California CO2 trading hub
Point Carbon
California will next year host the world’s second biggest CO2 market as it tries to roll back its carbon footprint two decades, but it will not be San Francisco or Los Angeles that will likely be the center of trade, but the U.S. oil-dealing hub in Texas.
http://jlne.ws/zzEymb

Carbon traders dust off CVs as market stagnates 
Point Carbon
A growing number of traders, brokers and advisors are looking for jobs outside traditional carbon markets amid weak prices and consolidation of the sector into fewer hands, recruitment consultants told Point Carbon News.
http://jlne.ws/xfja6I 

For more environmental trading news, subscribe to the Environmental Markets version of the John Lothian Newsletter edited by Jim Kharouf. 
Visit http://www.jlnenvironmental.com to subscribe.

Exchange & ECN News

EU Blocks NYSE, Deutsche Börse Deal
BY MATTHEW DALTON, JACOB BUNGE AND ULRIKE DAUER – Dow Jones
The European Commission on Wednesday blocked the merger of Deutsche Börse AG and NYSE Euronext, saying the deal would create a “quasi-monopoly” in derivatives trading.
http://jlne.ws/x3BGJK

NYSE Euronext to return $550 mln to shareholders
Reuters via Yahoo! News
BRUSSELS (Reuters) – NYSE Euronext said on Wednesday that it would return $550 million to shareholders and seek to grow its derivatives business after EU antitrust regulators blocked its planned merger with Deutsche Boerse.
http://jlne.ws/ztgtGx

NYSE Euronext, Deutsche Boerse in talks to end merger plans
International Business Times
NYSE Euronext said on Wednesday it is discussing ending its merger plans with Deutsche Boerse AG after the European Commission vetoed a proposed tie-up of the two financial exchanges.
http://jlne.ws/ABpOKu

NYSE Euronext Statement On EU Decision To Prohibit Merger Announces Resumption Of $550 Million Stock Repurchase Program Following Termination Of Merger Agreement
Press Release
http://jlne.ws/wlV0LC

Statement From Manfred Gentz, Chairman Supervisory Board Deutsche Boerse AG On European Commission Blocking Merger Between Deutsche Boerse And NYSE Euronext
Press Release
http://jlne.ws/zbFyZA

ICE Unveils Margin Offsets for Dealers on Cleared Swaps
By KATY BURNE – Dow Jones
The credit-default swap processing, or “clearing,” arm of IntercontinentalExchange Inc. on Monday said that it is now offering capital efficiencies for dealer banks looking to clear CDS protection on both individual borrowers and baskets of names.
http://jlne.ws/AppB5J

Maple Group and TMX Group Announce Extension of Offer to TMX Group Shareholders to February 29, 2012
TORONTO, January 31, 2012 – Maple Group Acquisition Corporation (“Maple”), a corporation whose investors comprise 13 of Canada’s leading financial institutions and pension funds, and TMX Group Inc. (TSX: X) today announced the extension of Maple’s offer to acquire a minimum of 70% and a maximum of 80% of the shares of TMX Group to 5:00 p.m. (Eastern Time) on February 29, 2012, unless further extended or withdrawn.
http://jlne.ws/wH1EwD

Direct Edge Trading Notice #12-07: Section 31 Rate Change Effective February 21, 2012
Press Release
http://jlne.ws/zAvT9k

Nordic Growth Market NGM AB: NGM Welcomes Neonet Securities As Member Of The Exchange
Press Release
http://jlne.ws/yb9GoY

Banks, Brokers & Dark Pools

Icap to cut jobs and clamp down on bonuses
By Jeremy Grant and Adam Jones – Financial Times
Weak trading volumes prompted Icap to cut jobs in the third quarter as the world’s largest inter-dealer broker said it was reviewing its bonus policy and “taking an increasingly tighter line on compensation”. The disclosure came as Icap reported a 19 per cent fall in electronic broking volumes, with overall trading volumes down by 7 per cent.
http://jlne.ws/wRVkHp

ICAP plc Interim Management Statement
As previously indicated, the third quarter ended 31 December 2011 was less active than the first half with Group revenue from continuing operations for the nine months to 31 December lower by 2% compared with the same period in the previous year. For the third quarter, Group revenue from continuing operations fell by 7% compared with the strong third quarter of 2011
http://jlne.ws/AEoxR7

Longer-term forecasts are a step backwards
By Charles Goodhart – Financial Times
“Whatever will be, will be. The future is not ours to see.” This refrain remains as true for central bankers as for other aspiring economic forecasters.
http://jlne.ws/zNGrko

Macquarie Said to Vie for Deutsche Bank Asset Divisions 
Feb. 1 (Bloomberg) — Macquarie Group Ltd., Australia’s biggest investment bank, is vying with at least three companies to buy asset-management divisions from Deutsche Bank AG, said two people with knowledge of the matter.
http://jlne.ws/zwhs3l

Morgan Stanley Smith Barney Account Statement Ranks #1 for Second Consecutive Year
For the second year in a row, Morgan Stanley Smith Barney’s client account statement has been ranked #1 by DALBAR, a leading market research firm in financial services.
http://jlne.ws/AjTe9s

Goldman Said to Be in Talks to Hire Ex-Geithner Aide Siewert
BusinessWeek
Goldman Sachs Group Inc. is in talks to hire Richard “Jake” Siewert Jr., a former counselor to U.S. Treasury Secretary Timothy F. Geithner, to manage the bank’s communications department, said three people familiar with the situation.
http://jlne.ws/zDFZwH

Tate to depart in Lloyds reshuffle
By Sharlene Goff, Retail Banking Correspondent – Financial Times
The last remaining Lloyds Banking Group executive with links to its ill-fated acquisition of HBOS is stepping down as part of a broader restructuring of top-level management at the state-backed bank.
http://jlne.ws/y8V8S0

Nomura avoids second quarterly loss
By Michiyo Nakamoto in Tokyo – Financial Times
Nomura narrowly averted a second quarterly loss, helped by a one-off gain from the sale of a private equity investment and higher trading revenues in its global markets businesses.
http://jlne.ws/zZWutV

Wells Fargo moving into investment banking arena
San Francisco Chronicle
http://jlne.ws/wRhRY0

MB Financial aims to get out from under TARP
By: Steve Daniels – Crain’s
(Crain’s) — MB Financial Inc. looks like the next major Chicago bank to get off the government dole. Chicago’s fifth-largest bank by assets is in discussions with regulators on redeeming $196 million of preferred shares it issued to the Treasury Department under the Troubled Asset Relief Program, CEO Mitchell Feiger told analysts on Jan. 27.
http://jlne.ws/wzSJ8E

Three UBS Clients Accused of Hiding Offshore Money From IRS
BusinessWeek
Three ex-UBS AG clients, including two who ran venture capital firms, were indicted on charges of hiding millions of dollars in assets from U.S. tax authorities through the use of secret offshore accounts.
http://jlne.ws/Ao6s6N

Citigroup unit to pay $500,000 in age bias case
Reuters via Yahoo! News
(Reuters) – A unit of Citigroup must pay $500,000 to a former branch manager who alleged the company fired him because of his age, according to a decision by a Financial Industry Regulatory Authority arbitration panel. The ruling, made by FINRA on January 25, found Citigroup Global Markets violated Florida’s civil rights statute in 2008 when it terminated Edward Laurence Bowne
http://jlne.ws/AwjFOr

DealBook: Ex-Traders at Credit Suisse Expected to Be Charged With Fraud
New York Times
Prosecutors are said to be preparing criminal charges against former Credit Suisse trading, accusing them of defrauding investors by mispricing mortgage securities.
http://jlne.ws/yFriu7

Regulatory News

The SEC News Digest
The SEC News Digest provides daily information on recent Commission actions, including enforcement proceedings, rule filings, policy statements, and upcoming Commission meetings.
http://www.sec.gov/news/digest/2012/dig020112.htm

CFTC Should Have Power to Resolve Futures Brokers, O’Malia Says
By Matthew Leising and Silla Brush – Bloomberg
Jan. 31 (Bloomberg) — Jan. 31 (Bloomberg) — The U.S. Commodity Futures Trading Commission should have its own authority to put futures brokers into insolvency as part of additional powers following the collapse of MF Global Holdings Ltd., Commissioner Scott O’Malia said today.
http://jlne.ws/x8hpxn

Skepticism rises around SEC fiduciary rule
Reuters via Yahoo! News
NEW YORK (Reuters) – Financial industry observers are increasingly skeptical that the U.S. Securities and Exchange Commission’s planned proposal to require a uniform fiduciary standard for all financial advisers will become a reality this year, if ever. The SEC said it would propose the rule, which would hold both fee-based financial advisers and commission-based brokers to the same fiduciary …
http://jlne.ws/yLB0KE

CFTC Issues Consumer Advisory Alerting Public to Possible Precious Metals Fraud
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) issued a Consumer Advisory warning the public to beware of promises of easy profits to be made from rising prices in gold, silver, platinum, palladium, and other precious metals.
http://jlne.ws/yWYY9K

NFA Arbitrator Update, January 2012 Issue
Table of Contents:
Arbitrator Profile: Bill Cousins
Hot Topics
Statistically Speaking
Staff Update
Reminders
The More the Merrier
http://jlne.ws/yBDNtj

SEC Charges Brothers With Short Selling Violations
Washington, D.C., Jan. 31, 2012 – The Securities and Exchange Commission today charged two brothers living in Chicago and New York with naked short selling for failing to locate and deliver shares involved in short sales to broker-dealers.
http://jlne.ws/ADMt0R

SEC Fines B-D 1st Discount, Former Exec For Lack of Oversight in Ponzi Case
Financial Planning.com
The SEC sanctioned Florida-based 1st Discount Brokerage and a former executive vice president for failing to supervise an advisor who was found to be running a Ponzi scheme.
http://jlne.ws/yaVG3U

SEC’s Schapiro Said to Face Pushback Over Choosing Next Watchdog
BusinessWeek
U.S. Securities and Exchange Commission Chairman Mary Schapiro may have to revise her plan for hiring the agency’s next internal watchdog after at least three commissioners demanded greater say in the process, according to two people familiar with the matter.
http://jlne.ws/Aete8W

Remarks At The John C. Bogle Legacy Forum – CFTC Chairman Gary Gensler
Press Release
http://jlne.ws/yxDvYe

“Where Are We? And Where Should We Be? Thoughts On MF Global And High Frequency Trading” – Address By CFTC Commissioner Scott D. O’Malia At The Center On Financial Services Law Of New York Law School
http://jlne.ws/ApImW3

Speech By SEC Staff: Remarks At The Compliance Outreach Program By Carlo V. Di Florio, Director, Office Of Compliance Inspections And Examinations, U.S. Securities And Exchange Commission
Press Release
http://jlne.ws/x5Hmbp

[ASIC] Former ARP Growth Fund operator prevented from participating in financial services, managing companies
http://jlne.ws/AjqBoh

ASIC finalises investigation into Saxo Bank A/S following Sonray collapse
http://jlne.ws/AE8uAq

DealBook: Gupta Faces New Charges in Insider Trading Case
New York Times
The government contends that Rajat K. Gupta called in to a Goldman Sachs board meeting in 2007 and, minutes later, leaked Raj Rajaratnam secret information about the bank.
http://jlne.ws/AlrZG1

Perfect Hedge: 56 found guilty of insider trading
CNN Money
It’s known as “Operation Perfect Hedge”: the government’s unprecedented crackdown on insider trading that’s led to nearly 60 convictions since it began roughly two and a half years ago. And with the charges announced two weeks ago against men from some of the country’s largest hedge funds, it shows no sign of slowing down any time soon.
http://jlne.ws/AnR5Fe

Investments – Indexes – Managed Futures – Managed Funds

Bruising year for commodities hedge funds
By Javier Blas and Jack Farchy in London and Gregory Meyer in New York – Financial Times
The commodities hedge fund industry has suffered its worst year in more than a decade as the sector’s top managers recorded heavy losses amid volatile markets.
http://jlne.ws/x6dnQK

Hedge funds brace for euro zone break-up
Reuters via Yahoo! News
LONDON (Reuters) – Nervous hedge funds managers are stress-testing their portfolios and searching for ways of protecting themselves against their worst nightmare — a potential break-up of the euro zone.
http://jlne.ws/ykFtVH

Ex-Credit Suisse Traders Said to Plan Asian-Focused Hedge Fund
BusinessWeek
Two former senior traders at Credit Suisse Group AG plan to start a hedge fund this year that will invest in stocks and derivatives tied to Asian companies, according to two people with knowledge of the matter.
http://jlne.ws/wYcXm0

Foreclosures Draw Private Equity as U.S. Sells Homes: Mortgages 
Bloomberg
Jan. 31 (Bloomberg) — Private equity firms are jumping into distressed housing as the U.S. government plans to market 200,000 foreclosed homes as rentals to speed up the economic recovery.
http://jlne.ws/wlDpD9

TPG Agrees to Purchase Hedge Fund Administrator GlobeOp for $800 Million
Bloomberg
TPG Capital LLP agreeed to buy GlobeOp Financial Services SA (GO/) , a hedge fund administrator, for about 508 million pounds ($800 million).
http://jlne.ws/AATXkg

SwapClear: Cleared volumes continue to increase across six currencies
This week’s volumes bring SwapClear’s total client notional cleared to USD 393 billion, and the total client notional outstanding to USD 291 billion (as of January 27, 2012). In addition, we have cleared client notional in six of the 17 currencies currently available to clients.
http://jlne.ws/yMWT7N

Endowments slow to recover from 2008 crisis as hedge funds lag
Boston Globe
U.S. college endowments are still struggling to recover from losses triggered by the collapse of Lehman Brothers Holdings Inc., as investments in hedge funds have lagged behind traditional strategies such as stocks. Many have not rebounded even with strong gains last year. Harvard University rose 21 percent in the year ended June 30.
http://jlne.ws/zVbChV

SC Treasurer sounds alarm about state investments
Florence Morning News
South Carolina’s pension plan has about $26 billion in it. Last year, that money earned 18.6 percent, compared to the national median of 21.4 percent.
http://jlne.ws/A9yypJ

Orchestrade Partners with Numerix to Expand Cross-Asset Pricing, Valuation and Risk Coverage
http://jlne.ws/xyhlnr

Calamos Closed-End Funds (CHI, CHY, CSQ, CGO and CHW) Announce Monthly Distributions for February 2012
PR Newswire via Yahoo! Finance
http://jlne.ws/wucdaE

BM&FBOVESPA starts trading in dividend and basic materials ETFs 
http://jlne.ws/yTkUAY

Warsaw Stock Exchange: 23 Companies Now Participate in the Warsaw Responsible Companies Index RESPECT
Press Release
http://jlne.ws/AyJK2z

Technology News

Bloomberg Opens Its Data Distribution Technology – Open Market Data Initiative Will Spur Innovation & Industry Collaboration
Press Release
Bloomberg is opening its market data interfaces for use by technology professionals globally, without cost or restriction, the company announced today.
http://jlne.ws/xcM1da

Turaz targets commodities trade monitoring
By Philip Stafford – Financial Times
The trading and risk management software business spun out of Thomson Reuters is targeting monitoring of commodities trading among a host of changes as it starts out as an independent company.
http://jlne.ws/y5XbTe

Media News

Hedge Fund Frankenstein Algorithm Stalks Robert Harris Thriller
BusinessWeek
Dr. Victor Frankenstein thought it would be a good idea to bring an inanimate body to life. We all know how that turned out.
http://jlne.ws/yJ0tYU

Facebook Is Said to Pick Morgan Stanley to Lead Share Sale
BusinessWeek
Facebook Inc., the world’s largest social-networking service, chose Morgan Stanley to take the lead on its planned initial public offering, four people with knowledge of the matter said.
http://jlne.ws/z6XpsS

Reports

Briefing.com Economic Calendar
http://www.briefing.com/Investor/Public/MarketAnalysis/Calendars/EconomicCalendar.htm

USDA Today
http://www.nass.usda.gov/Publications/index.asp

CBOE Events Calendar
http://www.cboe.com/AboutCBOE/EventCalendar.aspx

Economic Release Calendar
The Economic Release Calendar (PDF) is a schedule of government, academic and industry economic releases, provided as a service to CME customers.
http://www.cmegroup.com/tools-information/calendars/

Asia-Pacific News

FSA publishes registration of credit rating businesses
http://jlne.ws/ADRTRB

[TSE] Trading Overview and Preliminary Figures for January 2012
http://jlne.ws/wbFYBe

[TFX] Trading Volume in January 2012
http://jlne.ws/yo20nW

[OSE] Trading Overview in January 2012 
http://jlne.ws/AsM4TU

OSE has been Publishing “Indicative Net Asset Values” and “Portfolio Composition Files” of ETFs 
http://jlne.ws/y1Iqdv

HKEx: Status Report On New Product And Market Development Initiatives (Status As Of 16 January 2012)
Press Release
http://jlne.ws/wcKJvN

HKEx Publishes 43rd Edition Of Its Quarterly Publication – Exchange
Press Release
http://jlne.ws/x3WdDV

Frontier Markets

Bursa Malaysia Readies New Clearinghouse For 1Q Launch
By Jacob Bunge Of DOW JONES NEWSWIRES
PALM BEACH, Fla. (Dow Jones)–Bursa Malaysia Bhd (1818.KU) is preparing to launch a new trade-clearing facility for its derivatives markets that will enable the Kuala Lumpur exchange to offer a broader range of contracts, according to a senior executive.
http://jlne.ws/AwByv7

Saudi Stock Exchange (Tadawul) – Monthly Statistical Report – January 2012
Press Release
http://jlne.ws/xfTL2V

Tel Aviv Stock Exchange Annual Review 2011
Press Release
http://jlne.ws/xHgeO9

DIFC And Luxembourg For Finance Discuss Potential Collaboration To Develop The Financial Services Industry In The GCC
Press Release
http://jlne.ws/x8ApHV

Miscellaneous News

British Government Cabinet Office: Goodwin Knighthood Decision
Press Release
It will soon be announced in the London Gazette that the Knighthood conferred upon Fred Goodwin as a Knight Bachelor has been cancelled and annulled.
http://jlne.ws/xS23Kn

Goldman Sachs Runners Step Up for Empire State Building’s 86-Floor Climb
Bloomberg
Brian Kuritzky of Goldman Sachs Group Inc. (GS) is among a group of Wall Street executives seeking to raise more than $300,000 for cancer research by racing up 1,576 steps in New York City ‘s Empire State Building.
http://jlne.ws/ws2Y10

John Lothian Newsletter

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Past JLN Newsletters

Banks roll out robots as pandemic shakes up IT plans

Banks roll out robots as pandemic shakes up IT plans

First Read $11,441/$300,000 (3.8%) Thomas F. Chlada, Earle Combs, Gerry Corcoran and Martin Mosbacher ++++ Steptoe & Johnson LLP Makes Good Use of Pandemic Time with Financial Services University Video Series By John J. Lothian Matthew Kulkin of Steptoe &...

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