International Securities Exchange rebrands itself and shifts direction toward ETFs in a bid to improve slumping volume. Financial hub Singapore is rattled by the new investigation into currency fixing allegations. LSE’s Turquoise platform announces that they, too, will be increasing trading fees as a way to squeeze more revenues from declining trading volume.
Alan Grigoletto on OIC’s new education efforts
Alan Grigoletto was recently promoted to vice president, education at the Options Industry Council (OIC), where he is responsible for expanding OIC’s educational efforts, including developing educational programs for the European markets. He was interviewed by Sarah Rudolph of John Lothian News about the challenges for market makers in the current atmosphere and OIC’s response to those issues, the growing use of options by pension funds and others, what’s ahead for options volume, and the OIC’s new seminars for 2013.
Five Minutes with Tom Kadlec, President, ADM Investor Services, Inc.
Tom Kadlec is president of ADM Investor Services (ADMIS), the futures commission merchant (FCM) subsidiary of Decatur, IL-based Archer Daniels Midland Co (ADM). He spoke with JLN Editor-at-Large Doug Ashburn at ADMIS’ recent National Broker Meeting, an annual convention of networking, information sharing, and cutting-edge economic research presentations. Kadlec’s message to brokers is that of financial stability and growth in the wake of diminished customer confidence and regulatory uncertainty. Transparency and communication, he says, are the keys.
Q: How has ADMIS communicated its message of stability amid uncertainty? Is this particularly important because of the firm’s large presence in the agricultural space?
A: We go back to our fundamental roots. The first is that ADM has been a member of the Chicago Board of Trade since the early 1920s. ADM is not only our parent company, but also our largest customer. They are a user of these markets, rather than a large OTC shop. They bring their hedging requirements to the exchange, and like the counterparty clearing model. Second, we have embraced the introducing broker (IB) model. We have a large core group of IBs many of whom are in the agricultural space, because of the ADM name. We also have a significant presence in other market sectors including managed futures, metals, energies and softs.
In 2008, we had a few large funds that said, “You have a lot of capital, we like the ADM name, you have a strong parent company, and you are not a bank.” This is not to say that being a bank is a negative, but the 2008-09 financial crisis was a challenging environment for banks, and it became more strategic for funds to have two or three diversified FCM relationships. Most customers have become more conscious of FCM risk in the last 14 months and we have been able to expand our customer base because we have good capital and a large corporate parent that provides real oversight and helps define how we do business.
To see the whole interview, visit the John Lothian Newsletter blog
Peregrine fraud investigation finds shortcomings at futures regulator
By Lynne Marek – Crain’s
The National Futures Association said it will implement 21 changes to how it oversees futures industry firms after an independent investigator found numerous auditing shortcomings in the wake of the $200 million financial fraud by futures broker Peregrine Financial Group Inc.
**** Interestingly, there were no whistleblowers uncovered by the report. There are lots of things in this report to think about.
A letter from NFA’s CEO and Chairman
We wanted to send you a personal update on all that has happened in the months following the collapse of Peregrine Financial Group Inc. (PFG), and let you know that we have taken steps to refine and improve our regulatory practices and better protect you, your customers and the industry in the wake of this tragic situation.
Futures Industry Moves Forward with Enhanced Customer Protections
Joanne Morrison – FI Magazine
Since the collapses of MF Global and Peregrine Financial, the futures industry has made significant progress to better protect customer funds with a series of actions that have led to better transparency and internal controls. Many of the recommendations are in line with initiatives recommended by an FIA task force early in 2012.
US swaps industry attacks disparate rules
Shahien Nasiripour in Washington and Michael Mackenzie in New York – FT.com
The swaps industry publicly criticised proponents of futures contracts as the lead US derivatives regulator debated the wisdom of pushing the sector to futures.
**** So here is the thing, if swaps and futures have the same economic function, and you can switch swaps contracts to futures by renaming them and putting them in a different set of rules, then aren’t swaps really just futures contracts under a different regulatory scheme. Isn’t that what the fuss was about when Brooksley Born born said the CFTC should have regulatory oversight over them back in the day and in 2000 the CFMA gave them legal certainty? So if swaps needed a different regulatory scheme then versus futures, wouldn’t leveling the rules for swaps versus futures now just make them all the same thing? I will say this, there is a difference between things that trade and have liquidity and things that don’t. Things that don’t trade as actively should have higher regulatory standards and margins.
Trading Technologies Launches MultiBroker Solution
Business Wire via Yahoo! Finance
Trading Technologies International, Inc., a leading provider of professional derivatives trading software and solutions, announced today the launch of its MultiBroker ASP solution. With MultiBroker, the client can now enter orders from a single X_TRADER workstation or API and send them to any of its participating brokers through a direct market access (DMA) network.
**** Look for an upcoming commentary on this from Jim Kharouf.
New Restoring Customer Confidence Vi
The ninth video in our Restoring Customer Confidence series deals with securing 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»|
Customer Segregation: Keep It Separate
There has been much talk about protecting customer funds but keeping them in segregated accounts outside of the brokerage house. John Omahen, vice president of post trade derivatives solutions at SunGard, talks about the value in moving customer funds to a clearing house. Such segregation could help not only protect customer funds, but also could create lower financing costs.
Also see — Customer Segregation: A Clear View
About the Restoring Customer Confidence video series
Visit the video series page on MarketsWiki.tv over the next several weeks for new ideas and solutions.
CME Group Inc. Names Slate of Director Nominees and Announces its Plan to Implement a Majority Vote Standard
CME Group today announced its slate of candidates for election to serve on the company’s board of directors. CME Group shareholders will vote for directors at the company’s annual meeting to be held Wednesday, May 22, 2013.
***** There are director slates and then there are those who should be carved in granite.
NYSE’s Worries Helped Drive Separate Clearing Deal with ICE
Wall Street Journal Blogs
Why did NYSE agree to a side contract with ICE in its agreement? It all goes back to it’s failed Deutsche Boerse deal.
***** Secondarily, it was also a great poison pill move to help keep dealbreakers away.
Rapid Ratings Begins Coverage of Moscow Exchange MICEX-RTF
Edward Chambliss, Rapid Ratings International
Rapid Ratings is pleased to initiate coverage of Russia’s Moscow Exchange MICEX-RTF in the midst of its IPO. We are publishing based on historical financial reports; it will be updated in later coverage to reflect IPO-related implementation. As with all public names in coverage, we will report on MICEX-RTF as often as financials are updated. With its Moderate Risk Financial Health Rating (FHR) of 59, historical Moscow Exchange MICEX-RTF ranks reasonably among several leading exchange-related entities around the globe, such as CME Group (49), Deutsche Boerse (62), IntercontinentalExchange (61), London Stock Exchange (62), NASDAQ OMX Group (59), NYSE Euronext (57), and TMX Group (44)
**** This is interesting.
Alan Blinder: Everything You Think You Know About the Crisis Is Wrong
Yahoo! Finance: The Daily Ticker
In After the Music Stopped, former Fed Vice Chair Alan Blinder provides what he calls an “interpretative history” of, as the subtitle reads, ‘the financial crisis, the response and the work ahead.’ In the accompanying video, Blinder discusses his views on the crisis as well as the biggest misconceptions about its cause and aftermath, including:
***** What, what, what….
The Road Best Travelled
Trade Talk – Trading Technologies
“The only source of knowledge is experience.” – Albert Einstein
I’m sure our institutions of higher learning may take Einstein to task on his opinion given that they are in the “knowledge” business. If he were alive, he may elaborate on his statement by saying that until an education is put to work, its value is in question.
Trade of the Week: Hoax tweets muddy the waters
Tom Osborn – Financial News
Equity investors were this week dealt a harsh lesson in the danger of surfing social media channels for market tips, when two US companies fell victim to hoax defamatory tweets that sent their share prices crashing.
MarketsWiki Page of the Day
Russell R. Wasendorf Sr.
MarketsWiki Recent Updates
Companies, Organizations and Groups
34,271,590 pages viewed, 7,355 articles, 152,885 edits
ISE pushes into ETF market
Suzi Ring – Financial News
The International Securities Exchange, the New York-based options platform owned by Germany’s Deutsche Börse, has rebranded to increase its focus on exchange-traded funds, marking a shift in strategy following a difficult few years for the business.
Currency-fixing probe rattles Singapore
Jeremy Grant in Singapore – FT.com
Singapore, the world’s fourth largest centre for foreign exchange trading, has been unnerved by a probe by the city-state’s watchdog into possible “irregularities” in the market for fixing the rates for key southeast Asian currencies.
Turquoise hikes data fees
Tim Cave – Financial News
Turquoise, the European share trading platform owned by the London Stock Exchange, has followed one of its main rivals by introducing fees for some its data services for the first time, as part of wider efforts by the venues to boost revenues amid a slump in trading activity.
Opposition to FTT in Europe grows
Mike Foster – Financial News
Opposition to Europe’s proposed Financial Transactions Tax among investors is rising following the European Parliament’s decision to authorise 11 of its member states to push ahead with its introduction by 2014.
Peregrine boss Wasendorf gets 50 years jail for fraud
P.J. Huffstutter – Reuters
A judge on Thursday sentenced the founder of Peregrine Financial Group to 50 years in prison for looting hundreds of millions of dollars from the brokerage, saying his customers would probably never recover the money they lost.
Traders Seek Harmonization in New Futures, Swaps Rules
KATY BURNE – Dow Jones
A federal regulator is discussing new rules for large derivatives that traders say could determine which platforms are the winners and losers of financial-market overhaul. The Commodity Futures Trading Commission recently began considering rules that could change what size energy futures can take place privately, away from exchanges, and what delay will be allowed in the public reporting of those trades.
BOI did not try to stop ex-Monte Paschi chief leading bank lobby-new head
Reuters via Yahoo! News
ROME – The Bank of Italy made no effort to stop the re-appointment of former Monte dei Paschi chairman Giuseppe Mussari as head of the Italian Banking Association last year despite turmoil surrounding the troubled lender, the new head of the association said on Thursday.
Deutsche Bank CEO says bankers discussed global Libor settlement
Deutsche Bank co-Chief Executive Anshu Jain said bankers gathered at the World Economic Forum in Davos informally discussed whether to team up about settling a global probe in to alleged rigging of global inter-bank lending rates.
Netherlands nationalizes SNS Reaal at cost of $5 billion
The Netherlands nationalized bank and insurance group SNS Reaal (SR.AS) at a cost of 3.7 billion euros ($5 billion) on Friday to shore up confidence in the financial sector after a private investor-led rescue collapsed.
Sef rules could be finalised by mid-February, says O’Malia
Long-awaited rules on swap execution facilities (Sefs) are expected to be finalised within the next few weeks, with voice-broking likely to be permitted in some limited form, according to Scott O’Malia, a commissioner at the Commodity Futures Trading Commission (CFTC).
U.S. Rules Get Scrutiny as Energy Futures are Swapped for Swaps
Derivatives-trading rules will come under scrutiny today at the U.S. Commodity Futures Trading Commission after the country’s largest exchanges began replacing energy swaps with futures last year.
SEC Announces Panelists for Roundtable on Decimalization
The Securities and Exchange Commission today announced the panelists who will participate in its roundtable next week on decimalization.
FSA confirms start of full review of interest rate swap mis-selling
The Financial Services Authority (FSA) has confirmed that Barclays, HSBC, Lloyds and RBS will start the full review of their sales of interest rate hedging products (IRHPs) to small businesses.
EDHEC-Risk Institute Reiterates Its Warnings To The European Commission On The Inadvisability Of Imposing A Tobin Tax
In an open letter to European Commission President, José Manuel Barroso on January 30, 2013, Professor Noël Amenc, Director of EDHEC-Risk Institute and Professor of Finance at EDHEC Business School, has reiterated EDHEC-Risk Institute’s opposition to a ‘Tobin’ or financial transactions tax (FTT). Research findings from EDHEC-Risk Institute and other academic institutions show that the theoretical arguments in support of the FTT as a measure to reduce volatility are, at best, mixed; the empirical evidence, on the other hand, indicates that a FTT has either no effect on volatility or it actually increases volatility; and, introducing an FTT faces serious implementation challenges.
SEC: David P. Bergers Named Acting Deputy Director Of Enforcement
SEC: George S. Canellos Named Acting Director Of Enforcement
Chairman Gary Gensler’s Opening Remarks At CFTC Roundtable
Futurization And Swapification – Statement Of Commissioner Bart Chilton At The CFTC Roundtable On Futurization
ASIC appoints Morgan Stanley to sell shares in CMI Limited
Exchanges & Trading Facilities
TSE Trading Overview in January 2013
TOPIX rose 9.4% on support from yen correction, hopes of exiting deflation, and purchasing by overseas investors. Average daily trading value surpassed JPY 2 trillion, reaching its highest level since October 2008. Monthly trading volume for 10-year JGB Futures was 869,921 contracts (daily average: 45,785 contracts), a 101% gain year-on-year. Monthly trading volume for TOPIX Futures was 1,250,742 contracts (daily average: 65,829 contracts), a 95% gain year-on-year.
Osaka Securities Exchange Trading Overview In January 2013
Total derivatives trading volume in January 2013 was 27,625,238 units, which recorded the second highest. Total trading value of ETFs market was 525.6 billion yen, which achieved the record-high since the establishment of ETFs market. Trading volume of OSE-FX in January 2013 was 869,621 units, which showed a 58.8% rise over the preceding month.
TFX Trading Volume in January 2013
Combined trading volume for all TFX products was 7,496,558 ( + 60.7% MoM / + 11.7% YoY) and its average daily trading volume was 343,562.
Tokyo Grain Exchange Monthly Trading Report January 2013
CME Retreat on Grain Hours Welcomed by Traders Who Need to Sleep
CME Group Inc. , owner of the world’s largest grain market, is backing off an expansion of trading hours in May that left some traders complaining that 21 hours a day left them with little sleep and less liquidity.
NASDAQ OMX Reports Fourth Quarter And Full Year 2012 Results
NASDAQ OMX Announces Quarterly Dividend Of $0.13 Per Share
CME Group Inc. Declares Quarterly Dividend
Burgundy Aggregated Market Shares – Finnish Equities, January 2013
Burgundy Aggregated Market Shares – Swedish Equities, January 2013
CBOE to Suspend Trading in SPX Variance Strips
First IPO in Prime Standard in 2013: LEG Immobilien AG
[CBOE] February 2013 Fee Changes
[CBOE] Restrictions on Transactions in Myrexis, Inc (MYRX)
[CBOE] All-Or-None (AON) Orders
NYSE, NYSE MKT and NYSE ARCA Participation in Industry LULD/MWCB Testing
Program Trading Averaged 26.5 Percent of NYSE Volume during Jan. 22-25
Direct Edge Trading Notice #13-06: Limit Up-Limit Down Testing Update
Athens Exchange Market Operations Committee Decision
Hedge Funds & Managed Futures
Goldman’s Felton Quits as Investment Chief of $5 Billion Fund Group
Goldman Sachs Group Inc. told its asset management clients earlier this week that Gregg Felton, the chief investment officer of a $5 billion credit hedge fund group in its asset management division, is leaving the firm.
US manager recruits ex-Mercer partner
Sophie Baker – Financial News
US asset manager Payden & Rygel has appointed a 30-year buyside veteran to its London office, after he became the latest in a string of departures from the financial consultant Mercer.
Pimco appoints interim head of global equities
The Wall Street Journal
Giant money manager Pimco has appointed Marc Seidner as its interim head of global equities, according to a person familiar with the matter.
Blackstone swings to fourth quarter profit on strong revenue
Dow Jones Newswires
Blackstone Group swung to a fourth quarter profit as the private equity giant recorded strong revenue, driven by growth in both performance fees and management and advisory fees.
Paulson hedge fund conspired with Goldman in Abacus: lawsuit
Reuters via Yahoo! Finance
John Paulson’s hedge fund will have to defend claims that his firm conspired with Goldman Sachs Group Inc to fraudulently induce a bond insurer to guarantee payments on risky debt, court papers show.
Endowment Returns Fail to Keep Pace with College Spending
U.S. university endowments are losing ground as returns on investment fail to keep pace with school spending needs, according to Commonfund and the National Association of College and University Business Officers.
MetLife to Buy Chilean Pension Fund for $2 Billion
MARK SCOTT – NYTimes.com
MetLife agreed on Friday to buy the Chilean pension fund provider AFP Provida from the Spanish bank BBVA for around $2 billion.
The Cotton Bond Bubble
PHIL LEIGH – NYTimes.com
It’s a story recognizable to anyone who dealt with toxic derivatives in the early 21st century: on Jan. 29, 1863, the Confederate Congress secretly authorized the Paris-based bankers at Erlanger et Cie. – which rivaled Rothschild for European royalty connections – to underwrite $15 million of Confederate bonds, denominated in British pounds or French francs.
New Rules for the Admission of Investment Funds to Trading in the SIX Swiss Exchange Sponsored Investment Fund Segment [pdf]
Banks & Brokers
Deutsche Bank swallows $4 billion of charges for cleanup
Reuters via Yahoo! News
FRANKFURT – Deutsche Bank plunged to its worst quarterly loss in four years on Thursday after it took nearly $4 billion in charges to try and draw a line under a slew of scandals and boost its balance sheet without asking shareholders for cash.
Deutsche Bank CEO says changing rules force capital question
Reuters via Yahoo! News
FRANKFURT – Deutsche Bank co-Chief Executive Anshu Jain said the question over whether Germany’s lender needed a capital hike was driven by uncertainty over the likely burden of future bank regulation.
Goldman Sachs Picks Ranaan Agus to Manage Liberty Harbor Unit
Raanan Agus was picked to manage Goldman Sachs Group Inc.’s Liberty Harbor credit unit after its Chief Investment Officer Gregg Felton quit this week.
Goldman Raises Another Billion From ICBC Stake Sale
Goldman Sachs raised $1 billion through an overnight sale of shares in Industrial & Commercial Bank of China this Monday, making this the fourth major stake sale by
Morgan Stanley raises CEO Gorman’s base salary to $1.5 million
Reuters via Yahoo! News
Morgan Stanley Inc said Chief Executive James Gorman will receive a base salary of $1.5 million in 2013, nearly double the $800,000 he received last year. Morgan Stanley said the raise was to bring Gorman’s salary into line with the salaries paid to chief executives at rival financial institutions and to achieve an appropriate balance between fixed and at-risk variable compensation
Barclays CEO Gives Up Bonus for 2012
MAX COLCHESTER – WSJ.com
Barclays Chief Executive Antony Jenkins said Friday that he would give up his bonus for 2012 to avoid “unnecessary public debate” over his pay. Mr. Jenkins, who was named Barclays CEO last year, said in a statement that it was “only right” that he
Crédit Agricole confirms E2.68bn writedown
James Boxell in Paris – FT.com
Crédit Agricole of France is to take a E2.68bn goodwill writedown as Europe’s leading banks continue to pay a heavy price for poorly timed deals struck before the 2008 financial crisis.
UBS Cuts 20 Jobs at Canadian Bank Unit
UBS AG , Switzerland’s largest bank, fired 20 employees at its Canadian investment-banking unit as part of cost cuts by the Zurich-based bank. UBS fired Rick Meslin, head of Canadian equities, and chief economist and strategist George Vasic as part of the cuts, said Karina Byrne , a spokeswoman.
HSBC gets OK to sell $9.4B stake in Ping An
Associated Press via Yahoo! News
HSBC says it has received approval from Chinese regulators for the sale of its $9.4 billion stake in Ping An Insurance to a Thai conglomerate.
Barclays Diamond Reluctant to Tackle Bonus, Ex-Director Says
Barclays Plc former Chief Executive Officer Robert Diamond was reluctant to tackle “obscene” levels of pay as he was overly protective of investment bankers, ex-compensation committee head Alison Carnwath said.
Clearing & Settlement
LONGSTOP DATE EXTENSION ANNOUNCEMENT
On 24 December 2012 London Stock Exchange Group Plc (“LSEG”) and LCH.Clearnet Group Limited (“LCH.Clearnet”) announced the extension of the longstop date of LSEG’s recommended cash offer for a majority stake in LCH.Clearnet until 31 January 2013. Discussions between LSEG and LCH.Clearnet are progressing well and they have agreed to further extend the longstop date of the transaction until 28 February 2013 in order to finalise the detailed terms of the revised offer, as described in the announcement made on 24 December 2012.
Indexes & Products
Russell Eurozone Index Indicates A Dynamic Start For Eurozone Markets YTD As Of January 30th
NASDAQ Announces Annual Changes To The Dividend Achievers Indexes
Broadridge’s Broker Client Accounting Solution Accelerates Speed-To-Market And Processing Efficiencies For CIMB Group In Australia
DealBook: Roomy Khan, Figure in Galleon Insider Case, Sentenced to One Year in Prison
New York Times
Roomy Khan, a central figure in the insider-trading investigation that led to the conviction of the hedge fund manager Raj Rajaratnam, was sentenced to one year in prison. In a separate case, Jason Pflaum, who gathered evidence about his former boss, the hedge fund manager Samir Barai, received probation.
Environmental & Energy
Germany, 6 More EU Nations Said to Hold Key to Carbon Fix
Germany and six other EU nations hold the key to the decision on a rescue plan for the world’s biggest carbon market after prices slumped due to record oversupply, three EU officials with knowledge of the matter said.
Al Gore slams Chancellor’s ‘short-sighted’ approach to green growth
Al Gore, the former US Vice President, has accused Chancellor George Osborne of taking a “short-sighted” approach to climate change and green economic growth, warning that businesses increasingly want to see ambitious action on global warming.
CDM clocks up 6,000th carbon offsetting project
A wind farm in Vietnam yesterday became the 6,000th project to be registered under the UN’s carbon offset programme, the Clean Development Mechanism (CDM).
HKEx Change In Senior Executives
As announced earlier, Mark Dickens is to retire as Head of Listing and will be succeeded by David Graham. Following a successful transition of responsibilities, Mr Dickens will now bring forward his planned retirement from July 2013, as announced on 7 January 2013, to 1 March 2013. Effective 30 April 2013, Yang Qiumei will step down as Head of Mainland Development to pursue an opportunity at an international financial institution.
China ETFs struggle to meet demand
Josh Noble in Hong Kong – FT.com
An exchange traded fund tracking mainland Chinese equities became the most traded security on the Hong Kong exchange in January, the latest sign of international appetite for exposure to China and the growing interest in Asia for passive investments.
ICAP Energy appoints George Dranganoudis
ICAP plc, the world’s leading interdealer broker and provider of post trade risk and information services, today announces the appointment of George Dranganoudis as a Managing Director of ICAP Energy in Singapore, from 4 February, 2013.
Tokyo Commodity Exchange: Final Settlement Price Of Crude Oil For January 2013 Contract
UK authorities probe Barclays over Qatar loan: FT
Reuters via Yahoo! News
LONDON – British authorities are looking into an allegation that Barclays loaned Qatar money to invest in the bank as part of its rescue fundraising at the height of the 2008 financial crisis, the Financial Times reported.
Investors, beware: It’s a bumpy ride on the new Burma Road
Quartz via Yahoo! Finance
Myanmar began and ended 2012 as the frontier market on everyone’s mind. As a large, populous and strategically located country, Myanmar naturally invites the imagination to marvel at its possibilities—and …
Dubai Mercantile Exchange Strengthens Board Of Directors With Appointment Of Oil Industry And Commodities Leaders
Addition Of Senior Energy Experts From USA-Based CME Group And Singapore-Based Concord Energy Brings DME Into Closer Integration With CME Group And Strengthens Its Growing Presence In East Of Suez Markets
Abu Dhabi Securities Exchange Participates In Bahrain 2013 Investors Conference
MCX Weekly Market Report – January 24, 2013 To January 31, 2013
Malawi Stock Exchange Weekly Report – Week Ending 1st February, 2013