The head of alternative venue Equiduct is said to be leaving the company as meetings to decide the fate of the company progress. NYSE and BIDS Holdings is closing its block trading unit due to insufficient interest, as a way to reduce costs. CME Group is now just weeks away from beginning to clear off-exchange swaps in Europe.
Special Report Coming
We are working on a John Lothian News Special Report about last week’s CFTC Roundtable which discussed a CFTC proposal to require futures commission merchants to have collateral to cover all customer margin calls and not use other customer excess margin deposits to cover the timing gaps between when a call is triggered and when it is met. This is a significant change from the practice of the last 50 years. FIA Chairman Mike Dawley called this one of the most monumental events he has seen in his 30 years in the industry. The 4th panel of the Roundtable was where most of the critical issues were discussed. Several people approached us to request we shine a light on this issue as it received very little coverage as most of the large news organizations reporters had left the Roundtable by the time the residual interest issues were discussed. Several people approached us to request we shine a light on this issue as it received very little coverage as most of the large news organizations reporters had left the Roundtable by the time the residual interest issues were discussed. Here is the link for the YouTube video of the 3 and 4th panel: http://jlne.ws/126B1hw. The 4th panel starts about 1 hour 2 minutes into this video. Comments on the proposed rule are due February 15, 2013.
Sanjeev Joshipura of the Commodity Markets Council on Dodd-Frank in 2013
Sanjeev Joshipura, president of Commodity Markets Council, talks about how Dodd-Frank rules will impact his membership base. Joshipura talks with JLN editor-in-chief Jim Kharouf about the future of the controversial position limit rule, which was vacated by a US District Court on September 28, 2012. A new position limit rule is expected from the Commodity Futures Trading Commission (CFTC), which will include a cost-benefit analysis. CMC is also focused on the CFTC’s reauthorization this year and the continuation of EMIR regulations. Joshipura also talks about US and EU regulatory harmonization and the challenges facing that goal.
NYSE Euronext Announces Trading Volumes For January 2013
NYSE Euronext today announced trading volumes for its global derivatives and cash equities exchanges for January 20131. Global derivatives average daily volume (“ADV”) of 9.5 million contracts in January 2013 increased 26.9% compared to January 2012, and increased 27.5% from December 2012 driven principally by stronger fixed income derivatives ADV which increased 64% year-over-year and 91% month-over-month. U.S. Equity options volumes rebounded in January 2013 with an increase of 9.9% compared to January 2012 and an increased of 17.9% from December 2012 levels. U.S. Equity options combined market share set a new record high of 29.4% in January 2013. Trading volumes in European and U.S. cash equities declined year-over-year, but improved from December 2012 levels.
CBOE Holdings, Inc. Reports Record Fourth Quarter And 2012 Financial Results
CBOE Holdings, Inc. today reported record fourth-quarter GAAP net income allocated to common stockholders of $39.2 million, or $0.45 per diluted share, compared with $31.3 million, or $0.35 per diluted share in the fourth quarter of 2011. On an adjusted basis, net income allocated to common stockholders was $38.9 million, or $0.45 per diluted share, compared with $33.2 million, or $0.37 per diluted share, in the prior year period. Operating revenues for the fourth quarter were $130.1 million, an increase of 8 percent compared to $120.2 million in 2011’s fourth quarter.
IntercontinentalExchange Sets New Daily Record for ICE NYH RBOB Futures
IntercontinentalExchange, a leading operator of global markets and clearing houses, reported record daily volume in the ICE NYH RBOB Gasoline futures contract. ICE NYH RBOB Gasoline futures traded 29,559 contracts on Feb. 7. The new record is more than 10,000 above the previous daily record of 18,832 contracts on June 26, 2012.
CFTC Sanctions Gelber Group, LLC $750,000 for Trading Abuses on Two Exchanges
The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against Gelber Group, LLC (Gelber) of Chicago, Ill., for reporting orders during pre-opening trading sessions that Gelber had no intention of executing.
***** Bluffing during the pre-opening is a no-no and so is gaming volume-based incentive programs.
Retail Currency Market Eyes Card Ban
STEPHEN L. BERNARD – WSJ.com
Small investors in the currency market may soon find their credit cards denied. Industry overseers, concerned that retail investors are racking up credit-card debt to bet on currencies, are considering a ban on using the plastic to pay for trades. The National Futures Association, the self-regulating group for the U.S. futures industry, in a Jan. 18 letter to members, said it is concerned retail customers “are using credit cards as a source for borrowing funds to invest.”
***** I thought it was against the term of services from the card issuer to use it for such purposes.
Regulatory fatigue hits compliance bosses
Ruth Sullivan – FT.com
Compliance bosses at Europe’s largest asset managers are struggling beneath an avalanche of directives from both sides of the Atlantic, causing regulatory fatigue, according to a survey by Ernst & Young, the professional services firm.
***** This is why we built MarketsReformWiki: to help the industry handle the “avalanche” of regulatory proposals.
Exchanges are beginning to grow up, but they are still young
Michelle Price – Financial News
Last week, Jeff Sprecher, chief executive of the Atlanta-based Intercontinental
Exchange, which has inked a deal to buy NYSE Euronext for $8.2bn, was asked for his views on the structure of the US equity market. Sprecher, an engineer by training, told it straight: “Patently absurd,” was how he described some of the pricing practices at US stock markets.
***** Access to Financial News required for the rest of the story.
Court Hears Arguments on Judge’s Rejection of S.E.C.-Citigroup Deal
PETER LATTMAN – NYTimes.com
Judge Jed S. Rakoff has been an outspoken critic of the Securities and Exchange Commission, chiding the agency’s practice of allowing companies to settle fraud cases without having to admit that they had done anything wrong. On Friday, it was the S.E.C.’s turn to criticize him.
***** Judge not lest you be judged? But what if you are a judge?
Nasdaq’s man on a mission in Europe
Tim Cave – Financial News
As the only European on the nine-person executive committee of Nasdaq OMX, Danish-born Hans-Ole Jochumsen might well be personally familiar with the predicament currently facing the transatlantic exchange operator.
***** If you are Danish-born, don’t let your legs turn to jelly.
Putin Turns Black Gold to Bullion as Russia Outbuys World
Scott Rose & Olga Tanas – Bloomberg
When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it. Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer.
***** Putin turning oil sales into gold purchases. Also, he became a life member of GATA.
Regulators And Traders Fail To Keep Pace In High Frequency Markets
How nice that the good folks at the Department of Justice are getting around to charging the good folks at McGraw-Hill and Standard & Poor’s for that untidy mess involving all those years of ratings. Not that anyone in regulation ever had even so much as an inkling that the whole rating biz was just a tad conflicted when all those uppercase letters and minus and plus signs were being awarded.
****** No chance to keep up, even if they wanted to.
Banks size up revived ambition
Anna Irrera – Financial News
After taking a career break from nearly two decades in finance to spend time with her family and regroup, Elyse Goodman decided it was time to return to work. Her CV included positions in investment management at Lehman Brothers and Morgan Stanley, but the 19 months off had helped her realise she needed a change.
***** Another one of those behind the wall Financial News stories.
Hedging Against Hunger: Our Best Bet to Avoid a Global Food Bubble
Danielle Nierenberg – Huffington Post
In 2008, and again in 2010, global food prices soared through the roof, plunging millions worldwide into poverty. Riots occurred in 48 countries, according to the World Food Programme (WFP) and millions of people joined the ranks of the hungry. In developing countries, where many people spend 60 percent or more of their income on food alone, higher food prices led to widespread malnutrition and civil unrest.
***** Danielle gets this all wrong. Higher prices have spurred a growth in supply. Without that supply, there would be even more malnutrition and civil unrest.
11 Disgraced CEOs: The Hall Of Shame
By Bonnie Kavoussi – Huffington Post
The bigger they are, the harder they fall, especially when “they” are corporate chieftains raking in millions every year. What’s that? You need examples?
The impact of high frequency trading on Eurex Exchange’s products: A discussion of relevant issues
Tuesday, February 26 4:00 – 6:00 PM, New York
Wednesday, February 27th, 3:30 – 5:30 PM, Chicago
In late 2012, Eurex Exchange using its own market data conducted a thorough analysis of the impact of high frequency trading on its products. The results of the survey will be presented for the first time to US market participants during events in New York and Chicago. Join exchange representatives for an in-depth discussion of the study’s results. In this presentation, you will learn about the proposed regulation of high frequency trading in Europe and get an overview on Eurex Group’s trading and clearing safeguards. We will also discuss how high-frequency trading firms behave in extreme market situations.
Register for New York: http://jlne.ws/Xxi280
Register for Chicago: http://jlne.ws/VPitAg
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
34,743,594 pages viewed, 7,371 articles, 153,292 edits
Equiduct Chief Randall Said to Plan Exit From U.K. Trading Venue
Nandini Sukumar – Bloomberg
Peter Randall, chief executive officer of Equiduct Systems Ltd., plans to leave the London- based alternative trading system after three years as shareholders weigh closing the firm, two people familiar with the situation said. The company held a meeting to debate his future on Feb. 7 and plans to meet again to discuss funding for Equiduct, according to the people, who asked not to be identified as the information isn’t public. Jake Ford, sales and marketing executive for Equiduct in London, declined to comment.
NYSE to Close Block-Trading Market
JACOB BUNGE – Dow Jones
NYSE Euronext plans to close a subsidiary stock-trading unit set up to handle big share orders, saying the venture failed to attract enough business. The Big Board parent aims to stop operating the so-called New York Block Exchange on Feb. 28, exchange officials wrote in regulatory filing Friday, ending a four-year-old joint venture with broker-dealer BIDS Holdings LP.
CME to push clearing rate swaps in London
Philip Stafford – FT.com
The US is to make a concerted push into European derivatives with CME Group, the world’s largest futures market operator, set to begin clearing off-exchange swaps in coming weeks.
MCX-SX starts trading, setting up battle with NSE
By Rafael Nam and Abhishek Vishnoi – Reuters
India’s new stock exchange MCX-SX started trading shares on Monday with thin volumes, taking up a steep challenge to build liquidity and win market share against dominant player National Stock Exchange (NSE) and the smaller and older BSE Ltd.
Australia’s ASX keeps hands on clearing monopoly
Australia’s biggest bourse operator is to keep its monopoly over the clearing and settlement of stock purchases for at least two more years after the government deferred a decision on whether to open the door to competition.
Trading slump fuels fears European equity markets have ‘failed’
Tim Cave and Michelle Price – Financial News
Europe’s share of global equities trading volumes has slumped to “near all-time lows”, according to new research, as capital market activity moves to US and emerging markets.
Interdealer Brokers Emerge as Key Enablers in Libor Scandal
Gavin Finch & Liam Vaughan – Bloomberg
Interdealer brokers, the middlemen who line up buyers and sellers of securities for banks, are emerging as key enablers in the Libor scandal after three firms paid a total of $2.6 billion for rigging global interest rates.
Obama’s Treasury pick Lew to be grilled on Citi bonus, U.S. debt
Reuters via Yahoo! News
WASHINGTON – Jack Lew, President Barack Obama’s pick to be U.S. treasury secretary, is expected to come under fire for the administration’s budget policies and a nearly $1 million bonus he received from bailed-out bank Citigroup when he testifies on Wednesday before a Senate panel vetting him for the job.
‘Rain Man’ claims Libor scandal ‘goes much higher’
Many traders are implicated in the stack of documents regulators published this week detailing Royal Bank of Scotland Group’s attempts to rig the lending benchmark known as Libor. But only one trader is cited by name: Tom Hayes, a.k.a. Rain Man.
Two Firms, One Trail In Probes Of Ratings
JEANNETTE NEUMANN – WSJ.com
The Justice Department last week went after Standard & Poor’s Ratings Services—not rival Moody’s Investors Service—with a $5 billion fraud lawsuit. Some former Moody’s employees think they know why. The Moody’s Corp. unit took careful steps to avoid creating a trove of potentially embarrassing employee messages like those that came back to haunt S&P in the U.S.’s lawsuit, the former employees say.
The vendetta against S&P
The Obama administration’s suit against the rating agency Standard & Poor’s makes for riveting headlines and lousy history. We want to blame the financial crisis and Great Recession on greed and dishonesty. The charge that S&P rigged bond ratings for its own gain — providing artificially high ratings on the mortgage-backed securities that inflated the credit bubble — fits this self-serving morality tale. The discomforting reality is that the financial collapse resulted from an extended period of prosperity, which led to weakened credit standards and inspired wishful thinking about the permanence of economic growth.
What JPM,BAC,C,GS, MS,HSBC,BCS,UBS,RBS and CS Have in Common
Not a week goes by without one of these financial institutions agreeing to pay a huge fine, settle a lawsuit charging fraud, be sued, blued and tattooed by a myriad of private plaintiffs, or by regulatory organizations concerning a broad sweep of allegedly activities that together give a sordid portrait of the global financial system.
Longtime Wall Street Deal Maker Expands Advisory Firm
MICHAEL J. DE LA MERCED – NYTimes.com
During his 29-year career on Wall Street, Robert Wolf has amassed a contact list full of boldface names from the worlds of finance and politics, up to and including President Obama. Now the deal maker is drawing upon that list as he expands the advisory shop he formed last summer.
Mary Jo White, SEC Nominee, Represented A-List Of Big Banks, Companies
MARCY GORDON – AP
Mary Jo White, President Barack Obama’s nominee to lead the Securities and Exchange Commission, has represented an A-list of banks and corporations that could raise conflict-of-interest questions during her confirmation hearing.
Revolving door may have hurt SEC money fund reforms: report
Reuters via Yahoo! News
WASHINGTON – Former U.S. Securities and Exchange Commission staffers who now work in the private sector may have helped derail last year’s effort to reform the $2.6 trillion money market fund industry, a report said.
In-house legal teams size up new rulebooks
Sarah Krouse – Financial News
In-house legal and compliance teams within fund managers have spent much of the last year poring over new regulations churned out on both sides of the Atlantic, trying to understand what the regulations mean and how their firms will be affected.
Regulators reconsider their filing systems
Sophie Baker – Financial News
Regulators are worried. They think the securities lending market, which has a total lendable pool of assets of about $13 trillion worldwide, is opaque, and identifying triggers to a systemically risky incident can be, therefore, difficult.
Auditor code could lead to more banker prosecutions
Suzi Ring – Financial News
Senior City lawyers have offered their support for a new code of conduct for internal auditors in the financial services industry, stating it would strengthen any case made against bankers for misconduct.
IOSCO Publishes Recommendations Regarding The Protection Of Client Assets
Exchanges & Trading Facilities
New competition focuses on pricing models
Dan Barnes – Financial News
Slumping volumes in the European equities markets have put further pressure on already hard-pressed alternative trading venues, but innovative new pricing models may offer some relief in the ongoing hunt for liquidity.
Good news from grains bourses falls on deaf ears
Suzi Ring – Financial News
Exchanges are increasing their presence in the grains futures market just as trading in some products fell last year.
ASX commits to Code of Practice for cash equities clearing and settlement
ASX welcomes today’s announcement by the Deputy Prime Minister and Treasurer, the Hon Wayne Swan, which retains the current market structure for clearing and settlement of cash equities, and requests ASX to put in place a Code of Practice for Clearing and Settlement of Cash Equities in Australia.
ORB celebrates third anniversary; Winterflood Securities joins as new ORB market maker
[CBOE] Trader E-News
[CBOE] Automation of Stock-Option Strategy Orders in Classes that Trade until 3:15 PM CST
[CBOE] Form OE-418 and Attachments 2012 Year-End Filing Due March 1, 2013
OneChicago Holiday Notice – Presidents Day 2013
TSX Trading List Leaders By Volume And By Value – January 2013
TOM MTF Statistics Week 6 2013
Hedge Funds & Managed Futures
A go-to commodities dealmaker
Javier Blas – FT.com
When William Macaulay first stepped in to the offices of First Reserve Corporation, his immediate thought was that the $1 his buyout company had paid for it was way too much. “The portfolio was in terrible shape,” he remembers over lunch at its office in Greenwich, Connecticut.
Sequester Won’t Keep Investors From Stocks: Analysts
CNBC via Yahoo! Finance
Whether the “sequestration” happens or not, money is flowing into the stock market and likely will continue to do so this year, say analysts who spoke recently to CNBC.
Bankers turn sunshine into bonds
Tracy Alloway in New York – FT.com
Sliced and diced assets are about to get their moment in the sun. Bankers say they are close to turning sunshine into bonds for the first time, highlighting how exotic securities are shedding the toxic image they gained in the financial crisis amid fresh innovation.
Eurex expands its product offering on French government bonds
On 11 March 2013, the international derivatives market Eurex Exchange will introduce a new interest rate future, the Mid-Term Euro-OAT Future, which is based on notional medium-term bonds issued by the Republic of France (“Obligations Assimilables du Trésor” – OAT).
SURVEY: Tons Of Fund Managers Have Already Dumped All Their US Treasuries
The latest BofA Merrill Lynch survey of fixed income fund managers asks a simple question: Why are you long U.S. Treasury bonds? The answer from the majority of managers is that they aren’t.
Wave of Investor Fraud Extends to Ordinary Retirement Savers
NATHANIEL POPPER – NYTimes.com
Regulators across the country are confronting a wave of investor fraud that is saddling retirement savers with steep losses on complex products that until a few years ago were pitched only to the most sophisticated investors.
Accounting body considers end to DVA distortions
Giles Turner – Financial News
The confusion caused by debt valuation adjustments, where improvements in the value of a bank’s debt count as a cost when reporting quarterly results, may be coming to an end.
Why consultants need to face better performance audits
Mike Foster – Financial News
Nearly 20 years ago, a group of forward-looking actuaries led by Jon Exley of Mercer decided it was time pension schemes changed their ways.
Banks & Brokers
A road map for success and our commitment to real change
Antony Jenkins, group chief executive of Barclays – Telegraph
When I appeared before the Parliamentary Committee on Banking Standards last week, I was confronted with a catalogue of mistakes and shortcomings of the industry and Barclays itself in recent years.
Citigroup Argues for Approval of $285 Million SEC Settlement
An attorney for Citigroup Inc. asked a U.S. appeals court to let a $285 million settlement with the Securities and Exchange Commission be approved.
JPMorgan says MF Global plan obscures possible recoveries
Reuters via Yahoo! News
A proposed liquidation plan for MF Global Holdings Ltd fails to take into account that its finance unit is being hit twice for the same debt, undercutting what some creditors might recover, JPMorgan Chase & Co said in a court filing.
RBS boss in line for 780,000 pound bonus – report
Reuters via Yahoo! Finance
Royal Bank of Scotland will pay Chief Executive Stephen Hester a 780,000 pounds bonus deferred from three years ago while other executives see pay clawed back in the wake of the Libor rate rigging scandal, the Sunday Times newspaper said.
Barclays Plans Huge Cost Cuts, 2,000 Jobs to Go
Barclays is preparing to cut at least 2 billion pounds from its annual cost base of 20 billion pounds, the Financial Times reports.
Barclays axes controversial tax advisory unit
Reuters via Yahoo! Finance
Barclays is to close a profitable but controversial tax advisory business, it said on Sunday, as part of an attempt by its new chief executive to clean up the bank’s image.
Knight rides to the rescue of Jefferies
Shanny Basar in New York – Financial News
More than a fifth of equities revenues made last year by US investment bank Jefferies came from its rescue investment in Knight Capital, the high-frequency broker which almost collapsed after a software error.
Clearing & Settlement
Clearers line up to jump the authorisation hurdle
Michelle Price – Financial News
As clearing houses in Europe race to grab market share under the G20 reform programme, they face another hurdle later this year: securing authorisation from their local regulator.
Indexes & Products
Five new iShares ETFs launched on Xetra
FTSE/JSE Africa Indices – Weekly Market Wrap As At 8 February 2013
Nadeem Chowdhry, QlikTech’s Former Sales Director Of Financial Services, Joins Panopticon
Panopticon Software, the leading provider of visual data analysis software for real-time, CEP and historical time series data, today announced that Nadeem Chowdhry has joined Panopticon as its Senior Vice President in the UK. Chowdhry was formerly Sales Director of Financial Services for QlikTech, the makers of the QlikView business intelligence system.
CFTC Commissioner Jill E. Sommers’ Concurrence In The Matter Of Gelber Group LLC And Martin A. Lorenzen
CFTC Commissioner Bart Chilton’s Concurring In part And Dissenting In Part To The Settlement In The Matter Of Martin A. Lorenzen, Respondent
SEC Halts $150 Million Investment Scheme to Dupe Foreign Investors and Exploit Immigration Program
The Securities and Exchange Commission today announced charges and an asset freeze against an individual living in Illinois and two companies behind an investment scheme defrauding foreign investors seeking profitable returns and a legal path to U.S. residency through a federal visa program.
ASIC takes action against Zaam rentals, cancelling its licence and banning its directors
Environmental & Energy
Back in Fashion: China’s Bad Debt
DINNY MCMAHON AND LINGLING WEI – WSJ.com
Foreign and domestic investors are preparing to pounce on bad debts held by Chinese banks—a potentially lucrative but risky area that has disappointed investors in the past.
Marex loads up for Asian growth
Suzi Ring – Financial News
Marex Spectron, the commodities futures brokerage owned by former Lehman executives Roger Nagioff and Jeremy Isaacs, outlined plans last week to almost triple headcount in Singapore and extend sector coverage.
JIM ROGERS: Chinese Tourism Is Good, Black Markets Are Revealing, And Jim O’Neill Didn’t Really Understand BRICs
In his latest book Street Smarts , legendary investor Jim Rogers says he is extremely bullish on Chinese tourism for the next 20 or 30 years.
Monetary Authority Of Singapore: The People’s Bank Of China Appoints Clearing Bank For Renminbi In Singapore
Shenzhen Stock Exchange Outlines Key Tasks For 2013
Africa puts new exchange on the map
Suzi Ring – Financial News
A new African bourse was unveiled amid the ski slopes and macroeconomic chatter at Davos last month. The East Africa Exchange is one of several trading ventures that are being brought to market by local and international entrepreneurs with an ambition to develop the region’s capital markets.
Kazakh Central Bank Seeks Private Equity and Hedge-Fund Managers
Kazakhstan’s central bank will select private equity fund-of-fund managers and fund-of-hedge-fund managers to place as much as $300 million as the Central Asian nation plans its first alternative investments.
HSBC Says Gulf Surge to Drive 2013 Sukuk Record: Islamic Finance
Global Islamic bond sales are set to surpass the 2012 record as Persian Gulf issuers take the lead to tap borrowing costs that tumbled in the past year, according to HSBC Holdings Plc, last year’s top sukuk underwriter.
The Egyptian Exchange (EGX) Monthly Statistical Report January 2013