John Lothian Newsletter: Deal Size Becoming A Bigger Deal In Investment-Grade Bond Issues; Canada Examines How Benchmark Rates Get Set; Foreign outcry over ‘Volcker rule’ plans

Feb 14, 2012

Corporate bond investors find themselves managing liquidity issues as bank trading partners shed their holdings in advance of tighter regulations. Canada joins in the LIBOR price-fixing hunt. The US hears strident objections from overseas regarding the impending Volcker Rule, along with strident objections and support inside the country as well. Paul Volcker tells offshore worriers, “Seriously, dudes, chill,” using a somewhat more complete vocabulary.

Observations – Statistics – Commentary

Derivatives reform: We are none the wiser
By Jeremy Grant – Financial Times
It has been like watching paint dry, but Europe has finalised sweeping G20 reforms of the over-the-counter derivatives markets. Or has it? Last week the clumsily named European Market Infrastructure Regulation (Emir) was agreed by the European Commission.

**** Is it a Masterpiece?


Junius Peake, Early Advocate of Electronic Trading, Dies at 80
By Laurence Arnold – Bloomberg
Feb. 13 (Bloomberg) — Junius Peake, one of the finance industry’s earliest and most persistent proponents of electronic trading, has died. He was 80.

***** And not one trading platform named “Junius.”


Biggest winner of MF Global accounts expands more
Tom Polansek | Reuters
CHICAGO (Reuters) – Independent Chicago broker R.J. O’Brien, which got more former accounts from bankrupt rival MF Global than any other merchant, built on that success in December, while other brokers lost some of that extra business, data showed on Monday. Total segregated funds at the end of December were $145.5 billion, down 2.4 percent from the end of November and 4.9 percent from the end of October, CFTC data show.

**** Right Here!!!!!


CME Group: Globex Crude Markets Halted Due To Technical Issues
By Jerry A. DiColo and Dan Strumpf – WSJ
Exchange operator CME Group Inc.‘s electronic Globexoil-trading platform failed due to “technical issues” on Monday, halting all electronic trading and sending traders scrambling to place bets on the New York Mercantile Exchange trading floor.

**** A much reported halt.


Singapore diverges on OTC regulation
By Jeremy Grant in London – Financial Times
Singapore on Monday laid out its plans for meeting G20 commitments for over-the-counter (OTC) derivatives reform but diverged from the US and Europe by not requiring that derivatives be traded on formal platforms.

**** Jeremy Grant is not even in Singapore yet, but he can’t help himself.


Broker to launch electronic stock issuance
By Telis Demos in New York – Financial Times
Rodman & Renshaw, an independent US brokerage, has acquired an investor relations firm as it seeks to launch an all-electronic platform for raising equity capital directly from investors.

**** Now there is a name from the past.


Insight: Wall St commodity talent wars: Return of the merchants
Barani Krishnan | Reuters
NEW YORK (Reuters) – When it comes to hiring top commodity traders, what goes around comes around. Wall Street, after years of poaching the best and brightest from specialized commodity firms, is losing the war to keep the essential traders who know how to arbitrage copper or store crude.


Outside the Box: Investor protection agency protects scam artists
Market Watch
SIPC‘s history and recent behavior suggests that SIPC isn’t particularly concerned about investors, writes Ron Stein.

**** With all the calls for insurance in futures, this is an important story to read.


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19,400,268 pages viewed, 6,696 articles, 137,011 edits
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Lead Stories

Deal Size Becoming A Bigger Deal In Investment-Grade Bond Issues
Crowded into a corner by the pullback in trading on Wall Street, corporate-bond investors are finding there’s safety in bigger deals. How easy it is to trade a bond has long influenced the performance of risky high-yield debt. But until recently, the investment-grade corporate bond market has remained relatively immune to concerns about liquidity,

Canada Examines How Benchmark Rates Get Set
Canada’s top antitrust watchdog said it is investigating allegations of collusion in the setting of key benchmark interest rates, joining law-enforcement authorities across the globe in a probe of how the rates are set.

Foreign outcry over ‘Volcker rule’ plans
By Shahien Nasiripour in Washington and Tracy Alloway and Telis Demos in New York – Financial Times
US regulators are facing a flood of foreign complaints about the “Volcker rule” aimed at banning proprietary trading at banks, increasing the chances that the measure may be watered down.

Foreign critics should not worry about ‘my’ rule
By Paul Volcker – Financial Times
I confess total surprise about the complaints by some European and other foreign officials about the restrictions on proprietary trading by American banks embedded in the Dodd-Frank Act – now dubbed the “Volcker” Rule.

DealBook: At Volcker Rule Deadline, a Strong Pushback From Wall St.
New York Times
Regulators in charge of writing the Volcker Rule, which would ban banks from trading with their own money, were inundated with complaints and suggestions from the financial industry.

Financial Trade Groups Want Volcker Redone
By David Benoit – WSJ
The financial services industry wants to revise the “Volcker Rule.” The Securities Industry and Financial Markets Association, or SIFMA, teamed up with the American Bankers Association, the Financial Services Roundtable and the Clearing House Association to deliver a 173-page letter laying out their objections to the Volcker Rule and how it goes about setting up the ban on proprietary trading. The groups, the major trade associations for the financial world, also filed separate letters on other aspects of the rule.

MSCI Launches Probe Into ISS Employee’s Alleged Sale Of Data 
MSCI Inc. (MSCI) has launched an internal probe into allegations that an employee of its Institutional Shareholder Services unit sold details of client company votes to firms that seek to influence the outcome of merger proposals and other corporate decisions.

France to push on with trading tax
By Scheherazade Daneshkhu in Paris – Financial Times
France is determined to press ahead with a financial transaction tax inspired by the UK’s stamp duty and supported by at least eight other eurozone countries, the country’s finance minister has said.

Europe crisis tops agenda as China, EU leaders meet
AFP via Yahoo! News
Chinese and EU leaders will meet Tuesday for a major summit set to be dominated by Europe’s debt crisis, as an increasingly worried Beijing considers coming to the rescue of the embattled continent.

Greece far from safe even after debt swap
By Willem Buiter – Financial Times
On Sunday night, as Athens burned, the Greek parliament voted to approve an omnibus bill. It contained the main elements of an agreement with the Troika on fiscal austerity, privatisation and structural reform, and the recapitalisation of Greek banks. Was this a ‘make or break’ moment for Greece?

Merkel Backs Indirect Regulation Of Shadow Banks
FOX Business
BERLIN — German Chancellor Angela Merkel on Monday backed a proposal to indirectly regulate the shadow banking system prior to imposing direct regulation on institutions such as hedge funds and money-market funds that have traditionally been outside the scope of financial supervision.

Moody’s threatens to downgrade UK
By Michael Mackenzie and Vivianne Rodrigues in New York and Jim Pickard in London – Financial Times
Moody’s put the UK, France and Austria on negative outlook late on Monday night, raising the prospect that the three countries would lose their triple A ratings due to exposure to the eurozone debt crisis.

Rating Action: Moody’s Adjusts Ratings Of 9 European Sovereigns To Capture Downside Risks
Press Release

Environmental Trading News

EU open to talks but won’t scrap carbon tax
Europe is willing to discuss its new carbon emissions tax for airlines with disgruntled governments but has no plans to scrap the levy, top EU officials said Monday.

China Shale Delay to Boost LNG Imports in Boon for Exxon: Energy
China’s ambitions to unlock the natural gas trapped in shale rocks are likely to take longer than planned, boosting the nation’s reliance on overseas suppliers from Exxon Mobil Corp. to Royal Dutch Shell Plc. 

Norway’s Statkraft bucks trend by expanding CO2 desk
Point Carbon
Norwegian utility Statkraft has added two staff to its carbon desk in the past two months, bucking a downsizing trend triggered by plunging carbon prices and waning confidence about the market’s future. 

For more environmental trading news, subscribe to the Environmental Markets version of the John Lothian Newsletter edited by Jim Kharouf. 
Visit to subscribe.

Exchange & ECN News

Deutsche Boerse Raises Dividend, Adds To Share Buyback 
FRANKFURT (Dow Jones)–German exchange operator Deutsche Boerse AG late Monday raised its regular dividend for 2011, added a special dividend and set plans to buy back shares worth up to EUR200 million in the second half of the year.

Deutsche Boerse Plans Dividend, Buyback After NYSE Deal Fails
Deutsche Boerse AG, blocked from buying NYSE Euronext by European competition regulators this month, pledged to return capital to shareholders after posting a fourth-quarter profit.

Deutsche Boerse AG Releases Preliminary Results For 2011
Press Release

ISE Introduces Premium Access Connectivity
New York, February 13, 2012 – The International Securities Exchange (ISE) is now offering a Premium Access connection in its primary data center. Premium Access subscribers will connect to ISE over Juniper Networks’ high performance, ultra-low latency 10 gigabit Ethernet switches.

Steffen Köhler appointed as New Member of the EEX Board
Press Release
In its meeting last Friday, the Supervisory Board of the European Energy Exchange (EEX) appointed Mr. Steffen Köhler as a new member of the Management Board of EEX AG.

Supervisory Board Of Deutsche Boerse AG Extends Executive Board Contract With Gregor Pottmeyer
Press Release

CME Group Clearing Advisory
Additions to the FIXML Product Reference File for OTC FX Forwards

[SIX] Investigation against Bergbahnen Engelberg-Trübsee-Titlis AG
SIX Exchange Regulation initiates an investigation against Bergbahnen Engelberg-Trübsee-Titlis AG on the grounds of possible breaches of the rules governing the disclosure of management transactions.

Toronto Stock Exchange, TSX Venture Exchange, Montreal Exchange and TMX Select Closed for Family Day

SIFMA Market Close Recommendation For Presidents’ Day Holiday In The US, UK And Japanese Markets

Direct Edge Trading Notice #12-08: Market Holiday Reminder – President’s Day

BM&FBOVESPA Announces Market Makers For Options On Stocks Of PDGR3, CSNA3 And CYRE3

Kansas City Board Of Trade: Presidents’ Day Trading Hours – Schedule For Days Surrounding The Presidents’ Day Holiday

Banks, Brokers & Dark Pools

Instinet Named Best Overall Broker-Dealer
Press Release
NEW YORK – February 13, 2012 – Instinet Incorporated, a global leader in electronic trading and agency-only brokerage services, today announced that its US brokerage subsidiary, Instinet, LLC, has been named “Best Overall Broker-Dealer” in Wall Street Letter’s Institutional Trading Awards. Voted on by a panel of independent judges, the WSL awards recognize excellence and innovation among providers to the institutional trading community.

Interdealer-brokers fight to be heard
Michelle Price – Financial News
Europe’s interdealer-broker community is squaring up for what is fast becoming a significant scrap over new rules that could determine the future of voice trading in Europe.

Leverage cap has the power to reshape banking
By Brooke Masters – Financial Times
In the real world, leverage means power over someone or something. In banking, it stands for the ability to support a wide variety of lending and investment activities using only a relatively small amount of capital.

Goldman Sachs Ends Hana Investment With $331 Million Sale
Goldman Sachs Group Inc. sold its entire 3.9 percent stake in Hana Financial Group Inc. for 372 billion won ($331 million), exiting its seven-year investment in the South Korean bank.

Top Goldman dealmaker to retire
Reuters via Yahoo! News
(Reuters) – Goldman Sachs Group said on Monday that George Mattson, a co-head of the firm’s global industrials group, will retire after an 18-year career at the investment bank. Mattson will be succeeded in that role by Dusty Philip, who was named co-head of mergers and acquisitions in the Americas last year, Goldman announced in a series of internal memos reviewed by Reuters.

Deutsche Bank Names Binky Chadha Chief Global Strategist and Hires David Bianco as Chief US Equity Strategist
Business Wire via Yahoo! Finance
Deutsche Bank today announced that Binky Chadha has been named Chief Global Strategist. In his new role, he reports to David Folkerts-Landau, Global Head of Research. In this newly created position, he will publish in-depth views on key issues across asset classes and regions and look at strategic and tactical opportunities.

Deutsche Bank Said to Settle Kirch Case for About $1 Billion
Deutsche Bank AG and the heirs of media entrepreneur Leo Kirch are close to settling a 10-year-old dispute for about 800 million euros ($1 billion), according to a person with direct knowledge of the negotiations.

Swedbank to Cut Costs as Profit Dips
STOCKHOLM—Swedish bank Swedbank AB Tuesday said it will focus on cost efficiency to tackle global economic uncertainty as it posted falling net profit from a year earlier.

State Street Global Markets Intends To Join LCH.Clearnet’s SwapClear Service
Press Release

Direct Edge Introduces EdgeBook Cloud, A New Historical Trade And Quote Data Service
Press Release

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.

Confusion Over Exchanges
By Ulrike Dauer – Dow Jones
Just a week after Brussels ruled that exchange-traded derivatives don’t compete with their over-the-counter cousins, lawmakers reached a ground-breaking pact that will mush them all together. Confused?

Renewed User Fee Proposal For CFTC Budget Boost
By Andrew Ackerman, Dow Jones Newswires
WASHINGTON — The Obama administration’s fiscal 2013 budget plan renews a user fee proposal on entities policed by the Commodity Futures Trading Commission as a way to boost the CFTC’s funding as it begins to oversee the $600 trillion over-the-counter derivatives market.

SEC drops Lonza-Arch insider trading case, for now
Jonathan Stempel | Reuters
(Reuters) – A U.S. market regulator is for now dropping insider trading cases against three Swiss asset managers, despite accusations that two of the defendants improperly thwarted its investigation, including by throwing out a BlackBerry.

NFA Comment Letters
Retail Commodity Transactions Under the Commodity Exchange Act RIN 3038-AD64

Institutional Investors Call On U.S. Securities And Exchange Commission To Implement Financial Market Reforms
Press Release

SIFMA Offers Ideas To Reorient Proposed Volcker Rule Regulations
Press Release

Chairman’s Letter, President’s Budget And Performance Plan For Fiscal Year 2013 – CFTC Chairman Gary Gensler
Press Release

Statement Of Dissent, FY 2013 President’s Budget And Performance Review – CFTC Commissioner Scott D. O’Malia
Press Release

Allen & Overy Submits Comments On Behalf Of Non-U.S. Banks Challenging Volcker Rule
Press Release

SIFMA Urges Rule 621 Framework Not Impair Recovery Of Securitization Markets
Press Release

“Heart Of The Matter: Resources” – Statement Of CFTC Commissioner Bart Chilton On The Administrations FY 2013 Budget
Press Release

[SEC] Proposed FY13 SEC Budget Information

Director Of L.A. Office Rosalind Tyson To Retire After 30 Years Of SEC Service
Press Release

ESMA Extends The Deadline For The Consultation On The Considerations Of Materiality In Financial Reporting
Press Release

[ASIC] Online searching unavailable Tuesday night, 14 February.

[ASIC] Self-managed super adviser faces criminal charges following ASIC investigation

Improving consumer and investor confidence: A speech by Peter Kell, Commissioner, ASIC, delivered to the Association of Superannuation Funds of Australia (ASFA) NSW February Luncheon Briefing, 14 February 2012

ASIC releases guidance on advertising

Investments – Indexes – Managed Futures – Managed Funds

SEC May Speed ETF Approvals
ETF Trends via Yahoo! Finance
The Securities and Exchange Commission may be getting closer to giving the green light to many exchange traded funds awaiting regulatory approval after recently hiring an attorney who previously worked for leveraged and inverse ETF provider ProShares , according to a report Monday.

Dow Jones Introduces News Analytics to Institutional Trading Community
Press Release
NEW YORK, Feb. 14, 2012 /PRNewswire/ — Dow Jones today introduced News Analytics, a series of product solutions to help traders, quantitative analysts and risk managers build better, more predictable trading models based on news sentiment. News sentiment analytics quantify the impact of market-moving news, in real time or coupled with historical news models.

Direxion Launches Managed Futures Strategy Mutual Fund Tied to Next Generation Index
BOSTON, Feb. 13, 2012 /PRNewswire/ — Direxion, a leader in alternative investment solutions, has expanded their lineup of “buy and hold” alternative strategies with the launch of the Direxion Indexed Managed Futures Strategy Fund (Ticker: DXMAX). The Fund gives investors a liquid, transparent, and cost-efficient way to invest in managed futures.

Secretive hedge fund legend to surface
CNN Money
FORTUNE — It’s a humbling time for Louis Moore Bacon. The 55-year-old founder of the $15 billion Moore Capital Management — and one of the premier hedge fund investors of the past two decades — just weathered his second down year in the past four after a particularly ragged run in the markets.

Van Eck Plans Momentum Commodities ETF
New York-based asset manager Van Eck Global filed paperwork with the U.S. Securities and Exchange Commission to bring to market a futures-based multicommodities fund that uses a momentum strategy

Semerci Quits Duet to Start Boutique EMEA Capital
PR Newswire
LONDON, Feb. 14, 2012 /PRNewswire/ — Former Merril Lynch Banker, Osman Semerci, has stepped down as chief executive of alternative asset manager Duet Group to launch EMEA Capital: A boutique financial advisory firm specializing in investment management and capital markets.

Northern Trust Strengthens Alternatives Group
Business Wire via Yahoo! Finance
Northern Trust announced key appointments today to the Northern Trust Alternatives Group, building its capabilities in hedge fund and private equity management for institutional and individual clients.

The Hartford Mutual Funds’ Board Approves Move Of 11 Fixed Income Funds To Sub-advisor Wellington Management
Business Wire via Yahoo! Finance
The Hartford Mutual Funds’ board of directors approved moving 11 of its fixed income funds to sub-advisor Wellington Management. The move is part of The Hartford’s previously announced strategy to accelerate growth in the mutual funds business.

Manulife Asset Management Tapped to Manage US$140 Million in Global Fixed Income for Kentucky Retirement Systems
PR Newswire via Yahoo! Finance

‘They’ Don’t Move the Market
Smart Money
Hoenig: The belief that savvy speculators can manipulate the markets is flawed. Investors should instead focus on how stocks are moving.

Robusta coffee wrongfoots speculators
By Emiko Terazono – Financial Times
Robusta coffee has risen more than 10 per cent over the past four trading days to a five-month high, leaving speculators who had bet the market would fall scrambling to cover bearish positions.

Technology News

SunGard Enhances Trading Execution Services with the Addition of its Fox River Technology
SunGard has enhanced its execution services with the addition of its Fox River Execution Solutions to help improve execution quality, minimize information leakage and decrease overall execution costs.

SunGard Launches Trade Approval Mobile Application for SGN Short-Term Cash Management Portal
SunGard has added a mobile trade authorization capability to the SunGard Global Network (SGN) Short-Term Cash Management portal.

Deutsche Boerse Developing New Business Area – All Data And IT-Related Activities Pooled Management Change In IT
Press Release

MIK Fund Solutions Experiences Record Annual Growth And Expands To The West Coast
Press Release

Futures Industry Association Goes Live with Association Anywhere, SaaS Association Management Software (AMS) from ACGI …
PRWeb via Yahoo! News
FIA’s New AMS Unlocks Value of Member Data, Helping Washington DC-Based Global Trade Organization Streamline Operations and Boost Member Satisfaction

Finland’s Sp-Fund Management Selects Charles River IMS to Support New In-House Asset Management Operations
Business Wire

OnX Announces Leadership Role in Technology Consortium Focused on Accelerating FIX Protocol Messaging for High Performance Trading
Business Wire via Yahoo! Finance

Reports Economic Calendar

USDA Today

CBOE Events Calendar

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.

Asia-Pacific News

Newedge Joins Hong Kong Mercantile Exchange As Latest Broking And Clearing Member – Membership Addition To Significantly Boost Exchange Liquidity
Press Release
The Hong Kong Mercantile Exchange (HKMEx) announces today a major milestone with the addition of Newedge, one of the world’s largest futures brokerages, to its roster of members.

Instinet Records Significant Asian Liquidity Growth in 2011
HONG KONG – February 14, 2012 – Instinet Incorporated, a global leader in electronic trading and agency-only brokerage services, today announced that the alternative liquidity pools operated by its brokerage subsidiaries in the Asia-Pacific region experienced considerable growth in 2011. Instinet’s BLX Hong Kong grew 591%, CBX Hong Kong more than 350% and CBX Japan nearly 225% throughout the year

Singapore Proposed Derivatives Rules Offer Flexibility Vs US, Europe Ones
Dow Jones
SINGAPORE (Dow Jones)–Singapore Monday proposed new rules for financial derivatives that, while somewhat less rigid than those put forth in the U.S. and Europe, will nonetheless impose a raft of new requirements on the banks that deal in more sophisticated financial products.

Chinese Regulator Reviewing E Fund’s Application for H-Share ETF
The China Securities Regulatory Commission is vetting an application from E Fund Management Co. to start the mainland’s first exchange-traded fund tracking the Hong Kong-listed shares of Chinese companies.

Osaka Securities Exchange: Operational Status Of The Derivatives Trading System
Press Release

HKEx Announces Market Makers, Margin Rates And Information Vendors’ Access Codes For HSI Volatility Index Futures
Press Release

HKEx Launches Founding Members Programme For Hosting Ecosystem At Next Generation Data Centre
Press Release

Monetary Authority Of Singapore Reviews Regulation Of The Derivatives Market In Singapore
Press Release

Frontier Markets

Kuwait central bank governor resigns
By Tom Gara in Abu Dhabi and Camilla Hall in London – Financial Times
Kuwait’s long-serving central bank governor resigned on Monday, ending his 25-year run at the lender with sharp criticism of what he said were “unprecedented” increases in government spending.

Notification 1: Bursa Malaysia’s Website Target Of Distributed Denial Of Service
Press Release

NASDAQ Dubai Monthly Trading Report: January 2012
Press Release

Miscellaneous News

Wall Street’s Reputation Still Falling
More than three years after the financial crisis, Wall Street banks are still in the doghouse. In a survey intended to track the reputations of leading companies, only 17 percent of respondents had a positive impression of the financial services industry, according to Harris Interactive, a consulting firm.

Where’s the Boss? He’s in a Meeting
What do chief executives do all day? It really is what it seems: They spend about a third of their work time in meetings. In one sample of 65 CEOs, executives spent roughly 18 hours of a 55-hour workweek in meetings, more than three hours on calls and five hours in business meals, on average.

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