John Lothian Newsletter: BATS Global Markets Plans Final Steps Toward $100M IPO; Greek Legal Maneuvers Raise Fears of Euro-Zone Debt Fallout; CFTC to Consider Post-MF Global Futures-Collateral Safeguards

Feb 23, 2012

BATS Global Markets hopes to launch its IPO sometime next month.  As Greece hurries to put debt-related laws into place, creditors of that nation worry about far-reaching consequences of that legislative effort.  The CFTC will next week consider ideas to safeguard customer funds in futures accounts better than telling MF Global, “Remember, it’s bad to use that money for yourselves.”  In the top box, Sarah Rudolph provides deep details about CFE’s new Radar Logic real estate index, and you’ll also find a list of the top topics currently being discussed on; add your own thoughts, if you haven’t already!

Observations – Statistics – Commentary

Boy Scout News
As many of you know, I regularly share stories with you about my adventures in Boy Scouting, as I have 2 sons in scouts and serve as a Scoutmaster of a local suburban troop.  Today I have a sad one.  Yesterday, my Assistant Scoutmaster Bill Griswold passed away after battling numerous maladies in recent days and years, including cancer and kidney failure.  

Bill was a dear friend and dedicated scout leader.  He had forgotten more about scouting and camping than I could ever hope to know.  He was a great companion on many campouts and a regular at summer camp.  I told him on Saturday when I saw him at the hospital that I would start a memorial scholarship fund in his name in order that boys in need would have help going to summer camp.  I could not think of a better way to honor my friend who had given so much of his time and knowledge to the boys and scouting in general.  He will be missed.


1099 MF Global Help
For those of you who might need some accounting help, with or without 1099s from MF Global, there are solutions. 

One would be to use a fund administration firm that handles the accounting for commodity pools and are familiar with how to produce the tax numbers that need to be filed.  One person and firm that contacted me and said they would be interested in offering their services is Thomas Pearson of Stonegate International Administration LLC.

He can be contacted at

If there are other firms offering this service, please let me know and I will share your information as well.


CBOE Futures Exchange Puts Real Estate on the Radar
By Sarah Rudolph – JLN

CBOE Futures Exchange (CFE) launched futures on the Radar Logic 25-Metropolitan Statistical Area (MSA) RPX Composite Index on Feb. 2. We wanted to learn more about the index and the futures contracts, so JLN Options Newsletter editor Sarah Rudolph sat down to talk with John Angelos, director, institutional marketing, credit derivatives, at the Chicago Board Options Exchange.

The credit crisis was disastrous for the market in mortgage-backed securities and spelled the end for over-the-counter mortgage-backed-security (MBS) derivatives that could help hedge those portfolios. Now the CBOE Futures Exchange (CFE) is aiming to give the MBS market a tool to mitigate risk through new real estate futures contracts.

CFE’s entrance into the space is a revival of sorts, using the Radar Logic RPX Composite Index (RPX), which tracks U.S. residential housing values and is one of several Radar Logic 28-Day Real Estate indexes on which CFE is planning to offer futures contracts. CFE’s contracts follow an over-the-counter version of the RPX index that had traded for four years, up until the credit crisis, when the securitization market dried up and OTC trading disappeared, creating a void. But mortgage-backed-security portfolios haven’t disappeared; they still exist all over the U.S., and MBS portfolio managers need a new way to hedge their exposure, according to John Angelos of the CBOE.

The idea evolved from portfolio managers who came to Michael Feder, the owner of Radar Logic, to help them find a way to fill that void by creating a tool to mitigate their risk. They introduced Feder to the CFE, which came up with a futures contract based on the Radar Logic cash Index. 

For the rest of this detailed article (and there is much more), visit the JLN Options website at


NFA’s Board of Directors elects Christopher Hehmeyer to serve as Chairman
The Board of Directors of National Futures Association (NFA) has elected Christopher K. Hehmeyer, Non-Executive Chairman at Penson GHCO, to serve a one-year term as Chairman. The Board also elected Paul J. Georgy, President of Allendale, Inc., to serve as Vice Chairman.

***** Congratulations to Chris and Paul.  I believe that this is the first time an IB has been selected as vice chairman.


NYSE Euronext names members of its Strategic Planning Committee for SMEs
Following the announcement in November 2011 of its commitment to stepping up efforts to serve SMEs, NYSE Euronext (NYX) today announced the immediate launch of its Strategic Planning Committee and named the new committee’s members.


Morgan Lewis Expands Existing Derivatives and Commodity Futures Platform with Addition of Leading Chicago-based Partner 
CHICAGO, February 6, 2012: Morgan Lewis today announced that Michael M. Philipp – who has practiced in the derivatives field for 20 years – has joined the firm as a partner in its Financial Services, Investment Management and Securities Industry practice, resident in Chicago.  Mr. Philipp’s deep knowledge of the listed and over-the-counter derivatives and commodity futures markets, his experience in working with regulators and SROs and his considerable skills handling regulatory issues both in the U.S. and abroad will be tremendous assets for the firm’s clients-especially as they navigate implementation of regulations spawned by the Dodd-Frank Act.  He brings a wealth of experience in this area that complements the firm’s Financial Services, Investment Management, Securities Enforcement, and Energy practices, among others.

*** This is a couple of weeks old, but I had missed this.  


SEC seems stymied by complexity of high-frequency trading
By David S. Hilzenrath – The Washington Post
Trying to get a handle on the impact of high-frequency trading, which is practiced by technologically turbocharged investors, illustrates how regulators are often hard-pressed to keep up with the financial industry, especially where technology is involved.


Beware the risks of the rush to regulate
By George Osborne and Jun Azumi – Financial Times
This week’s meeting of the Group of 20 leading economies confronts pressing challenges: tackling indebtedness; supporting growth, strengthening international and financial institutions to promote global stability; and reforming financial regulation. However, all countries need to be alert to the unintended consequences of financial reforms. Both our governments have expressed concerns about the “Volcker rule”.


From alpha to smart beta
The Economist
Dear investor,
In line with the rest of our industry we are making some changes to the language we use in our marketing and communications. We are writing this letter so we can explain these changes properly. Most importantly, Zilch Capital used to refer to itself as a “hedge fund” but 2008 made it embarrassingly clear we didn’t know how to hedge. At all. So like many others, we have embraced the title of “alternative asset manager”. It’s clunky but ambiguous enough to shield us from criticism next time around.


FuturesCrowd Ideas
The number one priority: make customers whole 

Delete Hypothecation & re-hypothecation clauses 

Create a Futures Insurance Securities Corporation 

Regulator Employment Policy Change 

FCM Auditor Employment Policy Change 

Gross Margins v. Net 

License Treasurers and Controllers 

The Futures Industry Should Create a Futures Version of OIC 

CME risk controls. 

Create a Task Force Modeled on Sen. Pat Roberts Recommendation 

Segregated Funds Daily Reportable Data File 

Adopt a SIPC Like Program for Smaller End User Customers/Hedgers 

Know Your Business 

CME Group Should Spin off CME’s SRO 

Separation of Structure 

Create an Opt In Futures Account Insurance Fund 

Make Mandatory Ability of IBs to Bulk Transfer Accounts Out 

Impacted MF Global Clients Should Have Exchange Fees Waived 

All margins held by Exchages in U S Treasury Securities with Fed 

Putting Futures in the Name of the Customer 

A Central Customer Funds Repository 

Firms should not be registerd as broker-dealers & FCMs 


MarketsWiki Page of the Day
Christopher K. Hehmeyer


MarketsWiki Recent Updates


Bluford PutnamChristian MartinAlex LambChristopher K. Hehmeyer

Companies, Organizations and Groups

TeraExchangePhiladelphia Federal Reserve BankTwoFourFIA Principal Traders GroupSix Swiss Exchange


S&P/Case-Shiller Home Price Index


Five Minutes With Bluford PutnamDark poolNaked access


19,762,761 pages viewed, 6,706 articles, 137,330 edits
MarketsWiki Statistics

Lead Stories

BATS Global Markets Plans Final Steps Toward $100M IPO
By Jacob Bunge and Lynn Cowan Of DOW JONES NEWSWIRES 
BATS Global Markets may launch its long-planned initial public offering by the end of March in what would be the first U.S. flotation in almost four years launched on an exchange not run by NYSE Euronext (NYX) or Nasdaq OMX Group Inc. (NDAQ).

Greek Legal Maneuvers Raise Fears of Euro-Zone Debt Fallout
Matina Stevis and Katy Burne – Dow Jones
As Greece strives to restructure E207 billion worth of privately held debt, an urgent piece of legislation aimed at expediting the bond swap has left creditors — and their lawyers — anxious over its potentially far-reaching implications.

CFTC to Consider Post-MF Global Futures-Collateral Safeguards
By Silla Brush – Bloomberg
The U.S. Commodity Futures Trading Commission will hold a roundtable next week to consider steps to safeguard collateral — including a plan to insulate futures clients’ funds during a broker default — following the collapse of MF Global Holdings Ltd. (MFGLQ), according to two people briefed on the agenda.

Investigators Probe a Rush at MF Global to Move Cash
CHICAGO—Investigators probing the collapse of MF Global Holdings Ltd. are scrutinizing two money transfers made during the securities firm’s final days in an effort to uncover what happened to $1.6 billion in missing customer funds.

Fitch Cuts Greek Rating, Says Debt Exchange Equals Default
Day after latest bailout, ratings agency slashes Greece to one notch above default.

EU summit draft a damning critique of own growth goals
AFP via Yahoo! News
European Union leaders are set to issue a damning critique of their own flagship policy for economic growth, draft conclusions for a March 1-2 summit seen by AFP Wednesday show.

Germany fights eurozone firewall moves
By Quentin Peel and Gerrit Wiesmann in Berlin, and Peter Spiegel in Brussels – Financial Times
The German government is set to resist or delay increasing the size of the eurozone’s financial “firewall” against contagion from the Greek debt crisis, in the face of mounting pressure from its partners, the International Monetary Fund and the US administration.

Environmental Trading News

EEX Carries Out Third Dutch Primary Market Auction
Press Release
Today, the European Energy Exchange (EEX) carried out the third primary market auction of European emission allowances (EUA) for the Netherlands.

ICE makes UK carbon platform bid
Financial Times
Three of the world’s largest exchanges are among those bidding to win the contract to auction Britain’s emissions trading allowances, after IntercontinentalExchange on Monday confirmed it had submitted a tender. 

**JK – Okay, who here really thinks Bluenext will win the bidding?

Bunge Buys Climate Change Capital After Carbon Prices Plunge
Bunge Ltd. (BG), the world’s second- largest oilseed processor, won approval to acquire Climate Change Capital, a London fund manager that manages the world’s largest private-sector carbon fund, after C02 prices slumped to a record.

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

LME Set to Delay New Fees System
LONDON—The London Metal Exchange is expected to delay a plan to increase its fees by several months following opposition from several members, people familiar with the matter said Wednesday.

LME Fees an Untimely Distraction
By Andrea Hotter – WSJ
Today’s meeting of the London Metal Exchange board is likely to be a lively affair. On the agenda for discussion by the LME’s 12 board members are the bids received to buy the exchange–the largest of its kind globally for metals trading–and a proposal to increase fees that has caused uproar among several of its members. The two issues aren’t actually linked, although the exchange has been accused of seeking the fee hike in order to drive revenues higher and attract a better valuation during the bidding process.

CME Group Seeks To Tie Executive Pay More Closely To Performance
CME Group Inc. (CME) on Wednesday outlined plans to tie executive pay more closely to performance amid a range of efforts intended to make the world’s largest futures exchange company more shareholder-friendly.

Prospect of LME’s sale puts focus on clearing
By Jack Farchy and Jeremy Grant – Financial Times
When the London Metal Exchange saidlast autumn that it would consider a sale, the move kindled talk of booming investor interest in commodities and the metals price “super-cycle”. But much of the interest in the 135-year-old member-owned exchange is thanks to an altogether more prosaic boom – in the clearing industry.

LMEswaps Volumes Strong In First Month Of Trading
Press Release
The London Metal Exchange (LME) announces encouraging volumes in LMEswaps trading since launching the contracts on 23 January 2012. A total of 2,400 lots traded, of which 2,368 were in aluminium, 30 in copper and two in nickel.

Valuing the London Metal Exchange
By Jack Farchy – Financial Times
What price the London Metal Exchange? With the 135-year-old exchange’s board meeting on Thursday to judge the first round bids, that will be the question on everyone’s mind – particularly the shareholders of CME Group, ICE, NYSE Euronext and the other four or so companies that are bidding.

Record Open Interest In LME Cobalt Marks Two-Year Anniversary Of Minor Metals Contracts
Press Release

EX/ECC: OTC Clearing Service for NBP Natural Gas Futures starts with a Fee Holiday
Press Release
The European Energy Exchange (EEX) will launch OTC clearing for natural gas transactions concluded on the British National Balancing Point (NBP) from 29 February 2012. Both clearing and settlement of the OTC transactions including physical settlement will be provided by the European Commodity Clearing AG (ECC).

Natural Gas Exchange Continues U.S. Expansion by Adding Physical Clearing at Three New Locations

BM&FBOVESPA Publishes Annual Report Containing Financial And Sustainability Results
Press Release

BM&FBOVESPA Exchange Visits
Press Release

Direct Edge Market Data Notice #12-02: Market Data Fees
Press Release

Banks, Brokers & Dark Pools

Goldman Hedge-Fund Group Chief C. Howard Wietschner Retires After 18 Years
Goldman Sachs Group Inc.’s (GS) hedge- fund industry group chief, C. Howard Wietschner, is retiring after 18 years at the New York-based securities firm.

HSBC to Withdraw From Japan Consumer Banking, Close Branches
HSBC Holdings Plc, Europe’s largest bank, will withdraw from consumer banking in Japan, closing down six branches four years after starting the business.

Royal Bank of Scotland losses widen on writedowns
Associated Press
U.K. lender Royal Bank of Scotland saw its loss in 2011 swell by 78 percent as it booked large provisions for Greek debt and compensation for customers missold payment protection insurance.

Royal Bank of Scotland CEO Stephen Hester Interviewed on 2011 Annual Results
PR Newswire via Yahoo! Finance

Natixis says to reduce commodities market business
By Christian Plumb and Eric Onstad – Reuters
French investment bank Natixis plans to “significantly reduce” its commodities market activities, its chief executive said on Monday, as it scales back exposure to less profitable activities.

Credit Agricole Suffers Net Loss On Greece, Restructuring
FOX Business
Credit Agricole SA (ACA.FR) said Thursday that provisions against bad loans at its Greek business and restructuring costs in the fourth quarter drove it to its heaviest net loss since it went public a decade ago.

Appointments Within Societe Generale Corporate & Investment Banking
PR Newswire
Societe Generale Corporate & Investment Banking announces the appointment of Diony Lebot as Chief Executive Officer for Western Europe. In this position, she replaces Pascal Auge who joined Global Transaction & Payment Services at the end of 2011.

Middle Class Getting Pushed Out of Banking: Whitney
Excessive regulation of financial institutions is squeezing out middle-class consumers who soon will find themselves locked out of the banking system, analyst Meredith Whitney said Wednesday.

PFGBEST and OptionVue Team Up to Present Futures Options Software, Data, Technical Support, and Charts with Analytical Capabilities for Traders on the BESTDirect Trading Platform
Business Wire

TradeStation Releases Powerful New Portfolio-Level Back-Testing Tool

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.

CFTC Poised to Re-Propose Dodd-Frank Block Trade Regulation
By Silla Brush – Bloomberg
The U.S. Commodity Futures Trading Commission is poised to re-propose Dodd-Frank Act regulations that would determine when swaps are big enough that their price and size don’t need to be reported immediately to the public.

Bank Lobby Widened Volcker Rule Before Inciting Foreign Outrage
By Yalman Onaran – Bloomberg
U.S. banks pushed regulators to widen proposed restrictions on trading and hedge-fund ownership by foreign firms, then encouraged governments around the world to complain about the rule’s reach.

Financial Services Legislative And Regulatory Update — February 21, 2012
Mintz Levin – JD Supra
Two major events bookended this past week, which although not connected, provide a prism to view Congress and Washington, DC through in 2012.

Don’t Bet Your Money on Mary Schapiro
Steve Forbes
Chairman Mary Schapiro of the Securities & Exchange Commission is proposing two money market fund reforms to prevent another disaster like that which almost destroyed the industry in 2008.

The Trade: The Volcker Rule, Made Bloated and Weak
Bank lobbyists could not kill the Volcker Rule, so they got Congress and regulators to render it hopelessly vague and complex.

CFTC – Proposed rule for banks and nonbank financial companies restricting proprietary trading and relationships with hedge funds and other covered funds.
St Louis Federal Reserve

CFTC Orders New York Firm D.E. Shaw & Co. L.P. to Pay $140,000 Penalty for Violating Soybean and Corn Futures Speculative Position Limits
The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against commodity pool operator D.E. Shaw & Co. L.P., of New York. N.Y., for exceeding speculative position limits in soybean and corn futures contracts in trading on the Chicago Mercantile Exchange.

SEC Charges China-Based Executives with Securities Fraud
The Securities and Exchange Commission today charged two China-based executives with defrauding investors into believing they were investing in a Chinese coal business when in fact they were investing in an empty shell company.

ESMA Launches A Consultation On Key Concepts Of The Alternative Investment Fund Managers Directive And Types Of AIFM
Press Release

Commissioner Barnier Appoints Members Of A High-Level Expert Group On Possible Reforms To The Structure Of The EU Banking Sector
Press Release

Council Of The European Union – Short Selling: More Transparency And Stricter Rules
Press Release

Regulatory Update 2012: Insights From The Australian Securities And Investments Commission
Press Release

Publication Of A List Of Prospectuses And Supplements On ESMA’s Website
Press Release

Canadian Securities Regulators’ 2011 Enforcement Report highlights proactive measures to protect investors

[AMF] Financial Regulation Newsletter No 5 – February 2012

Investments – Indexes – Managed Futures – Managed Funds

Hedge Funds Take Another Look at Greek Debt
LONDON — Twice burned, once shy? Maybe not for hedge funds looking to make money in Greek bonds.

[Video] Chanos, Zimmerman on Hedge Fund History
Feb. 22 (Bloomberg) — Jim Chanos, founder of Kynikos Associates Ltd., Jamie Zimmerman, chief executive officer of Litespeed Management LLC, Michael Novogratz, principal at Fortress Investment Group LLC, and Steve Kuhn, head of fixed income trading at Pine River Capital Management LP, discuss the history of the hedge fund industry and government regulation.

Morgan Stanley Investment Management Raises Over $450 Million For Opportunistic Mortgage Income Strategy
Press Release
Morgan Stanley Investment Management (MSIM) announced today that the Morgan Stanley Opportunistic Mortgage Income Fund LP, a fund dedicated to investments in mortgage-related securities, held its final close with over $450 million in capital commitments.

Watkins Joins Sucden Financial’s Softs Commodities Team
Business Wire via Yahoo! Finance
Sucden Financial one of the UK’s leading commodities and futures trading firms, today announced that Kevin Watkins has joined its Softs Commodities Desk. He brings over 25 years commodities trading experience, coupled with an extensive exposure to a broad international client base.

Jim Rogers ‘talking his book’, but his ETF no chart topper
Legendary investor Jim Rogers is legendarily short on equities and long on commodities, and the Rogers International Commodity Index is the embodiment of his ideas. Unfortunately, the Rogers International Agriculture Commodity ETF doesn’t quite live up to its billing.

Euro denominated oil hits record
By Jack Farchy, Emiko Terazono and Javier Blas – Financial Times
Oil prices soared to a record high in euro terms, surpassing the peak touched in the 2008 price spike and posing a fresh problem for eurozone economies already struggling under the weight of the region’s debt crisis.

Goldman sees value in alternative asset managers
International Business Times
Goldman Sachs said fundraising across alternative asset classes, particularly credit and real estate, remains robust in a low-rate, low-risk world, and sees more value in the stocks of asset managers that have a diverse mix.

High Frequency Trading in the US Industry Market Research Report Now Available from IBISWorld
Industry research firm IBISWorld has added a report on the High Frequency Trading industry to its growing industry report collection.

Eaton Vance Corp. Report for the Three Months Ended January 31, 2012
PR Newswire

DTCC Releases Report On January Annuity Product Activity
Press Release

Technology News

Öhman Capital secures its competitive position by selecting Orc as trading technology provider
Press Release
Orc Group AB, a leading provider of technology and services for the global financial industry, today announced that Öhman Capital, a Stockholm-based investment and trading firm, has chosen Orc as its preferred trading technology supplier.

SunGard/PRMIA Survey Identifies Ten Buy-Side Market Risk Trends for 2012
Regulation, transparency and organizational change will be key concerns for risk managers in buy-side institutions during 2012, according to a survey by SunGard and the Professional Risk Managers’ International Association (PRMIA).

Banks, Hedge Funds and Corporates Vote SuperDerivatives Top for FX Pricing and Analytics
Press Release
SuperDerivatives (SD), the derivatives benchmark and multi-asset front office solution, has been voted as the best provider of FX pricing and analytics by clients on the buy- and sell-side in an annual ranking of technology vendors, carried out by Risk Magazine.

Traiana Extends Harmony CreditLink To FX Options – Digital Vega First Trading Platform On The Service With Support Of FX Prime Brokers Citigroup And Morgan Stanley
Press Release

KVH To Launch First 10 Gigabit Ethernet Leased Line Encryption Service In Japan
Press Release

Standard & Poor’s Announces Changes In The S&P/TSX Canadian Indices

Media News

Google Allows ‘Do-Not-Track’ Button in Browser to Protect Consumer Data
By Amy Thomson and Jonathan Browning – Bloomberg
Google Inc. (GOOG) will allow a “do-not- track” button to be embedded in its Web browser, letting users restrict the amount of data that can be collected about them.

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

Shanghai bourse readies for Hong Kong ETF launch
Market Watch
The Shanghai Stock Exchange has finished preparations for launching a cross-border exchange-traded fund, the Shanghai Financial Services Office says. The office didn’t give a date for the launch in a statement posted on its website Wednesday.

Hong Kong Securities Watchdog Wins Tiger Asia Court Appeal on Power to Sue
Hong Kong’s Securities and Futures Commission won its appeal against a ruling that it can’t independently seek civil remedies from hedge fund Tiger Asia Management LLC.

Vietnam Outperforms, Time to Re-Invest?
Wall Street Journal Blogs
Vietnams stock market is one of the best-performing frontier markets in the world this year, up 23% year-to-date.

[FSA] Policy Statement by Shozaburo Jimi, Minister of State for Financial Services, at the Committee on Financial Affairs of the House of Representatives

HKFE Announces Revised Margins For Foxconn International Holdings Futures
Press Release

SGX-ST Offers To Review New Information By Former Independent Director Of China Sky
Press Release

Frontier Markets

Dubai And TheCityUK Signs Partnership Agreement To Boost Collaboration Between Financial Centres
Press Release

Miscellaneous News

How a life expectancy of 100 would change U.S. spending and saving behaviors
By Tess Stynes – Market Watch
The majority of Americans would increase the length of their careers and change investment habits, as well as cut back on some discretionary spending, if they knew they would live to be 100, according to a report from Merrill Lynch.

John Lothian Newsletter

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