John Lothian Newsletter: ICE CEO Calls For Change In Stock-Market Practices; Exchange-traded Derivatives On U.S. Treasuries On The Way; Commodities brokers launch gas benchmarks

Feb 7, 2013

ICE’s Jeff Sprecher thinks there are a lot of dumb things going on in stock trading, and figures that the acquisition of NYSE Euronext might be a way to advocate straightening some of it out. Nasdaq and BNY Mellon set up to debut options trading on US Treasuries. Commodity brokers in Europe launch a set of natural gas price benchmarks based on actual trading rather than market estimates.

First Read

CME to begin hiring again
Shanny Basar in New York – Financial News
The CME Group has ended an 18-month hiring freeze as it looks to bolster its compliance expertise and readies itself for the launch of its new London-based derivatives exchange.
jlne.ws/TOTKtT

***** Looking for more Bobby’s are we?

++++

Commodity hedge funds lose 20% of assets
By Gregory Meyer in New York and Jack Farchy and Javier Blas in London – FT.com
Commodities hedge funds surrendered at least 20 per cent of their assets last year after investors pulled out large sums following the sector’s worst annual performance in more than a decade, according to fund managers and investors.
jlne.ws/TOTKtZ

***** Reward and Punishment at work.

++++

Spot Trading Elevates Merrilees To Chairman, Brodsky To CEO, McInerney To CFO
Spot Trading LLC, a leading Chicago-based proprietary trading firm, announced today that company founder and Chief Executive Officer Robert D. Merrilees will take on the newly established role of Chairman. The firm has appointed Stephen A. Brodsky as CEO. Brodsky most recently served as the firm’s Chief Financial Officer (CFO). Robin McInerney, currently Finance Director, Controller, will assume the CFO position. The changes will become effective on April 1.
jlne.ws/V0FD4d

***** Merrilees gets the top Spot? Brodsky is under the Spot-light? John needs to stop with the puns?

++++

NASDAQ OMX Risk Management and OTC Clearing Technology Now Powering KDPW_CCP
The NASDAQ OMX Group, Inc., the inventor of the electronic exchange and the world’s largest exchange company, today announced that its OTC clearing and risk management solution, Sentinel, is now live on KDPW_CCP’s OTC post-trade platform. The NASDAQ OMX technology supports the Polish clearing house and CCP’s (central counterparty) trade lifecycle and risk management requirements for clearing of OTC traded instruments.
jlne.ws/YVY25E

***** NASDAQ OMX has some cool risk management tools.

++++

Face It Already: There Is No Commodity Equivalent To The S&P 500
Optionshop
There was just a great article by Ianthe Jeanne Dugan in the Wall Street Journal (“Pension Funds Cut Back On Commodity Indexes“), shining a spotlight on big institutional investors who are now pulling out of commodity indexes. To this we at Optionshop say: “Finally!”
jlne.ws/XOtU7l

***** Optionshop CEO Bob Fitzsimmons takes on the issue of long only commodity index investing.

++++

New Restoring Customer Confidence Video
The tenth video in our Restoring Customer Confidence series deals with insurance 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»
Protection Fund: Slip it to SIPC

Protection Fund: Slip it to SIPC
MarketsWiki.tv

If there is one solution to restoring customer confidence in futures that has been talked about more than any other, it would be the creation of a customer or insurance fund. Securities customers have the Securities Investor Protection Corporation (SIPC), so why can’t futures customers use SIPC as well? That’s the idea from Neal Wolkoff, Of Counsel at the law firm of Richardson & Patel and longtime exchange executive, who argues that not only does it make rational sense, but using SIPC could be the easiest and most cost effective way to protect futures customers. This approach differs from others who have touted some type of insurance protection fund just for the futures industry.

Watch the video »

Also see — Protection Fund: Building a Better Piggy Bank

This video is sponsored by:
Trading Technologies

+++++

About the Restoring Customer Confidence video series
In the aftermath of the MF Global collapse, fraud at Peregrine Financial Group and high profile high-frequency trading shocks, John Lothian News asks – how do you restore customer confidence and bring traders back? Previous videos:

Visit the video series page on MarketsWiki.tv over the next several weeks for new ideas and solutions.

**** Neal Wolkoff makes a good point about the value of enlarging SIPC to include futures rather than start a new customer protection fund.

++++

The Trade: Time to Revive the Financial Transaction Tax
New York Times
A financial transactions tax would take a 3-cent nip out of every $100 traded, and raise billions. The burden of proof is on opponents to explain how so slender a tax could harm the capital markets.
jlne.ws/TOTKub

****** And every time this gets proposed, the industry does explain it.

++++

ICAP promises action if rate-rigging found
Philip Stafford – FT.com
ICAP said on Thursday it would take action against employees found to be involved in Libor rate-rigging as the interdealer broker is investigated by UK authorities over its involvement in the scandal.
jlne.ws/TOTNpK

****** No pikes please.

++++

Nasdaq in talks on botched Facebook debut
Arash Massoudi and Kara Scannell in New York – FT.com
Nasdaq OMX is in early-stage talks with US regulators over a potential settlement stemming from the exchange operator’s botched handling of the Facebook public offering, people close to the situation said.
jlne.ws/TOTNGc

****** Where is my like button?

++++

Why the EU’s rejection of EMIR is an explicit endorsement of Dodd-Frank
Daniel Parker – FOW
The EU rejection of EMIR on February 5, 2013 is specifically directed at non-financial companies, such as airlines, agriculture firms and other corporates that use derivatives to hedge against commercial activities. The ruling likely provides much-deserved relief to non-financial hedgers by modifying, reducing or potentially eliminating a threshold-based clearing obligation.
jlne.ws/TOTNGk

***** Stay tuned here.

++++

The Things Traders Say, R.B.S. Edition
By DEALBOOK – NYTimes.com
It has almost become cliché at this point. As part of major financial cases, authorities release a flurry of incriminating e-mails, telephone conversations and instant messages that depict questionable behavior.
jlne.ws/TOTNWE

****** I love regulatory cherry-picking.

++++

MarketsWiki

MarketsWiki Page of the Day
Julian Harding
jlne.ws/UYnCDF

MarketsWiki Recent Updates

People

Julian Harding; David Field

Companies, Organizations and Groups

Rule Financial; CME Group, Inc.; Eris Exchange; The DRW Trading Group

Statistics

34,492,221 pages viewed, 7,367 articles, 153,138 edits
MarketsWiki Statistics

Lead Stories

UPDATE: ICE CEO Calls For Change In Stock-Market Practices
Jacob Bunge and Saabira Chaudhuri – WSJ.com
The top executive of IntercontinentalExchange Inc. (ICE) aims to use the “pulpit” of the New York Stock Exchange to push for fundamental changes in the way stock markets work, he said Wednesday. ICE Chief Executive Jeffrey Sprecher, who struck a deal to buy NYSE Euronext (NYX) in December, lashed out at business practices among securities exchanges that he called “patently absurd” and “destructive” to long-term investors.
jlne.ws/TOTLOt

Exchange-traded Derivatives On U.S. Treasuries On The Way
Forbes
Fixed-income investors with the stomach for placing interest rate bets will have a new source thanks to the NASDAQ OMX and Bank of New York Mellon. They announced plans this morning to allow investors to trade put and call options on U.S. Treasury Securities on the NASDAQ OMX exchange.
jlne.ws/TOTLOv

Commodities brokers launch gas benchmarks
Javier Blas in London – FT.com
The largest commodities brokers in Europe have ventured into the territory of the price reporting agencies, launching a set of natural gas price benchmarks that will rely on actual transactions rather than assessments.
jlne.ws/TOTLOx

Merkel Cabinet Backs Jail Terms for Rule-Flouting Bank Managers
Bloomberg
German Chancellor Angela Merkel’s Cabinet approved a bill that would force some large retail banks to spin off proprietary trading and introduce jail terms for managers who wilfully violate compliance rules.
jlne.ws/TOTNWR

JPMorgan Hid Reports of Defective Loans Before Sales
Bloomberg
JPMorgan Chase & Co. overrode an independent analysis of home loan portfolios by buying and selling defective loans to create a sanitized version of the pool, which was then securitized and sold, a court was told.
jlne.ws/TOTLOG

Italian Bank Was Aided by Covert Loan
GIOVANNI LEGORANO And ALESSANDRA GALLONI – WSJ.com
MILAN—Monte dei Paschi di Siena SpA, the 541-year-old Italian bank at the center of a burgeoning financial scandal, was so strapped for cash in late 2011 that it negotiated a covert loan of nearly E2 billion ($2.7 billion) from the Bank of Italy even as executives were publicly describing the lender’s funding position as comfortable, according to the Bank of Italy and people familiar with the deal.
jlne.ws/TOTOd8

John Hourican: An RBS timeline
Richard Partington – Financial News
Once described as the most senior investment banker you had probably never heard of by Financial News, John Hourican signs off at RBS with a reputation for having gradually repaired its investment bank.
jlne.ws/TOTM54

Regulatory

Ex-Amaranth Trader, CFTC Unite to Ask Court to Toss Fine
Bloomberg
A former natural-gas trader at Amaranth Advisors LLC, backed by the U.S. Commodity Futures Trading Commission, will ask a federal appeals court to overturn a $30 million fine imposed by another regulator over alleged manipulation of the gas-futures market.
jlne.ws/TOTOdg

Saudi Hires World Bank Executive to Head Market Regulator
Zahra Hankir & Deema Almashabi – Bloomberg
Saudi Arabia replaced the head of its stock market regulator with a World Bank executive amid speculation the kingdom, home to the largest Arab bourse, will move toward opening its equities market to foreign investors.
jlne.ws/TOTOdj

Introductory Remarks At The SEC’s Roundtable On Decimalization By James R. Burns, Deputy Director, Division Of Trading And Markets
jlne.ws/TOTOtD

Comments on CFTC’s Further Proposed Guidance Regarding Compliance With Certain Swap Regulations
jlne.ws/TOTOtI

Exchanges & Trading Facilities

International Securities Exchange And IndexIQ Announce Broad Partnership To Develop And Launch Innovative Exchange-Traded Products
The International Securities Exchange (ISE), a leading U.S. options exchange, and IndexIQ, a leading asset management firm, announced today their partnership agreement to support and promote new exchange traded products (ETPs) focusing on physical commodities.
jlne.ws/TOTOtO

NASDAQ OMX To Introduce Derivatives Trading On U.S. Treasuries
Press Release
The NASDAQ OMX Group, Inc., the world’s largest exchange group, in cooperation with BNY Mellon, the global leader in investment management and investment services, today announced plans to introduce options trading on U.S. Treasury Securities at NASDAQ OMX PHLX
jlne.ws/TOTOtT

February 2013 InBOX
This is the February issue of InBOX, your news source from inside the BOX Options Exchange. This monthly publication will provide convenient summaries of recent developments at BOX.
jlne.ws/TOTMlL

TMX Group Limited Reports Results for the Fourth Quarter 2012
jlne.ws/TOTOKc

BM&FBOVESPA announces January 2013 market performance
jlne.ws/TOTOKf

CBOE Holdings Declares First Quarter 2013 Dividend
CBOE Holdings, Inc. announced today that its Board of Directors has declared a quarterly cash dividend of $0.15 per share of common stock payable on March 22, 2013, to stockholders of record at the close of business on March 1, 2013.
jlne.ws/TOTOKk

NZX Equity Derivatives Update
jlne.ws/TOTOKn

Hedge Funds & Managed Futures

Currency Hedge Fund Index Races Higher in January
Wall Street Journal Blogs
An index of currency focused hedge funds had its biggest gain in January since April 2011, marking a turnaround for foreign exchange investors who have struggled through much of the post-crisis era.
jlne.ws/TOTP0E

Hedge Funds Rose 0.9% Last Month on U.S. Budget Agreement
Bloomberg
Hedge funds climbed 0.9 percent last month, posting their best gain since September while trailing global equities, as markets rallied in the wake of a U.S. budget agreement and correlation between stocks diminished.
jlne.ws/TOTMSF

Citigroup Names $6.8 Billion Fund-Unit Spinout Napier Park
Bloomberg
Citigroup Inc., the third-biggest U.S. bank, renamed an internal hedge-fund unit Napier Park Global Capital as it spins out the business with about $6.8 billion in holdings under management.
jlne.ws/TOTP0L

Pension fund investors publish exec pay manifesto
Mark Cobley – Financial News
The UK’s biggest pension-fund investors have called for company executives paid in shares to be obliged to hold onto them for at least 10 years; the most eye-catching of a new set of principles on boardroom pay published this morning.
jlne.ws/TOTN92

Banks & Brokers

JPMorgan Overtakes Wells Fargo as Most Valuable U.S. Bank
Bloomberg
JPMorgan Chase & Co., the biggest U.S. bank by assets, reclaimed the No. 1 title by market value as the impact of last year’s wrong-way bet on derivatives fades and investors wager on an investment-banking rebound.
jlne.ws/TOTN99

ICAP, Marex Spectron and Tullett Prebon Launch Tankard
The leading interdealer brokers in the European energy markets, ICAP, Marex Spectron, and Tullett Prebon, today launch ‘Tankard,’ a series of trade-backed natural gas indices for UK and European hubs.
jlne.ws/TOTPhe

ICAP plc Interim Management Statement – 2013
ICAP plc, the world’s leading interdealer broker and provider of post trade risk and information services, today issues its Interim Management Statement for the period from 1 October 2012 to 6 February 2013 and the outlook for ICAP’s financial year ending 31 March 2013.
jlne.ws/TOTPhk

Ireland to Liquidate Anglo Irish Bank
MARK SCOTT – NYTimes.com
LONDON – The Irish government passed emergency legislation on Thursday to liquidate Anglo Irish Bank, one of the country’s largest financial institutions.
jlne.ws/TOTPht

Monte Paschi CEO says sees no more derivatives losses
Reuters via Yahoo! Finance
Banca Monte dei Paschi di Siena Chief Executive Fabrizio Viola said on Thursday the bank sees no more derivatives losses beyond the 730 million euros disclosed late Wednesday.
jlne.ws/TOTQ4M

Cavalier RBS traders move “the entire fixing, hahaha”
Reuters via Yahoo! News
LONDON – Royal Bank of Scotland traders laughed and counted their profits as they rigged Libor interest rates and dubbed the London market a cartel, according to conversations published by regulators on Wednesday.
jlne.ws/TOTQ4U

Deutsche Bank Said to Suspend Five Traders in Rates Probe
Bloomberg
Deutsche Bank AG, Europe’s biggest bank by assets, suspended five traders in Frankfurt amid an internal probe into alleged attempts to rig interbank lending rates, according to a person familiar with the matter.
jlne.ws/TOTPxN

JPMorgan Chase investment bankers were paid 3 percent less in 2012
Denver Post
JPMorgan Chase paid investment bankers and traders about 3 percent less in 2012 as shaky economies in the U.S. and Europe put a damper on deals, said two people with knowledge of the firm’s compensation.
jlne.ws/TOTPxO

HSBC’s global spread left it open to crime: CEO
Reuters via Yahoo! News
LONDON – HSBC was forced into its biggest restructuring in almost 150 years because the bank’s complex structure and wide geographical spread had made it attractive to criminals, its chief executive said. “Our structure was not fit for purpose for a modern world,” Stuart Gulliver told lawmakers on a British banking inquiry on Wednesday.
jlne.ws/TOTQlq

Barclays Said to Dismiss Traders Amid 275 Job Cuts in Manhattan
Bloomberg
Barclays Plc, the U.K.’s second- largest lender by assets, dismissed trading-division employees this week as it notified regulators its investment bank is cutting 275 jobs in New York City.
jlne.ws/TOTPOc

Videos: Lloyd Blankfein Interviewed by Media Following Meeting at the White House
jlne.ws/TOTQBN

Video: Gary Cohn interview with Bloomberg TV in Hong Kong
jlne.ws/TOTQBS

Clearing & Settlement

Two of the largest European investment managers join EurexOTC Clear for client clearing
Two of the largest European investment managers, Insight Investment Management (Global) Limited in London and OFI Asset Management in Paris, have successfully begun client-clearing services of the EurexOTC Clear for Interest Rate Swaps (IRS).
jlne.ws/TOTQC0

First hedge fund joins EurexOTC Clear for client clearing
The European hedge fund Whard Stewart Master Fund has joined the client-clearing services of the new EurexOTC Clear for Interest Rate Swaps (IRS). J.P. Morgan, one of the largest clearing service providers for listed and OTC derivatives globally, acted as clearing member in respect of initial transactions for Whard Stewart, which was on-boarded as a Registered Customer. The clearing of initial client transactions well ahead of the start of the clearing obligation in Europe demonstrates the advanced readiness of J.P. Morgan and its client Whard Stewart.
jlne.ws/TOTPOu

Effectiveness of new collateral forum questioned
Risk.net
Post-trade services provider Euroclear has questioned the effectiveness of a new forum meant to find solutions to help address an expected shortfall in high-quality liquid assets. The group, called Liquidity Alliance, was launched last month, and includes the Australian Securities Exchange, Brazil’s Cetip, Frankfurt and Luxembourg-headquartered Clearstream, Spain’s Iberclear and Strate in South Africa.
jlne.ws/TOTQSq

CME Group Clearing Advisory: FIXML Trade Register Additions/Changes – Cash Adjustments
jlne.ws/TOTSKa

Indexes & Products

BlackRock’s ETP Landscape January 2013 – Record-Breaking ETP Flows In January
jlne.ws/TOTT0q

ETFs And ETPs Listed In The United States Reach A New All-Time High Of $1.42 Trillion At The End Of January
jlne.ws/TOTR8V

ETFs And ETPs Reach A New All-Time High Of $2.05 Trillion At The End Of January 2013 Driven By Significant Net Inflows Into Equities And Strong Equity Market Gains
jlne.ws/TOTT0B

Technology

SuperDerivatives – Alfa Capital deploys SuperDerivatives to supercharge structured products offering
Alfa Capital, one of the leading Russian asset management companies, has selected SDX, the real-time cross-asset front office system from SuperDerivatives, to drive its structured products offering.
jlne.ws/TOTR90

Webinar: RTD Tango QUANT – Trading Solution for Complex Quantitative Challenges
RTS Realtime Systems
Join us for an interactive webinar on February 21 where our expert will demonstrate RTD Tango QUANT, a single platform for managing entire trading strategy lifecycle.
jlne.ws/TOTTh0

Enforcement

CFTC Orders The Royal Bank of Scotland plc and RBS Securities Japan Limited to Pay $325 Million Penalty to Settle Charges of Manipulation, Attempted Manipulation, and False Reporting of Yen and Swiss Franc LIBOR
The U.S. Commodity Futures Trading Commission (CFTC) today announced an Order against The Royal Bank of Scotland plc and RBS Securities Japan Limited (collectively, RBS or the Bank), bringing and settling charges of successful manipulation, attempted manipulation, and false reporting relating to LIBOR for Yen and Swiss Franc, which are benchmark interest rates critical to financial markets and the public.
jlne.ws/XVoSUT

RBS fined £87.5 million for significant failings in relation to LIBOR
The Financial Services Authority (FSA) has fined The Royal Bank of Scotland plc (RBS) £87.5 million for misconduct relating to the London Interbank Offered Rate (LIBOR).
jlne.ws/TOTThc

Statement Of CFTC’s Chairman Gary Gensler On RBS Settlement
jlne.ws/TOTTxt

Statement Of CFTC Commissioner Bart Chilton On RBS Settlement
jlne.ws/TOTRFR

Statement By The UK Financial Secretary To The Treasury On RBS Libor
jlne.ws/TOTRFV

Federal Court in Texas Orders Rodney Wagner and Roger Wagner, and their company GID Group, Inc., to Pay Over $2.4 Million for Fraud in Foreign Currency (Forex) Ponzi Scheme
The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Order against defendants Rodney Wagner and Roger Wagner (Wagner brothers) and GID Group, Inc. (GID), all of Grand Prairie, Texas, requiring the Wagner brothers and GID to jointly pay approximately $1.37 million in restitution to defrauded customers and a civil monetary penalty of approximately $1.05 million.
jlne.ws/TOTRG0

SEC Settles Insider Trading Case With Houston Man for $60,000
Bloomberg
The U.S. Securities and Exchange Commission settled an insider-trading case with James Balchan, a Houston man who allegedly bought shares of National Semiconductor based on confidential information that he gleaned from his wife, a partner at a law firm that did consulting work for the company.
jlne.ws/TOTRG2

NASDAQ OMX On Verge Of Changing Facebook Status
jlne.ws/TOTTO9

Sydney director banned from engaging in credit activities, Australian credit licence suspended
jlne.ws/TOTU4z

Environmental & Energy

U.S. Northeast Cap-and-Trade Program Said to Lower Carbon Limit
Bloomberg
The U.S. Northeast’s cap-and-trade program, which was been hampered by pollution limits that exceed carbon emissions, is expected to reduce its cap by as much as 45 percent tomorrow, according to the Natural Resources Defense Council.
jlne.ws/WRxs7L

White House Weighs Emission Rules
The Wall Street Journal
President Barack Obama in next week’s State of the Union speech will lay out a renewed effort to combat climate change that is expected to include using his authority to curb emissions from existing power plants, people who have talked to the administration about its plans said.
jlne.ws/14TilRD

**RKB — Obama is likely to signal he wants to move beyond proposed Environmental Protection Agency rules on emissions from new power plants and tackle existing coal-fired plants, people familiar with the administration’s plans said. Stay tuned until Tuesday.

U.S. needs additional steps to reduce emissions -World Resources
Reuters
The United States will not be able to meet its goal of slashing greenhouse gases 17 percent by 2020 from a 2005 baseline without taking additional steps to target emissions, a new report found.
jlne.ws/14EQ14z

**RKB — Economic downturn and an increase in supplies of cheap natural gas are only temporary trends, according to the World Resources Institute.

Asia-Pacific

FTSE Publishes A New Research Report: Classifying South Korea As A Developed Market
The success of FTSE’s market indices is founded on a combination of expert research and analysis, clear methodology, and its unique ability to reflect the perceptions and real-world experience of its clients and investors worldwide. FTSE’s attention to the views of market practitioners was an important factor in the 2009 decision by its external governing committees to reclassify South Korea as a Developed Market. It remains a key reason for maintaining this classification today. FTSE believes that to include South Korea in an Emerging Market index creates distortions that fail to reflect the intentions of investors.
jlne.ws/TOTU4F

HKEx Launches Founding Members Programme For Its Mainland Market Data Hub
Hong Kong Exchanges and Clearing Limited (HKEx) today (Wednesday) launched its Mainland Market Data Hub (MMDH) Founding Members Programme, which is designed to allow information vendors and other interested parties to participate in the early set-up of the market data hub HKEx will launch by the third quarter of this year in Shanghai, in connection with the HKEx Orion Market Data Platform (OMD) that is scheduled to be implemented in phases beginning in the second quarter of this year.
jlne.ws/TOTUkZ

SGX welcomes Overseas Education to Mainboard
jlne.ws/WBHL1F

Hong Kong’s Financial Markets Authority Concludes Investigation Into Strategic Finance
jlne.ws/TOTSd1

Shanghai Stock Exchange InfoNet’s Pilot Service For Listed Company’s Performance Briefing
jlne.ws/TOTUl6

Dalian Commodity Exchange Circular On Adjustment Of Minimum Trading Margin Standard And Trading Limit Rate Of Each Variety During The Spring Festival Of 2013
jlne.ws/TOTUld

Taiwan Futures Exchange: TAIFEX Newsletter – February 2013
jlne.ws/TOTStm

Frontier Markets

Emerging Turkey gains millionaires
David Thomas – Financial News
The number of high-net worth individuals in Turkey is expected to increase strongly by 2017, according to Wealth Insight, as the country continues its strong economic performance relative to European peers.
jlne.ws/TOTStr

Delta raises capital as investors look to emerging markets
Paul Hodkinson – Financial News
Middle East-headquartered growth capital firm Delta Partners has reached a first close on its second fund as research shows emerging market investment firms are claiming their largest share of global fundraising to date.
jlne.ws/TOTStt

Palestine Exchange (PEX) Monthly Newsletter
jlne.ws/TOTUBG

Malawi Stock Exchange Monthly Performance Report – January 2013
jlne.ws/TOTVp5

John Lothian Newsletter

We visit more than 100 websites daily for financial news (Would YOU do that?)

“John Lothian and Company… our industry intelligence.”

Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

Pin It on Pinterest

Share This Story