John Lothian Newsletter: NASDAQ OMX and IKON GLOBAL MARKETS Launch Spot Gold Futures; EU seeks to patch up differences with UK over banks; Concession Smooths Way Toward a Greek Debt Deal

Feb 8, 2012

Nasdaq OMX and IKON Global Markets launch a new spot gold futures product. The EU, hoping to make nice with the UK banking regulators, says that perhaps there’s room in future EU financial regulation to allow a nation to impose stricter local oversight. The European Central Bank agrees to concessions that should make a bailout of Greece more likely, and more likely to work. Direct Edge and ICAP Energy both win awards for being very good at what they do. And in the top box, JLN FX’s Doug Ashburn floats some explanations of the broad decline in FX volume.

Observations – Statistics – Commentary

Direct Edge Named Best Overall Exchange Operator at the 2012 WSL Institutional Trading Awards
GlobeNewswire via Yahoo! Finance
JERSEY CITY, N.J. — Direct Edge, one of the world’s leading equities exchange operators, won the 2012 WSL Institutional Trading Award for Best Overall Exchange Operator.

**** A shout out to Direct Edge.


ICAP Energy voted “Overall Energy Broker of the Year” in Energy Risk Commodity Rankings
Press Release
London/ Louisville, 7 February 2012 — ICAP Energy, the energy business of ICAP plc, has been voted “Overall Broker of the Year” in Energy Risk magazine’s annual commodity rankings. Based on votes cast by energy trading executives, Energy Risk’s “Overall Broker of the Year” category is the most respected in the energy industry.

**** And ICAP.


Nasdaq OMX ramps up data centre battle
By Philip Stafford in London – Financial Times
Nasdaq OMX, the second-largest US exchanges operator, is ramping up competition to attract trading via complex algorithms by expanding the data feed capacity in the connections at its main US data centre.

**** It is not what you know, it is who you are connected to, and how fast your connections are.


Intercontinental Exchange Net Rises on European Energy Trade (1)
By Matthew Leising – Bloomberg
Feb. 8 (Bloomberg) — Intercontinental Exchange Inc., the second-largest U.S. futures market, said fourth-quarter profit rose 28 percent, led by European energy trading and over-the- counter clearing commissions. Net income climbed to $127 million, or $1.73 a share, from $99.1 million, or $1.34, a year earlier, the Atlanta-based company said today in a statement distributed by PR Newswire.


FX Volume: Less than Meets the Eye?
By Douglas Ashburn – JLN

Perhaps the biggest story of last week was decreasing trade volume across exchanges, platforms, banks and brokerages. On Tuesday, January 31, JLN FX featured a column on the volume slippage among FX platforms such as EBS and Hotspot, and what it meant for the impending IPO of FXall. Two days later, after the major exchanges announced lower volumes for January, the John Lothian News staff put together a special report on falling trade volume.

Since then, we have received input – some solicited, some unsolicited – as to the underlying reasons. Many have posited that the volume slippage is a temporary phenomenon; others have suggested that certain systemic failures have permanently impaired the trading landscape, in FX and beyond. Here is a summary of the dialogue:

Reason #1: The global forces of deleveraging. After two decades of leverage-building leading up to the financial crisis of 2008, banks, households, and even entire nations began the painful process of deleveraging. While central banks have tried to stem the flow through monetization of bad debt, deleveraging drags on and is still spreading across Europe. Through most of the process, however, forex volumes continued seeing record highs. Deleveraging in and of itself has not caused the downturn in volume but, when taken in combination with other market trends, could be a drag on volume.

Reason #2: Capital adequacy ratios. Many of our largest institutions are widely considered to be “zombies,” neither dead nor alive, and feeding indirectly off the living. The European Banking Authority has said that, by June of this year, member banks will be required to maintain a nine percent core capital buffer. Conservative estimates peg the capital needing to be raised by these 31 European banks at EUR 115 billion. At least some of these banks may be unwinding positions and moving to the sidelines.

For the rest of the commentary and deeper coverage of the FX sector, visit the JLN FX website at


MF Had $190 Million of Insurance for Corzine, Professionals
MF Global Holdings Ltd.‘s insurance unit issued $190 million of liability policies for Jon Corzine, other professionals and the company through May to cover costs of defending against allegations of wrongdoing, according to a court filing.

**** More self-dealing? Is there an acronym for Too Stupid To Not Fail?


Watchdogs to drag shadow banks into the light
Douwe Miedema | Reuters
LONDON (Reuters) – Beyond the reach of regulators, and about half the size of the world’s banking industry, a thriving breed of “shadow banks” is emerging that could trigger the next chapter in the global financial crisis.

Q+A – What is shadow banking and why does it matter?
Reuters via Yahoo! News
LONDON, Feb & (Reuters) – The shadow banking system makes up 25 to 30 percent of the total financial system, according to the Financial Stability Board (FSB), a regulatory task force for the world’s group of top 20 economies (G20). This largely unregulated sector was worth about $60 trillion in 2010, having grown from an estimated $27 trillion in 2002, according to the FSB.


Why Do We Still Care About the Dow?
ADAM DAVIDSON – New York Times
Imagine you know someone with pointed opinions, who is often wrong. Would you ask him for financial advice?


MarketsWiki Page of the Day
Nicole V. Rohr


MarketsWiki Recent Updates


Thomas Kadlec; Sunil Hirani; Nicole V. Rohr; James Giddens

Companies, Organizations and Groups

Quote MTF; FC Stone; ADM Investor Services, Inc.; OneChicago LLC; RGM Advisors, LLC;; MF Global Holdings Ltd; Standard & Poor’s; Futures For Kids; Direct Edge; TrueEX


Maker-taker; High-yield bonds; Robin Hood tax; Financial Transaction Tax; Job Postings; Financial Information eXchange Protocol; Margin


19,174,903 pages viewed, 6,679 articles, 136,629 edits
MarketsWiki Statistics

Lead Stories

Press Release
NEW YORK, (GLOBE NEWSWIRE) — The NASDAQ OMX Group, Inc., the world’s largest exchange group, in partnership with IKON GLOBAL MARKETS, Inc., a futures commission merchant registered with the U.S. Commodity Futures Trading Commission offering foreign exchange, futures and options, today will launch NASDAQ OMX XAU/USD Spot Gold Futures on the NASDAQ OMX Futures Exchange, Inc.

EU seeks to patch up differences with UK over banks
Reuters via Yahoo! News
LONDON (Reuters) – The European Union (EU) sought to patch up differences with Britain over financial regulation, saying on Tuesday there was room for exemptions in a draft European banking law to accommodate stricter local supervision of lenders.

Concession Smooths Way Toward a Greek Debt Deal
The European Central Bank has made key concessions over its holdings of Greek government bonds, which will contribute to a reduction of the country’s debt burden and smooth the path toward a new bailout for the country, said people briefed on Greece’s debt-restructuring negotiations.

FSA Sants: EU Mustn’t Hamper National Supervision Of Banks
FOX Business
European Union efforts to impose uniform standards of financial regulation across the continent mustn’t hinder member states’ efforts to police their own banks, the chief executive of the U.K.’s Financial Services Authority said Tuesday.

Lawson urges Brussels over auditing reforms
By Jennifer Thompson – Financial Times
A former chancellor of the exchequer in the House of Lords has urged the European Commission to strengthen proposed legislation aimed at reforming the region’s auditing industry.

European Parliament: Getting The Best Out Of A Financial Transaction Tax
Press Release

Marshall Auerback: The Elephant in the Room is Spain, Not Italy
Naked Capitalism
By Marshall Auerback, a portfolio strategist and hedge fund manager. Cross posted from New Economic Perspectives Another day andthe markets remain fixated on whether Greece comes to a “voluntary” arrangement with its creditors.

To Senators, Bernanke Defends the Fed’s Dual Objectives
WASHINGTON — The Federal Reserve chairman, Ben S. Bernanke, continued to defend the Fed’s efforts to control inflation and unemployment during an appearance Tuesday before the Senate Budget Committee.

U.S. Treasury Secretary Geithner To Attend G-20 Meeting Of Finance Ministers In Mexico City, Mexico, February 25-26, 2012
Press Release

Environmental Trading News

ICE Announces Launch of Futures Contracts on EUAAs
Press Release
LONDON, Feb. 8, 2012 /PRNewswire/ — IntercontinentalExchange (NYSE: ICE), a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, today announced that ICE Futures Europe will introduce futures contracts on European Union Aviation Allowances (EUAAs) on February 27, 2012, subject to regulatory approval.

Nord Pool, Epex Raided as Part of EU Power-Exchanges Antitrust Probe
Nord Pool Spot AS and Epex Spot SE, Europe’s two biggest electricity exchanges for near-term delivery, said they were raided by European antitrust regulators probing possible collusion.

Europe’s Emissions-Trading System Is ‘Dead,’ EON CEO Teyssen Says
The European Union needs to fix its “bust” emissions cap-and-trade program, the world’s largest, and improve existing energy rules after investors lost trust in the EU’s policies, said EON AG’s chief executive officer.

Americans Gaining Energy Independence With U.S. Emerging as No. 1 Producer
The U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo triggered a recession and led to lines at gasoline stations.

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

ICE Low Sulphur Gasoil Futures Contract Successfully Completes First Delivery
Press Release
LONDON, Feb. 7, 2012 /PRNewswire/ — IntercontinentalExchange, a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, today reported that 934 lots (93,400 metric tonnes) of ICE Low Sulphur Gasoil Futures were successfully delivered during the first physical delivery process for the new contract.

NYSE Euronext Announces Trading Volumes for January 2012 Global Derivatives ADV Down 17% Year-over-Year European Cash ADV Down 15%; U.S. Cash ADV Down 24%
Press Release
February 8, 2012 – NYSE Euronext (NYX) today announced trading volumes for its global derivatives and cash equities exchanges for January 2012[1]. Trading volumes declined year-over-year across most venues, but generally rebounded from seasonally slower December 2011. Global derivatives average daily volume (“ADV”) of 7.5 million contracts in January 2012 decreased 17.3% versus the prior year, with European Derivatives declining 31.3% and U.S. equity options decreasing 4.1%. European cash trading ADV decreased 14.6% and U.S. cash trading ADV decreased 23.5% from January 2011 levels.

Clearstream’s January 2012 figures
Press Release
In January 2012, the value of assets under custody held on behalf of customers registered a decrease of 4 percent to E 11.0 trillion (compared to E 11.4 trillion in January 2011). Securities held under custody in Clearstream’s international business decreased by 1 percent from E 6.0 trillion in January 2011 to E 5.9 trillion in January 2012 while domestic German securities held under custody decreased by 6 percent from E 5.4 trillion in January 2011 to E 5.1 trillion in January 2012.

London Stock Exchange Group: Monthly Market Report – January 2012
Press Release
London Stock Exchange Group (LSE.L) sits at the heart of the world’s financial community, offering international business unrivalled access to Europe’s capital markets. In January a total of 30.1 million trades were carried out across the Group’s electronic equity order books with a combined value of £159.4 billion (E191.5 billion), down 17 per cent on January 2011 (£191.6 billion).

CBOE Holdings, Inc. to Present at the Credit Suisse Financial Services Forum on Friday, February 10

CME Group Chief Executive Officer to Present at Credit Suisse Forum, February 9

NASDAQ OMX CFO Lee Shavel Presents at the 13th Annual Credit Suisse Financial Services Forum

MICEX-RTS Stock Exchange Offers New Opportunities For Participants In Executing Trades During The Post-Trading Auction
Press Release

Banks, Brokers & Dark Pools

Finance firm Loop Capital taps four former MF Global execs
By Lynne Marek – Crain’s
(Crain’s) — Loop Capital Markets LLC, one of the largest U.S. minority-owned investment banking and brokerage firms, has hired seven professionals in an expansion this year, including some from MF Global Holdings Ltd.

US banks snap up bundled mortgage products
By Tracy Alloway in New York – Financial Times
Banks have been responding to low interest rates by snapping up billions of dollars of bundled mortgage products that resemble the sliced-and-diced debt some blame for the financial crisis.

UBS Cuts 2011 Bonus Pool 40% as Investment Bank Posts Loss
UBS AG, Switzerland’s biggest lender, cut its 2011 bonus pool by 40 percent and investment bank chief Carsten Kengeter waived any variable pay entitlement as his division posted a second consecutive quarterly loss.

Goldman Sachs Acquires Dwight Asset Management From Old Mutual
Goldman Sachs Group Inc. agreed to buy Dwight Asset Management, a Vermont-based stable-value money manager, from Old Mutual Plc for an undisclosed sum.

Goldman Sachs, Morgan Stanley to Revise Language on Clawbacks
Goldman Sachs Group Inc. and Morgan Stanley will rewrite their so-called clawback policies to make it clear they will reclaim pay from supervisors as well as from employees who take excessive risk or engage in improper conduct.

Goldman, on Both Sides of a Deal, Is Now in Court
Goldman Sachs appears to be everywhere in a $21.1 billion buyout of a giant pipeline and energy company — or at least on every side where money can be made. In wearing different hats in Kinder Morgan’s proposed acquisition of the El Paso Corporation, Goldman may have done nothing improper. Still, a lawsuit challenging the deal raises some important questions about how investment banks do business.

Goldman Sachs Announces Successful Completion and Expiration of Consent Solicitations for 5.793% Fixed-to-Floating Rate Normal APEX of Goldman Sachs Capital II and Floating Rate Normal APEX of Goldman Sachs Capital III

RBS’s CEO Says Political Scrutiny of Bonus Was ‘Discomforting’
Royal Bank of Scotland Group Plc Chief Executive Officer Stephen Hester said the political scrutiny of his bonus has been “discomforting to say the least.”

Prove critics wrong under-fire RBS boss tells staff
Hartford Courant
LONDON (Reuters) – The boss of majority state-owned Royal Bank of Scotland urged his staff to “prove the critics wrong” and continue a clean-up that has cost 38 billion pounds ($60 billion) in the past three years.

HSBC Names Gooding to Head Yuan Business in London
Wall Street Journal Blogs
HSBC Holdings PLC has appointed an executive in London to lead the bank’s efforts in helping the city become a trading hub for the Chinese yuan, as yuan-related business has become an important source of growth for the British bank.

Deutsche Bank To Turn Unit Norisbank Into Pure Online Bank-Source
FOX Business
Germany’s Deutsche Bank AG (DB) plans to transform its domestic retail unit Norisbank into a pure online bank and close the roughly 100 branches throughout the country, a person familiar with the matter told Dow Jones Newswires Wednesday, confirming a report from the Financial Times Deutschland.

Deutsche Bank Wins Dismissal of Two Mortgage Bond Suits That Alleged Fraud
Deutsche Bank AG won dismissal of two fraud lawsuits by investors in residential mortgage-backed securities who had claimed the bank sold them securitized loans it internally disparaged as “crap.”

5 Banks Said to Bid for A.I.G. Assets
Another batch of the riskiest mortgage-backed securities once owned by the American International Group is being auctioned off this week, according to two people familiar with the matter, in a sale that would bring the insurance giant’s 2008 collapse once step closer to a resolution.

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.

Industry attacks SEC proposals to regulate money market funds
Washington Post
The mutual-fund industry rejected plans for new rules governing money market funds, escalating a three-year confrontation with regulators over how to make the investments safer. Two proposals being worked on by the Security and Exchange Commission’s staff “are neither constructive nor likely to make financial markets more resilient,” Paul Schott Stevens, president and chief executive of the Investment Company Institute, said in a statement posted on the group’s Web site.

HSBC Chairman: Cross-Border Resolution “Missing Piece” In Bank Reform
FOX Business
A framework for the orderly management of the of the collapse of a big bank operating in different countries is the missing piece of global efforts at reforming financial regulation, HSBC Holdings PLC (HSBA.LN) Group Chairman Douglas Flint said Tuesday.

Finance Firm Debacle Shows Light Touch Failed – Watchdog Is Looking For The Regulation Sweet Spot, Writes New Zealand Financial Markets Authority ‘s Sean Hughes
Press Release

ESMA: Vacancy For A TA – Officer For Corporate Reporting (AD6)
Press Release

ESMA Chair Speaks At EP/EC Event
Press Release

European Parliament – Insider Trading And Market Manipulation: First Committee Debate
Press Release

[ASIC] Scheduled service interruption – Wednesday 8th February 2012

[ASIC] Federal Court finds loan brokers engaged in unconscionable conduct

ASIC warns about secured debt products

Investments – Indexes – Managed Futures – Managed Funds

Hedge Funds Gain 2.63% In January
FOX Business
NEW YORK — Hedge funds started the year on the right foot, with a 2.63% gain in January, according to Chicago-based Hedge Fund Research.

CalSTRS invests $500 million in infrastructure
Reuters via Yahoo! News
(Reuters) – The California State Teachers’ Retirement System, the second-largest public pension fund, has made what it called one of the largest single U.S. fund management commitments to infrastructure, investing up to $500 million. Infrastructure has emerged as a separate asset class to private equity in the last decade, offering lower returns but also stable cash flows

Arabs Seek Safety in Dollars as Uprisings’ Euphoria Fades Away
As he watched Egypt’s revolt turn into a financial crisis that devoured 50 percent of the nation’s foreign-currency holdings last year, Ahmed El-Rifai started charging some clients in U.S. dollars.

Oceans of Flexibility Give Brent an Edge Over WTI
Brent crude is bolstering its reputation as the best indicator of global oil prices in 2012, using its transportation flexibility to outmaneuver landlocked U.S. benchmark West Texas Intermediate.

Stockpickers ride again as investors hunt value
By Michael Mackenzie and Ajay Makan in New York – Financial Times
The recent demise of “risk-on, risk-off” style trading across markets is welcome news to the battered ranks of stockpickers.

New ICMA European Repo Council Paper Examines Role Of ‘Haircuts’ In European Repo Market
Press Release

New ComStage ETF launched on Xetra

Dow Jones Indexes To License Six Dividend Indexes To Unicredit – Launch of New Regional, Country Indexes To Provide Enhanced Transparency
Press Release

Dow Jones Indexes To License Dow Jones Global Titans 50 Volatility Risk Control Indexes To J.P. Morgan And Barclays Capital
Press Release

Technology News

Bluebay Asset Management, Cheyne Capital Management and Goldman Sachs Asset Management, Go Live on AcadiaSoft MarginSphere
Press Release
AcadiaSoft, Inc. today announced that Bluebay Asset Management, Cheyne Capital Management and Goldman Sachs Asset Management (GSAM) will be live on MarginSphere, AcadiaSoft’s online community for margin automation in the OTC derivatives market, in the first or second quarter of 2012

Martin Porter And Adrian Guest Join b-next To Head Up International Expansion
Press Release

Media News

Yahoo Board Shaken Up in a Push for Revival
For years, the board of Yahoo has been pilloried for a parade of missteps, including ceding ground to upstarts like Google and Facebook and failing to sell itself to Microsoft in 2008.

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

SGX FTSE China A50 Index Futures achieves record!
Press Release
* As of 7 February 2012, open interest on SGX FTSE China A50 Index Futures reached a record high 108,112 contracts.
* Liquidity has also increased with notional value traded of US$278 million yesterday, adding to the diversity of liquidity of comparable exchange fund offering.

China Lone BRIC Among Top Emerging Markets
When Antoine van Agtmael was traveling around Asia in the late 1970s, he became convinced there were companies worth investing in throughout the developing region. In 1981, while working for the World Bank’s International Finance Corp., he presented an idea for a “third- world equity fund” to Salomon Brothers Inc.

China’s PBOC Pledges Support for Homebuyers as Sales Slide
China’s central bank pledged support for first-home buyers as a crackdown on real-estate speculation threatens to trigger a property slump in the world’s second- biggest economy.

Citi Reshuffles Asia Management Team
Wall Street Journal Blogs
Citigroup Inc. is reshuffling its senior management team in the Asia-Pacific region, a growing source of profit for the New York bank.

Thai Bourse Market Report For January
Press Release

Tokyo Commodity Exchange January 2012 Average Daily Volume Down 4.2% From December 2011
Press Release

Frontier Markets

Crisis must not change India’s course
By Martin Wolf – Financial Times
What do the financial and economic crises of the high-income countries mean for emerging and developing countries? I addressed this in New Delhi last week, at a discussion sponsored by the Federation of Indian Chambers of Commerce and Industry (FICCI), the Consumer Unity & Trust Society (CUTS) and the Financial Times. The conclusion I drew was that the crisis is dangerous. But this is not so much because of its direct effects. It is far more because of the lessons that might be drawn. The right lessons have to be drawn, not the wrong ones.

DFSA Announces Stakeholder Survey Results

The Middle East Investor Relations Society Launches The Palestine Chapter, The Latest Initiative To Promote IR Best Practice In The Middle East
Press Release

Miscellaneous News

Wall Street: Is the Party Over for MBAs?
For a certain type of MBA, but certainly not all, the degree is all about landing a job on Wall Street. And not just any job, an investment banking job, the kind that promises untold riches–a lifetime of high six-figure salaries and bonuses to match.

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