John Lothian Newsletter: Europe set to block DB-NYSE tie-up; Citi chief urges risk disclosure shake-up; Hedge funds lock horns with IMF on Greek debt

Jan 11, 2012

Early reports suggest that European regulators are preparing to reject the DB-NYSE merger.  Vikram Pandit of Citigroup suggests that banks should explain the methods used to evaluate risk, providing more insight into the degree of optimism present in bank self-evaluations. Hedge funds involved with Greek debt add their name to the IMF’s “bailout complications” list. And in regulation, the CFTC prepares to vote on Dodd-Frank rules from last year; while other agencies consider including clearing houses, insurers and other types of firms to in “too big to fail” considerations that were once applied just to banks.

Observations – Statistics – Commentary

Quick View: Bulking up – is it worth it any more?
By Jeremy Grant – Financial Times
The biggest exchange merger ever attempted looks like it’s hitting the buffers. Europe’s antitrust authorities have blocked the Deutsche BörseNYSE Euronext deal, our sources tell us. Brussels dug its heels in, in spite of two sets of concessions offered by the two groups designed to alleviate competition officials’ concerns.

**** “Hitting the buffers?”  Really?  Is there a non-English English version of this lead?


Morgan Stanley sheds senior derivatives execs
Tom Osborn – Financial News
Morgan Stanley’s cuts to its global institutional equities workforce have begun to bite, with senior managing directors in the firm’s London and Singapore derivatives teams leaving the bank, Financial News has learned, as the firm trims back its listed futures operations. Bill Templer, the bank’s global co-head of exchange-traded derivatives, and Divya Doshi, managing director for listed derivatives in Singapore, both left the bank last week, according to two people familiar with the matter. Morgan Stanley declined to comment. Neither Templer nor Doshi responded to a request for comment. Clark Hutchison, Templer’s co-head of listed futures in New York, remains in his position.

**** I am really sorry to see Bill Templer leave Morgan Stanley.  For his work with Futures For Kids, Bill is a hero of mine.


CME’s Duffy: Unaware Of Any Effort To ‘Break Up’ CME Group -CNBC
The executive chairman of CME Group Inc. said Tuesday that the futures exchange operator was “very much unaware” of any regulatory effort to “break up” the company. The comments from CME’s Terry Duffy, made in an interview with CNBC, followed reports this week that authorities in Washington were considering a forced spin-off of CME’s regulatory functions following the collapse of MF Global Holdings Ltd. in late October.

***** Questioning the one-source quality journalism offered by Fox’s Charlie Gasparino?  Really?


[Video] The changing face of Asian markets
Steve Grob/FragVision – Fidessa
Episode 5 of FragVision is now available featuring a discussion with Stephen Edge, Principal of Asia Etrading, about the key issues affecting Asian markets.

**** Until Mad Men comes back on AMC television, FragVision is my favorite TV show.


Barchart Expands its Market Data and Information Business with New Content
Press Release
CHICAGO, IL – January 10, 2012 –, Inc., a leading provider of market data and information, today announced the availability of a series of new market data and information content, including new exchange data feeds, fundamental data sources and news providers. The new information sets have been acquired and integrated by Barchart to support its expansion into both equity and international markets. Barchart will offer the new information through its data feeds, hosted website content solutions and desktop market data and trading applications.

**** If you expand market data, do the bits become bytes, or big bytes?


The Flash Crash Risk is Rising
Resource Investor
Regulators claim they have reduced risks of a flash crash through the enforcement of daily trading limits across a broader range of financial instruments. I am not so sure. During a real panic, preventing people from unloading risk is almost impossible.

**** I love people who promote panic, or predict panic. How would you sell newsletters without this?


Algorithmic trading in energy markets
Alexander Osipovich –
Algorithmic traders are now a significant presence in energy markets. Alexander Osipovich explores how they’re changing the game for human traders. They made their debut on the stock market, and gained notoriety after the ‘Flash Crash’ of May 6, 2010. Today, algorithmic traders who use computers to execute thousands of trades in seconds have become major players in energy markets, too.


Let’s talk about the market economy
By John Kay – Financial Times
The Financial Times is debating capitalism, but what it is really debating is the future of the market economy.

“So the business leaders of today are not capitalists in the sense in which Arkwright and Rockefeller were capitalists. Modern titans derive their authority and influence from their position in a hierarchy, not their ownership of capital.”


What Does Wall Street Do for You?
New York Times
More than you think. Without it, the 99 percent would be a whole lot poorer, and there definitely wouldn’t be any good goat cheese.


Five Minutes with Tommy Molloy, Chief Dealer, FX Solutions
Tommy Molloy is the Chief Dealer at FX Solutions, a New Jersey-based FX broker-dealer. His 25-year FX trading career has included positions with Bank Hapoalim, Bank Leumi, Natwest, and BNP. Molloy spoke with John Lothian News Editor-at-Large Doug Ashburn about macroeconomic FX trends, the 2012 FX environment, and trends in retail foreign exchange.

Q: After a volatile 2011, the FX market has been relatively quiet thus far in 2012. Do you expect this trend to continue?

A: Not at all. Interestingly, what we are seeing is that, last year, when data was released, it was generally interpreted as either “risk-on” or “risk-off.” Positive data, from whatever center it came from, was considered “risk-on.” Positive for the euro, or Aussie, or gold or silver, for example was negative for the dollar and indicated a “risk-on” environment. The release of the U.S. nonfarm payroll data [January 6] was kind of a departure from that, and may signal that markets are changing their outlook, or changing their indicators. We had a fairly positive nonfarm payroll number, which ended up being dollar positive. Before, strong U.S. data would have been interpreted as a “negative”. That seems to have changed, at least for the small part of 2012 we have seen thus far.

Q: Do you think this indicates a lower risk of eurozone breakup, or at least less likelihood of an extreme volatility event in the near future?

A: I think that it is more a function of the market feeling that it knows everything that is to be known currently. For the last three months, we have jumped, in the eurozone, from data point to data point, or from meeting to meeting. There had been plenty of expectations built into each meeting designed to fix the eurozone problem. The meeting happens, an announcement or resolution is released, the market is disappointed by the outcome, another meeting is set for two weeks later, and the cycle repeats itself ad nauseum. The market is now ignoring what people say, and is instead only looking for “cold, hard data.” Cold, hard data is now being reacted to in a sort of “old school fashion,” where U.S.-positive news is reacted to in a dollar-positive way. Eurozone-positive information is reacted to as positive for the euro. It is not as “risk-on/risk-off” as it has been. That trend is likely to continue, if not for the year, then at least for the next three months.

For the rest of the interview and in-depth FX coverage, visit the JLN FX website at


Eurex Educational Seminar Invitation: Regulation, Compliance and the Role of the Director 
Thursday, February 9th, Cayman Islands

Join Eurex Exchange, the leading European derivatives exchange, and a panel of special guests for this interactive seminar. We will provide an update on Eurex’s perspective on the hedge fund industry in the wake of regulatory change. This will be followed by an interactive discussion focusing on the importance of directors in enhancing risk management and compliance within the hedge fund industry. You’ll hear about the exchange and key products, current developments and regulatory initiatives and Eurex’s reaction to the changing needs of the hedge fund industry.

Our distinguished panelists will provide their insights on one of the industry’s current hot topics: the importance of the director within the context of the current market volatility and regulatory landscape. Other panel topics will include: the importance of directors in the current landscape, countering the negative press around directorships and the influence of the director in establishing compliance.

Panelists will include:
Richard Addlestone, Partner, Appleby
Jeremy Walton, Fund Disputes Team Leader, Appleby
Ronan Guilfoyle, Managing Partner, dms Management Ltd.

For more information, please visit:


MarketsWiki Page of the Day
Walter L. Lukken


MarketsWiki Recent Updates


Thomas Jordan (Swiss National Bank)Thomas Jordan (Jordan & Jordan)Thomas JordanJohn M. DamgardWalter LukkenRobert C. LiebenowKevin T. MurphyKevin L. Murphy

Companies, Organizations and Groups

Capstone Investment Advisors, LLCFutures Industry Association



Job Postings


18,073,348 pages viewed, 6,644 articles, 135,494 edits
MarketsWiki Statistics

MarketsReformWiki Recent Updates

Whistleblower Provisions RegulationSEC Proposed Rule: Removal of Certain References to Credit Ratings Under the Securities Exchange ActSEC Proposed Rule: Nationally Recognized Statistical Rating OrganizationsSEC Proposed Rule: References to Credit Ratings in Certain Investment Company Act Rules and FormsPrudential Regulators: Risk-Based Capital Guidelines: Market Risk; Alternatives to Credit Ratings for Debt and Securitization PositionsBanking Supervision Regulation – Hearings & Testimony


729,196 pages viewed, 1,326 articles, 19,732 edits

Lead Stories

Europe set to block DB-NYSE tie-up
By Alex Barker in Brussels and Jeremy Grant in London – Financial Times
European competition officials have recommended blocking the tie-up between Deutsche Börse and NYSE Euronext, the German and US exchange operators, setting in motion what could be weeks of frantic lobbying to salvage the deal.

NYSE-Deutsche Boerse Merger Rejected By EU Regulators – Source
By Jacob Bunge and Stephen Fidler Of DOW JONES NEWSWIRES
Regulators of the European Union have preliminarily rejected the proposed merger between NYSE Euronext (NYX) and Deutsche Boerse (DBOEF, DB1.XE), according to a senior European Union official.

Citi chief urges risk disclosure shake-up
By Brooke Masters in Basel – Financial Times
The chief executive of Citigroup has said banks should be forced to publicise how they measure risk so that investors can “punish” institutions that are too optimistic about the quality of their assets.

Hedge funds lock horns with IMF on Greek debt
Reuters via Yahoo! News
LONDON (Reuters) – Hedge funds are taking on the powerful International Monetary Fund over its plan to slash Greece’s towering debt burden as time runs out on the talks that could sway the future of Europe’s single currency. The funds have built up such a powerful positions in Greek bonds that they could derail Europe’s tactic of getting banks and other bondholders to share the burden of …

Sarkozy refuses to drop financial tax proposal
By Hugh Carnegy and Scheherazade Daneshkhu in Paris – Financial Times
President Nicolas Sarkozy insisted on Tuesday that France must press ahead with a tax on financial transactions to force the issue in Europe, despite concerns that a unilateral move would isolate the country and damage the French financial services industry.

Fannie Mae chief executive to step down
By Shahien Nasiripour in Washington – Financial Times
Michael Williams, chief executive of US government controlled mortgage financier Fannie Mae, has announced he will leave the company as soon as a successor is chosen.

MF Global UK wins backing for pay-outs
By Philip Stafford – Financial Times
Administrators for the UK arm of MF Global have secured backing from customers and creditors to make the first returns of the $1.2bn in assets frozen after the failure of the US futures broker.

Environmental Trading News

New Clearing Member Notice – FCStone, LLC
Press Release
GreenX and CME Group Inc.’s Clearing House Risk Committee have approved the application of FCStone, LLC for Green Exchange Clearing Membership. The approval is effective immediately.

EU Carbon Permit Set-Aside to Be Decided in Clear-Cut March Vote
The European Parliament is likely to decide in a “clear-cut” vote at the end of March whether to back a draft amendment urging a temporary cut in the supply of carbon allowances, according to a member of the Parliament.

Airlines May Book Windfall Gains on EU CO2 Plan, Study Shows
U.S. airlines may post windfall gains of as much as $2.6 billion after their inclusion in the European Union emissions trading system, according to an academic study that contradicts the aviation industry’s cost estimates.

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

NYSE and Deutsche Borse Chiefs to Discuss Plans to Save Merger
New York Times
The chief executives of the two exchange operators plan to meet in New York to discuss their next steps as European antitrust regulators continue to signal opposition to the merger of their two companies.

Olsson to Leave ASX
Asia ETrading
ASX announces that Mr Jeff Olsson, Group Executive Technology, has decided to leave ASX. Mr Olsson will leave the company in July 2012.

NYSE Euronext Statement in Response to Media Report
Press Release
(“NYSE Euronext has not yet received any official decision by the European Commission regarding the requested merger of both companies. The Commission has announced that it will make its final ruling on whether to clear the proposed merger by February 9, 2012. As a matter of policy, we cannot comment on speculation.

CME Group Congratulates New FIA President Walt Lukken

Press Release
Santa Fe / Paris, 10 January 2012. Tres Amigas and EPEX SPOT announced that they have signed a joint cooperation agreement to enable the respective companies to share mutual expertise in the development and coupling of their respective markets.

EEX: 2011 in Retrospect: “Transparency in Energy Markets” improved continuously
Press Release
In 2011, the “Transparency in Energy Markets” ( platform – the central publication location for energy market data, such as regarding the installed capacity, scheduled and unscheduled power plant outages and on the planned and actual generation of power – was further expanded and improved.

December 2011 FIF Market Share And Market Dynamics Reports – Executive Summary
Press Release

TMX Group Inc. to announce financial results for Q4 2011 on Wednesday, February 8, 2012

BM&FBOVESPA Announces 2011 Market Performance
Press Release

Banks, Brokers & Dark Pools

Federal Reserve pays $77 billion to Treasury
CNN Money
Ben Bernanke is about to hand Timothy Geithner a very large check.

Fed May Have Pushed Risk-taking Too Far: George
FOX Business
The Federal Reserve may have pushed investors too far in search of returns, leading to a “mispricing of risk,” said Esther George, the new president of the Kansas City Federal Reserve Bank, on Tuesday.

BarCap recruits Eurex exec in post-trade push
Tom Osborn – Financial News
Barclays Capital, the UK’s largest derivatives trading bank, has hired the former London sales chief at futures exchange Eurex to head a senior client services team within its London derivatives operations.

BNY Mellon Near Settlement of Foreign Exchange Claims, U.S. Says
Bank of New York Mellon Corp. is close to settling some claims by U.S. prosecutors in a lawsuit accusing the bank of overcharging customers for foreign-exchange trading, according to a court filing.

Goldman Sachs, Citigroup Planning First 2012 Commercial Mortgage-Bond Deal
Goldman Sachs Group Inc. (GS) and Citigroup Inc. (C) are planning to market about $1 billion of bonds backed by commercial property loans as soon as next week as demand for the debt recovers amid optimism the U.S. economy can withstand Europe’s fiscal crisis.

RBS’s Ulster Said to Plan Job Cuts, About $64 Million of Savings
Royal Bank of Scotland Group Plc’s Irish unit is preparing its second round of job cuts in four years as part of an effort to save about 50 million euros ($63.9 million), according to two people with knowledge of the plan.

Lehman Executive Departures Mark ‘Turning Point’ for Nomura
The resignation of two former Lehman Brothers Holdings Inc. executives from Nomura Holdings Inc. may allow Japan’s biggest brokerage to revamp a business that has stumbled since it bought assets of the failed U.S. firm in 2008.

Ex-Bank of America Deal Maker Sets Up in Indonesia
Wall Street Journal Blogs
As Bank of America Merrill Lynch embarks on a brutal round of cuts in Asia, one deal maker has set out on his own in Indonesia.

Advent among bidders for Deutsche asset management
Market Watch
LONDON -(MarketWatch)- Advent International is among the bidders for the asset management business being sold by Deutsche Bank AG (DB), a person familiar with the situation told Dow Jones Newswires on Tuesday.

Morgan Stanley Says Strategist Caron Succeeded by Mutkin
Morgan Stanley said James Caron, head of U.S. interest-rate strategy, has left the primary dealer and his responsibilities will be assumed by Laurence Mutkin.

Citi Launches Pairs Trading Algorithm
Business Wire
NEW YORK–(BUSINESS WIRE)–Citi today announced that it has added pairs trading functionality for equity securities to its suite of advanced algorithmic trading strategies. This will allow traders to execute market neutral strategies to help leverage changing market conditions by simultaneously selling and buying highly correlated securities.

HSBC’s Bottomley to Succeed Watkinson in North America
HSBC Holdings Plc, Europe’s biggest bank by market value, named Stephen Bottomley, who was most recently running strategy and planning in the Middle East and North Africa, to oversee commercial banking in North America.

HSBC Holdings Appoints Jean Beunardeau As CEO, HSBC France – Quick Facts

Jorge Arce Appointed Chief Country Officer of Deutsche Bank Mexico
Business Wire via Yahoo! Finance
Deutsche Bank today announced that Jorge Arce has been appointed Chief Country Officer for Deutsche Bank Mexico. Arce will be based in Mexico City and will report to Bernardo Parne

BT Prime Receives FSA Authorization and Announces Name Change to Boston Prime
Business Wire via Yahoo! Finance

BNP reaches settlement with MBIA
By Tom Braithwaite in New York and Shahien Nasiripour in Washington – Financial Times
BNP Paribas has followed Morgan Stanley in reaching a settlement in a mortgage lawsuit with MBIA, the bond insurer, leaving a handful of holdouts in a legal action that initially involved 18 international banks.

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 May Vote on Derivative Rules to Protect Cities, Collateral
The U.S. Commodity Futures Trading Commission may complete rules designed to curb the abuses of banks that sell derivatives to municipalities as it moves to impose new Wall Street regulations under the Dodd-Frank Act.

Too-Big-to-Fail Bank Definition May Be Expanded by Regulators
Global regulators may expand the definition of a too-big-to-fail financial firm, signing up domestic lenders, clearing houses and insurers to capital rules designed for the world’s biggest banks.

Watchdog to tackle banking pay breaches
By Brooke Masters in Basel – Financial Times
Bankers who believe that rivals in other countries are violating new global restrictions on pay and bonuses will be able to complain to the Financial Stability Board, the global regulatory body’s new chairman announced on Tuesday.

European Parliament: Parliamentary Committee Opens Its Work On Increased Budgetary Surveillance
Press Release

Olli Rehn Vice-President Of The European Commission And Member Of The Commission Responsible For Economic And Monetary Affairs And The Euro Eurobonds: Stability And Growth For The Euro Area ALDE New Year Seminar Brussels, 10 January 2011
Press Release

Publication Of Responses To ESMA’s Consultation On Possible Delegated Acts Concerning The Prospectus Directive
Press Release

Meeting Of The Financial Stability Board In Basel On 10 January
Press Release

SEC Said to Prepare Vote on Cases Against Ex-Stanford Executives
U.S. Securities and Exchange Commission investigators have proposed sanctions against at least five former Stanford Group Co. executives and brokers for their role in selling investments that fueled R. Allen Stanford’s alleged $7 billion Ponzi scheme, according to two people with knowledge of the matter.

Investments – Indexes – Managed Futures – Managed Funds

ETF glow fades for US investors
By Ajay Makan in New York – Financial Times
A record number of new US exchange-traded funds failed to attract substantial investor demand last year, leaving fund operators facing losses in one of the first signs that the industry’s explosive growth may have peaked.

LCH.Clearnet named “clearing house of the year” by Risk Magazine for second consecutive year
Press Release
LCH.Clearnet Group (LCH.Clearnet) has been named “clearing house of the year” for the second year in a row by Risk Magazine, in recognition of its market leading OTC derivative risk management capabilities, client-focused service and development of innovative clearing solutions.

Hedge Fund Veteran Howard Eisen Joins Conifer Group
PR Newswire via Yahoo! Finance

Hedge Funds Now Hold Future Of Europe Hostage
Zero Hedge
Payback sure is a bitch. After being demonized for everything from the tiniest tick down in the EURUSD, to blowing out spreads in CDS, to plunging stocks across the insolvent continent, hedge funds, long falsely prosecuted for everything, even stuff they patently did not do, are about to have their day in the sun

Cargill sees 88% drop in income
By Javier Blas, Commodities Editor – Financial Times
Cargill, the world’s largest trader of agricultural commodities, has suffered its worst quarter in more than a decade, reporting a 88 per cent drop in net income.

Pimco Total Return ETF To Launch March 1 via Yahoo! Finance
The long wait to see Bill Gross’ Total Return Fund in ETF clothing is just weeks away. Pimco, the world’s-biggest bond fund manager, revealed today that it plans to launch the exchange-trade…

Highland Capital Strengthens Business Development, Adds Managing Director
PR Newswire via Yahoo! Finance

MTS Licences Lyxor For Macro-Weighted Government Bond Indices
Press Release

Barclays Adds Three Currency Exchange Traded Notes to iPath Platform
Business Wire via Yahoo! Finance

Northern Trust’s FlexShares Funds Exceed $500 Million
Business Wire via Yahoo! Finance

Technology News

SunGard Acquires Pilot Software from TOBAM
Press Release
SunGard has acquired the Pilot solution from TOBAM, a Paris, France-based asset management firm. The Pilot solution, built and used by TOBAM as its decision support solution for the fund’s principals, is complementary to SunGard’s Asset Arena solution suite, which supports the core functions of the asset management industry including investment management, investment operations and investor servicing.

SIX Telekurs Strengthens Its Data Production Centers In Poland And India
Press Release

Montanaro Asset Management Live on Charles River IMS Hosted Solution
Business Wire via Yahoo! Finance

Media News

Wedbush Securities Gives Firm-Wide “Green Light” to Engage in Social Media
Business Wire via Yahoo! Finance
Wedbush Securities, one of the nation’s leading financial services providers, today announced the launch of its new social media initiative offering employees a way to engage in social media conversations on platforms including Twitter, LinkedIn, and Facebook.

Blackstone Group says it “sucks”
Domain Name Wire
Blackstone group registers “sucks” domains for its name and its chairman. Private equity giant Blackstone Group thinks it sucks. That’s the only plausible explanation for seven recent domain name registrations by the company. (OK, so they were actually defensive domain registrations.)

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

Exclusive: Head of China’s CIC tipped as next finance minister
Reuters via Yahoo! News
BEIJING (Reuters) – The head of China’s $410 billion sovereign wealth fund is the front-runner to become the country’s next finance minister, two independent sources said, a move in the country’s broad leadership reshuffle that will culminate in 2013. Lou Jiwei, 61, currently chairman of China Investment Corp (CIC), is tipped to replace Xie Xuren as finance minister, the sources said.

TriOptima announces the appointment of Ken Nishimura as head of TriOptima Japan
Press Release
TriOptima announced that Ken Nishimura has been appointed the head of TriOptima Japan. Mr. Nishimura will manage the continuing expansion of TriOptima’s client relationships in Japan as well as the day-to-day operations of TriOptima’s Tokyo office.

Most senior foreign exec quits Japan’s Nomura
AFP via Yahoo! News
The most senior foreign executive at Japanese bank Nomura has resigned, the company confirmed Wednesday, as the firm struggles to compete on the world stage.

At Nomura, future direction hangs on who succeeds
Reuters via Yahoo! News
HONG KONG/TOKYO (Reuters) – The abrupt exit of Jasjit Bhattal, the highest-ranking ex-Lehman executive at Nomura Holdings, marks a crucial juncture for Japan’s top brokerage as it decides whether to replace him with an experienced global banker to foster expansion, or with an in-house local to focus on the home market. …

Tokyo Stock Exchange: New ETF To Be Listed On Mar. 30, 2012 (Fri.) – Nikko Asset Management Co., Ltd.
Press Release

Tokyo Grain Exchange SPAN Parameters Effective From January 16, 2012 To January 31, 2012
Press Release

Tokyo Commodity Exchange December Average Daily Volume Down 7.7% From November, Up 8% Year-On-Year
Press Release

Thai Bourse Market Report For 2011
Press Release

Frontier Markets

Dow Jones Islamic Market Titans 100 Index Closed Down 0.83% In 2011
Press Release

Miscellaneous News

The Amazing Failure of Women’s Career Advice
On a recent Monday morning, Kathryn Ferris, a 32-year-old financial analyst, had a weekly 6:15 appointment with her formal mentor at a lower Manhattan office for a 40-minute debrief of the previous work week. She spent the next 11 hours in front of three computer screens, checking in twice with the nanny about her three-year-old twins. At 6pm, when her male colleagues hit the gym before evenings …

SIFMA Issues 2011 Year In Review
Press Release

SIFMA Releases 2012 Economic Forecast
Press Release

John Lothian Newsletter

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