With some noting that 2012 was “The Year of the Technical Fault”, many exchanges are reviewing ways to increase reliability in the coming year (note that the LSE managed to start 2013 not with progress, but with another technical fault). The bankruptcy trustee for Peregrine Financial wants permission to run the ex-brokerage into at least March of 2013 as it continues to work to wind down operations. The hedge fund industry, while not posting as much red ink in 2012, nevertheless showed lackluster returns in the past year, with many headliners posting substantial losses.
Resolutions for the New Years
Welcome to 2013. Here are some our our resolutions or plans for the new year.
We are making some changes to our JLN Metals newsletter.
First, we are suspending the daily newsletter delivery for the foreseeable future. Secondly, we are moving to an intermittent blogging format. We will continue to blog on the metals markets and create original content, but we will not necessarily do so on a daily basis. We will however continue to tweet from @JLNMetals on a daily basis.
JLN Metals was created in 2009 at the request of our lead sponsor, NYSE Liffe US. Unfortunately, due to budget cutbacks they are discontinuing their sponsorship of JLN Metals at this time.
We are seeking other potential sponsors for the newsletter and its website and will re-evaluate the publication schedule should enough new sponsors and advertisers emerge to support its operations.
John Lothian News Website
We are combining all of our JLN newsletter websites into a single site, johnlothiannews.com, with special bespoke landing pages for each of our newsletters. This single website strategy will create a more dynamic market news portal which will feature original JLN created content, as well as regular newsletter fare. We believe it will enhance the readers experience and deliver greater value to our sponsors. It will also make our mobile strategy (an app for 2013) easier to deploy.
We will be combining JLN Interest Rates and JLN Forex into a new combined and expanded newsletter called JLN Financials. This new JLN product will aggregate content in interest rates, forex and indices news, as well as feature JLN original content about the same. With short term interest rates pinned down due to Federal Reserve and Central bank policy, and so much happening structurally that impacts several different financial sectors, we decided to take a broader perspective for the financial markets. Thus JLN Financials will be launched later in January.
John Lothian Newsletter
Lastly, at the first of the year we ask readers to pay for their subscriptions to the John Lothian Newsletter. JLN is offered on what is called a voluntary pay basis. If you find it valuable, you are asked to pay for it. If you have been reading this newsletter for years, you find it valuable. If you are one of several people in your company that reads it, you find it valuable. All it takes is one item in the newsletter to inform you and influence your participation in the markets or your strategy at your firm to find the newsletter valuable.
We are asking all readers to pay for the newsletter this year. The year 2013 looks like it may be the most difficult we have faced in the markets in many years. We need your support this year. Please click on the link at www.johnlothiannewsletter.com titled “Subscribe” to pay for your newsletter subscription by credit card or to request an invoice.
The John Lothian Newsletter has been a voluntary pay newsletter since 2003. We have taken the revenues from JLN to launch MarketsWiki, MarketsReformWiki and all the JLN derivative newsletters. You paying for your JLN subscriptions is what has allowed us to build these online knowledge bases, newsletters and accompanying videos that benefits us all.
The ongoing success of MarketsWiki is a testament to the power of the volunteer pay format. In 2013, MarketsWiki had 15.5 million page views after having 9.6 million in 2011. The life to date pageviews stand just over 33 million pageviews, having passed the 33 million mark over the weekend.
MarketsReformWiki just passed the 3 million page view mark, which means we have seen 2 million page views in less than a year. We passed the 1 million page view mark in February of 2012.
Help us continue the success of MarketsWiki, MarketsReformWiki and the John Lothian Newsletters by paying for your 2013 subscription today.
And from the fiscal fudge-osphere
Izabella Kaminska | FT Alphaville
You’ve heard what the early (and slim) analyst reaction has been, now for what the blogosphere has had to say about the fiscal deal achieved.
**** Paying taxes is just one cost of the price of freedom and freedom is priceless.
Quick View: Battleground Europe for bourses
Philip Stafford – FT.com
With its baseball code words and references to icons of capitalism, the $8.2bn ICE–NYSE Euronext deal was clearly stamped; “Made in America”. But its biggest impact may be in Europe.
**** Three strikes and you are out? The Mendoza Line? What baseball reference are we talking about?
Vix Futures Set New Single-Day Volume Record Today
The CBOE Futures Exchange, LLC (CFE) announced today that CBOE Volatility Index (VIX index) futures set a new single-day volume record of 212,800 contracts (estimated) today. The new daily record eclipsed the previous single-day record of 190,081 contracts traded on September 13, 2012.
***** New product idea: US Congress Volatility Index.
Operations chief to exit SGX
Tom Osborn – Financial News
The head of operations at Singapore Exchange is to step down, according to people familiar with the matter, becoming the second high-profile executive to depart the bourse in little over a month.
Trade Talk: Recapping the #TTTop10: The Year in Review
If you follow us on Twitter at @Trading_Tech, you’ve probably seen our compilation of 2012’s top 10 news stories in trading, tech and Chicago business—or as we called it on Twitter, the #TTTop10. To close out the year here on Trade Talk, we’re recapping that list.
**** Where is Casey Kasem when you need him?
First the Rise of the Machines, Now the Rise of the Bugs
Paul Vigna – WSJ
This past year wasn’t the year everybody realized computers have taken over trading; that honor will forever belong to 2010 and the infamous flash crash. But this year may be remembered as the year everybody realized those expensive, high-powered trading programs and servers can be just as buggy as your average PC.
**** BTW, bugs outnumber us.
Imagining a Future of Lower Hedge Fund Fees
By NEIL UNMACK and RICHARD BEALES – NYTimes.com
d publication of this column around 2020: The most surprising thing about the demise of 2-and-20 hedge fund fees is how long it took. Neither the losses in the 2008 credit crunch nor the feeble returns during the ensuing seven-year euro zone crisis did much to bring down the archetypal fee structure: 2 percent management fee and 20 percent of gains. Now, though, it can finally be said: 2-and-20 is dead.
**** This is one of those stories like “The City is worried about losing its status as a financial center” that keeps cropping up. I wonder who is pushing this story line?
Investor Protection: Super-regulator Needed
Investor protection is like a row of leaky buckets in the U.S. Each one of them is extremely porous and needs to be fixed.
**** Some good ideas in this blog post.
The SEC Warns About Muni Bond Risks. Is That Its Job?
As the Securities and Exchange Commission tells investors to beware risks in the municipal bond market, some lament a ‘ridiculous’ overstepping of the SEC’s regulatory role
How Algos Orchestrate “Momentum Ignition” Chaos
Via Nanex , On December 26, 2012 at 11:02:59, the market suddenly exploded with activity. Approximately 3,800 March 2013 eMiini futures contracts were sold during that second. Nanex thought the sudden explosion in activity warranted a closer look . What they found was fascinating .
**** How to construct a conspiracy theory.
Holiday illiquidity in one chart
Izabella Kaminska | FT Alphaville
Eric Hunsader at Nanex presents us with a nice start to 2013 markets — a no less than an 8 per cent drop and subsequent clawback in natgas futures during early Thursday trade:
**** This kind of volatility used to happen in the days of open outcry too at the end of the year.
Only fools claim to know the future
John Kay – FT.com
At this season it is customary to look back on the achievements of the year that is past and to consider what may unfold in the year to come. Nate Silver, the young statistician who became an unexpected hero of 2012, is relevant to both exercises.
***** This headline is worthy of an award. Maybe a Pulitzer.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
33,154,433 pages viewed, 7,306 articles, 151,573 edits
Exchanges Seek to Make Repairs
MATT JARZEMSKY – WSJ.com
The past year exposed cracks in the systems underlying the U.S. stock market. In 2013, exchanges and market overseers will seek to repair them.
Peregrine Trustee Seeks March Extension
JACOB BUNGE – Dow Jones
The trustee appointed to wind down Peregrine Financial Group Inc. sought court permission to run the defunct brokerage until mid-March, while trimming its staff to 15.
Hedge fund industry loses out again
Sam Jones, Hedge Fund Correspondent – FT.com
Bearish hedge fund managers have lost out in 2012, with the $2tn industry suffering another year of disappointing returns as traders were wrongfooted by a change in fortunes for the eurozone.
Exchange Regulation Needs Review, Credit Suisse Says
Nina Mehta – Bloomberg
The botched initial offering of Facebook Inc. (FB) is the catalyst that should lead to U.S. exchanges being stripped of self-regulatory powers and their related benefits, a Credit Suisse Group AG (CS) executive said.
Experts back Deutsche whistleblowers
Kara Scannell, Tom Braithwaite and Michael Mackenzie in New York – FT.com
Accounting experts say Deutsche Bank appears to have improperly accounted for billions of dollars of credit derivatives trades by failing to value adequately the risk that its trading counterparties could walk away.
Looking Ahead to Civil and Criminal Cases to Come
PETER J. HENNING – NYTimes.com
It is not really of question of whether there will be a major white-collar crime that captures the public’s attention in 2013; it’s a question of when and how costly it will be. If the cases of 2012 can serve as a guide, too many loopholes in the system allow fraud to go undetected.
Merkel warns Europe crisis far from over
A year after Europe stood on the brink of economic disaster, financial markets are calmer and the chances of the euro disintegrating have diminished.
Insight: How Colombian drug traffickers used HSBC to launder money
Reuters via Yahoo! News
When several Colombian men were indicted in January 2010 on money-laundering charges, the case in Brooklyn federal court drew little attention. It looked like a bust of another nexus of drug traffickers and money launderers, with mainly small-time operatives paying the price for their crimes.
Used to Hardship, Latvia Accepts Austerity, and Its Pain Eases
ANDREW HIGGINS – NYTimes.com
When a credit-fueled economic boom turned to bust in this tiny Baltic nation in 2008, Didzis Krumins, who ran a small architectural company, fired his staff one by one and then shut down the business. He watched in dismay as Latvia’s misery deepened under a harsh austerity drive that scythed wages, jobs and state financing for schools and hospitals.
Financial News: The top 25 stories of 2012
London Whales, Libor-fixing and an explosive departure by a Goldman Sachs banker: 2012 was not short of news. Here is a selection of the best-read stories, opinion pieces and blog posts that FN has published this year.
CFTC’s Division Of Swap Dealer And Intermediary Oversight Issues Further No-Action Relief For Certain U.S. Banks Wholly Owned By Non-U.S. Swap Dealers, For Purposes Of Making Calculations Under The Swap Dealer Definition
CFTC’s Division Of Swap Dealer And Intermediary Oversight Issues No-Action Letter Providing Registration Relief To Certain Introducing Brokers And Commodity Trading Advisors Involved In Swaps Activities
CFTC’s Division Of Swap Dealer And Intermediary Oversight Issues No-Action Letter Providing Time-Limited Registration Relief To Certain Associated Persons
UK’s Financial Services Authority: Changes To Financial Advice Come Into Force
[AMF Canada] Complaint Reporting System (CRS) – Firms have until January 30, 2013 to file their report
Exchanges & Trading Facilities
LSE announcements hitch disrupts trading
Adam Jones – FT.com
The first day of 2013 trading on the London Stock Exchange has been disrupted by a technical problem that delayed the release of many company announcements by 90 minutes.
Oslo Børs 2012 – Yet Another Turbulent Year
2012 was yet another turbulent year for the stock market. Even though the Oslo market rose over the course of the year, with the OBX Index (which comprises the 25 most traded shares listed on Oslo Børs) up by 14.74% per cent by the end of the year, this was not enough to encourage investors to fully return to investing in shares.
Boerse Berlin – Stable Total Turnover In 2012
The total turnover of both marketplaces XONTRO and Equiduct increased slightly by 1.5 per cent to 48.3 billion Euro in 2012 compared to 2011 (47.6 billion Euro). The number of trades reached 7.6 million, a plus of 10 per cent (2011: 6.9 million).
Burgundy: Aggregated Market Shares – Swedish Equities, December 2012
Osaka Securities Exchange Trading Overview In Year 2012 & December 2012
Vienna Stock Exchange: ATX And Top Performers 2012
TOM MTF Statistics Week 52, 2012
NYSE Announces First-Quarter 2013 Circuit-Breaker Levels
Updated MIAX Options Exchange Fee Schedule
Direct Edge Trading Notice #12-64: EDGA And EDGX Behavior During Locked And Crossed Markets
Athens Exchange Market Operations Committee Decision
Hedge Funds & Managed Futures
Pimco tops European flow chart
Mike Foster – Financial News
US fixed-income giant Pimco attracted E29bn of net inflows from European investors in the 11 months to November 30 – more than double that of its nearest competitor.
Slim’s Pensioners Burned as Funds Sink to Bottom: Mexico Credit
The world’s richest man is proving better at generating wealth for himself than the 1.1 million Mexican pensioners investing with him.
Hedge Funds Cut Bullish Bets to Lowest Since June: Commodities
Hedge funds cut bullish commodity bets to a six-month low as mounting concern that slowing economic growth will erode demand drove prices toward the first fourth-quarter retreat since the global recession.
A rebound for hedgie Robbins
New York Post
Hedge-fund mogul Larry Robbins, founder of $4.5 billion Glenview Capital, posted healthy returns last year after a sickly 2011 by betting big on hospital stocks.
Pimco’s Gross Sees Less Return, Stubborn Unemployment
Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said he expects stocks and bonds to return less than 5 percent in 2013 amid a sluggish economy as the effect of Federal Reserve stimulus diminishes.
Wall Street Journal Trashes Analysts For Blowing It On Facebook
The Wall Street Journal has a big scare-story about analysts at big banks and their Facebook stock ratings. Despite the fact that Facebook’s stock tanked once it hit the public markets, Wall Street analysts have largely issued “buy” recommendations for the stock.
CFTC Commitments Of Traders Reports Update
Banks & Brokers
Executives at collapsed Iceland bank jailed for fraud
Reuters via Yahoo! Finance
Two former executives at an Icelandic bank which collapsed in the 2008 financial meltdown were sentenced to jail on Friday for fraud which led to a 53 million euro loss, in the first major trial of Icelandic bankers linked to the crisis.
Holland joins UBS alumni at Getco
Tom Osborn – Financial News
The former co-head of European prime brokerage at UBS has become the latest equities alumnus from the Swiss bank to take up a senior role at high-frequency trader Getco, Financial News has learnt.
Carlyle consortium to acquire Duff
The Wall Street Journal
Investment banking and valuation advisory firm Duff & Phelps said it agreed to be acquired for about $665.5m by a group that includes private equity firm Carlyle Group.
Position in derivatives haunts Deutsche
Tom Braithwaite, Kara Scannell, Michael Mackenzie – FT.com
Repercussions from Deutsche Bank’s massive pre-crisis position in credit derivatives are still being felt. Stefan Krause, the bank’s chief financial officer, recently devoted part of an investor presentation to allegations from former employees that the bank hid $4bn-$12bn in paper losses on complex derivatives known as leveraged super senior trades.
Top Goldman Sachs execs get shares on New Year’s Eve
Reuters via Yahoo! News
Ten senior Goldman Sachs Group Inc executives, including Chief Executive Lloyd Blankfein, were on New Year’s Eve given stock pegged to earlier restricted awards worth tens of millions of dollars.
Citigroup Hire Goldman’s Capote for Top Post in Mexico
Capote, who was head of investment banking for Goldman Sachs Mexico, started Dec. 12 at Citigroup, according to an internal memo obtained by Bloomberg News and confirmed by Rob Julavits, a spokesman for the New York-based bank.
Settlement Expected on Past Home Loan Abuses
Los Angeles Business Journal
Banking regulators are said to be close to a $10 billion settlement with 14 banks – Including JPMorgan Chase, Bank of America, and Wells Fargo — that would end government efforts to punish lenders for foreclosure abuses like high fees and faulty paperwork, the New York Times reports.
Citigroup, RBS Sued by DZ Bank Over $641 Million in Bonds
Citigroup Inc. and Royal Bank of Scotland Group Plc were sued by Germany’s DZ Bank AG, which accuses the lenders of fraud in the sale of $641 million in mortgage securities.
Deutsche Bank co-CEO sees more Europe bank consolidation: paper
Reuters via Yahoo! News
FRANKFURT – Consolidation of European banks is not yet at an end, and Germany’s sector with its many small banks will have to change, the co-chief executive of Deutsche Bank told a German newspaper.
RBS Retail Structured Products Director McIlwain Said to Leave
David McIlwain has left Royal Bank of Scotland Group Plc , where he was director of retail structured products, according to online records of the Financial Industry Regulatory Authority.
Indexes & Products
Make Way for Active ETFs
JOE LIGHT – WSJ.com
The world of ETFs is about to get pumped up. A long-heralded blossoming of actively managed exchange-traded funds is one step closer, now that the Securities and Exchange Commission earlier this month removed a hurdle that discouraged money managers from releasing such products.
Exchange Traded Funds of the Year: Inverse VIX ETFs
ETF Trends via Yahoo! Finance
For much of 2012, the CBOE Volatility Index, or VIX, has reflected greater complacency in the markets, fueling the rapid growth in inverse VIX related exchange traded funds.
Top Performing Country ETF: Turkey in Focus – ETF News And Commentary
Turkey ETF is the best performing country ETFs this year–up more than 63% year-to-date
BlackRock’s iShares Funds to Raise ETF Fees in 2013
The Motley Fool
STOXX Preliminary Index Report – 2012 In Review
S&P Dow Jones Indices Announces Changes In Canadian Indices – A Deletion From S&P/TSX Venture Composite Index
S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices: Revision – A Share Distribution And Price Adjustment In The S&P/TSX Composite Index
Supreme Court to hear Gabelli appeal of SEC civil fraud penalties
The Supreme Court will hear arguments next week in a case that will determine how much time federal securities regulators have to impose civil fraud penalties . In Gabelli v. SEC , two Gabelli Funds officials argue that the Securities and Exchange Commission waited too long to bring a civil case accusing them of authorizing an improper trading technique at their firm.
People Are Finally Waking Up To China’s Massive Over-Investment Problem
The IMF’s Il Houng Lee, Murtaza Syed, and Liu Xueyan have published a very interesting and widely noticed study called “Is China Over-Investing and Does it Matter?” In it they argue that there is strong evidence that China is overinvesting significantly.
Xi should be bold in pushing change
From his first words as general secretary of the Communist party, Xi Jinping’s tone was different. He apologised for being late and went through a list of problems facing the country in general and his party in particular. He mentioned the aspirations of ordinary people several times, and used the word “socialism” only once.
DealBook: Looking for Opportunity Where Few Others Invest
New York Times
Building on his experience in starting an investment fund in Cambodia, Douglas Clayton is expanding into other regions and countries that pose similar challenges but yield high returns.
ADX Hosts Orientation Presentation On New Trading Mechanism
Abu Dhabi Securities Exchange (ADX) organized a presentation on it new and upcoming trading mechanism for media personnel.
Saudi Stock Exchange (Tadawul) Annual Statistical Report – 2012
Tehran Stock Exchange 2012 Statistical Digest