Deutsche Börse isn’t all that concerned about the ICE-NYSE merger, and instead is casting its eye toward Latin America and Asia as better places to expand. JPMorgan plans to start a new electronic bond-trading platform early this year to compete against Goldman’s and Citigroup’s similar efforts. The Moscow Exchange continues its plans to IPO itself, choosing to launch its stock on its own exchange in the hopes of raising legitimacy as well as capital. In today’s First Read section, take a look at our latest episode of Restoring Customer Confidence, in which Ben Van Vliet, assistant professor of finance, Stuart School of Business, Illinois Institute of Technology discusses his work on the creation of a standard set of rules high frequency trading participants can use to ensure safer markets.
New Restoring Customer Confidence Video
The eighth video in our Restoring Customer Confidence series again deals with high frequency trading. 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»|
HFT Rules: Rules for the Algo Highway
Customer confidence has been hit by a number of different events over the past several years and high frequency trading (HFT) problems have been among them. Ben Van Vliet, assistant professor of finance, Stuart School of Business, Illinois Institute of Technology has been looking the creation of a standard set of rules high frequency trading participants can use to ensure safer markets. Van Vliet has helped initiate the AT 9000 system, which would implement standards for HFT design, backtesting, implementation and portfolio and risk management. Van Vliet says its important that the industry support such a project, rather than wait for regulators to dictate new standards and rules for participants.
About the Restoring Customer Confidence video series
The Restoring Customer Confidence video series answers that question by exploring potential solutions using expert interviews and simple animations.
John Lothian News interviewed more than a dozen professionals in the industry to get their ideas and solutions. As these ideas become practice, or as new concepts are adopted by the industry, we will continue to add them to the site.
Visit the video series page on MarketsWiki.tv over the next several weeks for new ideas and solutions.
Deutsche Boerse CEO: Must Keep Close Eye on Exchange M&A in Asia
Consolidation among exchanges will continue on a global scale and one must “keep a close eye on this development” notably in Asia, the chief executive of Deutsche Boerse AG will say at the company’s New Year reception later Monday, according to prewritten remarks embargoed for 1330 GMT.
**** Mr. Francioni, we plan on doing just that here in the John Lothian Newsletter. Stay tuned.
Jeffrey Sprecher’s Improbable Path to Buying the N.Y.S.E.
NATHANIEL POPPER – NYTimes.com
It was January 2000, and Mr. Sprecher had been cold-calling Wall Street for weeks. He was searching desperately for someone to back his small company in Atlanta, a business that was eating up his money and years of his life.
**** This is an excellent profile of Jeff Sprecher by the New York Times. Nice work Mr. Popper.
Proactive policing needed for bankers
Patrick Jenkins – FT.com
It is rare to see drama and excitement from a bank compliance officer. But on July 17 last year, David Bagley did his bit to change that, resigning live in front of a US Senate committee and the world’s media, as he admitted that as HSBC’s chief compliance officer he had been unable to prevent a vast money laundering scandal in Mexico.
***** I don’t think of compliance officers and drama queens in the same sentence.
Banchile builds for the future with Fidessa’s sell-side trading platform and connectivity network
Fidessa group plc has announced today that Banchile, Chile’s third largest brokerage house, has selected its Latin American sell-side trading platform to underpin its institutional trading activity. The scalable SaaS solution, which includes access to Fidessa’s extensive global connectivity network, will provide Banchile with a firm foundation from which to pursue its growth strategy. The decision followed an extensive due diligence process by Banchile.
***** Latin America is also a place to keep a close eye, but you might get cross-eyed watching Asia and Latin America.
New Assets to Trade Online
THERESA W. CAREY – Barrons.com
A start-up venture launched a new electronic platform on Jan. 7 that allows retail investors to trade options on futures for the first time. Online traders have been able to participate in the equity options market for years, but this new site from Optionshop permits them to trade options on futures in interest rates, equities, currencies, and commodities.
***** Trading futures options online is not new, but it is unique to have a brokerage firm focused and specialized on it.
No equities please, we’re institutional investors
Mark Cobley – Financial News
Equities are set to be the top-performing asset class in 2013, a survey of asset managers, pension funds and insurance companies suggests – but when it comes to their own money, these investors are sticking with fixed income.
***** What is fixed? What is income?
Moscow Exchange IPO Will Be Test of Reforms
LUKAS I. ALPERT – WSJ.com
Russia’s main stock exchange said it plans to list its shares through an initial public offering in Moscow, marking the first major test of the government’s highly touted push to transform the Russian capital into an international financial center and stem the tide of domestic companies listing abroad.
***** What is Russian for IPO?
A Chance to Rub Shoulders With the Elite of Business and Politics
LIZ ALDERMAN – NYTimes.com
The minimum $20,000 entry fee has been paid. Fur hats and silk underwear are in the luggage. And stacks of business cards are ready to be slipped into the palms of the business and political elite gathering this week at the snowy alpine fortress that is the World Economic Forum in Davos, Switzerland.
***** It is cold enough in Chicago.
DealBook Column: Prophecies Made in Davos Don’t Always Come True
New York Times
Many influential people will gather this week at the World Economic Forum to make predictions, and some of them will be right, and some wrong.
***** Wrong prophecies? Who would have guessed?
Current Account: Dodd-Frank, Seen from Missouri
FRANCESCO GUERRERA – WSJ.com
Few would pair Columbia, Mo., and 200 Park Ave. in New York City when trying to assess the most drastic overhaul of U.S. financial rules since the Great Depression. But the questions raised in mid-Missouri and Midtown Manhattan in the wake of the 2007-2008 financial turmoil are similar: Has the response, which includes the Dodd-Frank law and other regulations, gone too far?
***** Show Me Regulation and I will show you Dodd-Frank.
Ten private equity challenges
Paul Hodkinson – Financial News
Various challenges face the private equity market. Here industry adviser Altius Associates lists the 10 largest.
***** Turns out stale bagels was number 15.
Virtu shuts London office and heads for Dublin
Tim Cave – Financial News
Virtu Financial, one of the world’s largest high-frequency trading and marketmaking firms, is to shut its London office and run all of its European operations from Ireland, Financial New has learnt.
***** It will be a Virtu-al office.
Even if It Enrages Your Boss, Social Net Speech Is Protected
STEVEN GREENHOUSE – NYTimes.com
As Facebook and Twitter become as central to workplace conversation as the company cafeteria, federal regulators are ordering employers to scale back policies that limit what workers can say online.
***** Freedom of speech. What a novel concept?
2013…..Looking into the Baringa Crystal Ball
Matthew Clay – FOW
In many ways, from a financial services perspective, 2012 was a year that never quite fulfilled its potential for change. Neither the much anticipated implosion of the Eurozone, nor the raft of regulatory initiatives set for completion
played out in quite the way that the industry may have expected.
***** Don’t drop the crystal ball on your foot, it may not hurt at first, but I can see where it might in the future.
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Deutsche Börse eyes LatAm and Asia growth
Philip Stafford in London – FT.com
Deutsche Börse has signalled its interest in expanding in Asian and Latin America as it explores its next move in the wake of IntercontinentalExchange’s planned purchase of NYSE Euronext.
JPMorgan Plans to Start Electronic Corporate Bond Trading System
JPMorgan Chase & Co. , the biggest U.S. bank by assets, plans to start trading corporate bonds electronically in the early part of this year, joining Citigroup Inc. and Goldman Sachs Group Inc. in helping clients buy and sell debt among themselves.
Moscow exchange presses ahead with IPO
Courtney Weaver in Moscow and Philip Stafford in London – FT.com
The operator of Russia’s largest bourses is pressing ahead with an initial public offering in an attempt to convince more of the country’s companies to shun London for a domestic listing. Unlike many of the Russian companies that have raised capital in the UK in recent years, the Moscow Exchange will attempt to set an example by listing exclusively in Russia on its own platform.
Transcripts show Federal Reserve underestimated crisis in 2007
WASHINGTON — The Federal Reserve on Friday released transcripts of its eight regular meetings and three emergency telephone conference calls in 2007. The meetings occurred as the country was on the brink of the worst financial crisis since the Great Depression.
Letter from Davos: The ‘first day of school’
Anne Richards – Financial News
Getting to Davos is not for the faint hearted. For your correspondent, this required taking a first flight at the stupid o’clock time of 5.50am, followed by a connection through Schipol to Zurich, then a two and a half hour bus journey to the village itself.
In Davos, Atmosphere for Bankers Improves
New York Times
Among the government overseers who will be in attendance at the World Economic Forum, there appears to be a growing sentiment that banks have taken enough abuse.
Haldane says changes afoot for “too complex” bank rules
Reuters via Yahoo! Finance
LONDON – Bank capital rules coming into force this month are too complex and efforts to simplify them are already underway, a senior Bank of England official said on Monday.
Barclays Wealth division ‘out of control’, says secret report
Roland Gribben – Telegraph
Andrew Tinney, chief operating officer at the £180bn business, has resigned following an inquiry into the “shredgate” affair and allegations that he misled senior management about the existence of the report before finally confessing last month. Barclays said he left without any pay-off. His pay and perks package is estimated to have been worth £4-£5 million a year.
Further job cuts likely in finance sector
Brian Groom, Business and Employment Editor – FT.com
Financial services companies are likely to cut a further 18,000 jobs across the UK over the next three months despite optimism that business volumes will rebound, the CBI employers’ group and PwC have reported.
Euro zone splinter group seen near deal on transaction tax
Reuters via Yahoo! Finance
A group of euro zone countries, led by Germany and France, looks set for a green light next week to push ahead with a tax on financial transactions, a step politicians hope will please voters but which critics have warned could backfire.
Abundant liquidity oils the wheels of US market
Shasha Dai – Financial News
This time last year, buyout firms predicted 2012 would be the year of mid-market rather than mega-deals, amid concerns over Europe’s continued sovereign debt problems, the US presidential election and recovering but fragile credit markets.
Dark Pool Disclosures to Users Are Subject of Review by Finra
Securities regulators are examining disclosures by broker-run trading venues known as dark pools, concerned they are not always giving their customers a complete picture of how they work.
CFTC Staff to Host Public Roundtable to Discuss the “Futurization of Swaps”
The Commodity Futures Trading Commission (CFTC) today announced that staff will hold a public roundtable on January 31, 2013, from 9:30 a.m. to 3:15 p.m., to discuss the “futurization” of the swaps market.
CFTC Extending Review Period on a Request from the Chicago Mercantile Exchange Inc. to Adopt New Chapter 10 (“Regulatory Reporting of Swap Data”) and New Rule 1001 (“Regulatory Reporting of Swap Data”) of CME’s Rulebook
[AMF Canada] Information regarding registration as Advising Representatives and Associate Advising Representatives
IOSCO Publishes Suitability Requirements For Distribution Of Complex Financial Products
ESMA Calls For Improvements In Disclosures Related To Goodwill Impairment
Exchanges & Trading Facilities
Deutsche Boerse CEO Not ‘Sleepless’ Over ICE-NYSE Deal
Deutsche Boerse AG, the German exchange blocked from buying NYSE Euronext last year, said it’s not worried by IntercontinentalExchange Inc. ’s agreement to acquire the operator of the New York Stock Exchange.
Borsa Italiana Launches AGREX, The First European Derivatives Market For Durum Wheat
Borsa Italiana has today launched AGREX, a new segment on IDEM and the only Italian derivatives market dedicated to agricultural commodities. The first products available for trading on this new segment are durum wheat futures.
CME Group Announces Trading Volume Record in NYMEX Brent Crude Oil Futures
CME Group, the world’s leading and most diverse derivatives marketplace, today announced a record in daily trading volume for its NYMEX Brent (BZ) crude oil futures contract.
TMX Group Equity Exchanges Ranked First in the World for Number of New Listings in 2012
TMX Group Limited today announced that combined, Toronto Stock Exchange and TSX Venture Exchange were first in the world among global exchanges by number of new listings for the fourth consecutive year, according to data from the World Federation of Exchanges (WFE) as of December 31, 2012.
MIAX Options Exchange System Issue – MIAX Quote Mitigation
The MIAX Options Exchange has identified a system issue related to MIAX quote mitigation where the MIAX Top of Market (ToM) and OPRA data feeds may not have properly updated a bid or offer when the previously displayed bid or offer was subject to mitigation and then subsequently traded or was cancelled.
TOM Launches Index Options After A Successful Start In Equity Options
After a successful introduction of equity options, as of today, TOM is offering trading in options based on the value of the AEX index
Moscow Exchange Announces Intention To Float On Its Own Platform
BM&FBOVESPA announces Market Makers for Options on the Stocks of Banco Bradesco, Gerdau and Banco do Brasil, As Well as Options on Ibovespa
BM&FBOVESPA announced (January, 18) the winning institutions in the competitive bidding process to select market makers for options on the stocks of Banco Bradesco S.A., Gerdau S.A. and Banco do Brasil S.A., as well as options on the Ibovespa Index (IBOV). The institutions concerned will be obliged to act as market makers for 12 months starting on February 14, 2013.
Reto Francioni Chief Executive Officer, Deutsche Börse AG, Speech At New Year´s Reception Frankfurt
Review Of 2012: “Transparency In Energy Markets” Continuously Expanded And On Track For REMIT
ASX Board Renewal – Dr Ken Henry
Re-Location of PM-Settled S&P 500 Index Options (SPXPM) From C2 to CBOE
TSX Markets Top 20 Largest Consolidated Short Position Report – January 15, 2013
Hedge Funds & Managed Futures
Block trading comes back into vogue
Senior European traders have spoken of a marked increase in block trades among institutional investors in recent weeks, amid a renewed appetite for equities and as part of the shift away from electronic execution and towards voice-brokered transactions.
Pimco to Norway Love Mexico as New Bond Gauges Use GDP
The world’s biggest investors are moving away from allocating money to government bond markets based on their amount of debt, a strategy that has favored the largest borrowers for three decades.
Ex-BlueGold founder Andurand readies launch
Harriet Agnew – Financial News
The co-founder of BlueGold Capital Management, the commodities hedge fund manager whose fund shut down last year after losing a third of its value in 2011, is preparing to launch a hedge fund that will focus on trading oil derivatives.
Doll plots course to equities growth at Nuveen
Sarah Krouse – Financial News
Bob Doll, the former BlackRock strategist, has put organic growth at the heart of plans to increase the size of the equities business at his new firm Nuveen Asset Management, which, he said, “doesn’t cut it” at $15bn under management.
With Tax Advantages Looking Shaky, Private Equity Seeks a New Path
JANE SASSEEN – NYTimes.com
As Washington grapples with the country’s fiscal woes, the private equity industry is grudgingly facing a new reality: its long-held tax advantages are likely to disappear.
Indian Jeweler Becomes Billionaire as Gold Price Surges
Netty Ismail, Zohair Siraj & Swansy Afonso – Bloomberg
T.S. Kalyanaraman is beloved by his customers and detested by his rivals for bringing transparency to jewelry sales in India, where haggling is the norm.
SAC Misses Out on Big Investment
JENNY STRASBURG – WSJ.com
SAC Capital Advisors late last year lost a potential investment from a Japanese bank that could have landed the hedge-fund giant hundreds of millions of dollars to manage, a setback for a firm under siege from government investigators and facing significant client withdrawals.
Clients follow Hosking out of Marathon
Mike Foster – Financial News
Investors have pulled £5bn from Marathon Asset Management, the London-based investment manager, after news of the departure of one of its three founders last summer.
Dutch pensions giant begins house hunting in UK
Mark Cobley – Financial News
Europe’s largest pension fund has said it is investing £160m in rental housing in London, a rare move for a large institutional investor in a market that has traditionally been dominated by private landlords.
Near-record sums flow into Europe junk funds
Michael Stothard – FT.com
Investors poured near-record amounts of money into European “junk” bond funds last week, brushing off speculation that the asset class may be overvalued as they continue to search for yield.
Active equities sour year for BlackRock
Sophie Baker and Mike Foster – Financial News
The performance of BlackRock’s active equity funds has fallen below their benchmark over one, three and five years, even though the company took steps to bolster its position in the second half of 2012.
Galena Slides as Commodity Hedge Funds Trail Index a Second Year
Hedge funds lost money for commodity investors for a second straight year as managers from the Galena Metals Fund to Clive Capital LLP trailed benchmark indexes of raw materials.
Speculators Boost Bullish Bets Most Since November: Commodities
Hedge funds raised bullish commodity wagers by the most since November as a jump in U.S. housing starts and the first acceleration in Chinese growth since 2010 drove prices to a three-month high.
Banks & Brokers
RBC promotes Rising Star to head of electronic trading
Michelle Price – Financial News
RBC Capital Markets has promoted Stuart Baden Powell to head of European electronic trading as it continues its push into European equities execution, according to two people familiar with the move.
Swiss Banks Vie for Declared American Assets Amid U.S. Tax Probe
Swiss wealth managers are resuming the fight for American clients four years after the U.S. sued UBS AG in a case that undermined banking secrecy and triggered the withdrawal of billions of dollars from Zurich and Geneva.
Baum leaves Dreyfus
The Wall Street Journal
Jonathan Baum, chairman and chief executive of Bank of New York Mellon’s mutual-fund unit, has left the firm, the company said on Monday.
Deutsche Bank Will Continue to Provide Agriculture Investments
Deutsche Bank AG will continue to provide agriculture investments after concluding that they don’t cause rising prices for farm commodities.
U.S. power regulator to fine Deutsche Bank unit over energy trading: WSJ
Reuters via Yahoo! News
U.S. electricity regulators are expected to impose a $1.5 million fine as early as Tuesday on a Deutsche Bank AG subsidiary over alleged power market manipulation, the Wall Street Journal reported, citing people with knowledge of the matter.
Barclays Says Tinney Steps Down as COO of Wealth Management Unit
Barclays Plc , Britain’s second- largest bank by assets, said Andrew Tinney stepped down as chief operating officer of its wealth-management unit.
Barclays Staff Seek Anonymity in U.K. Libor-Fixing Case
A group of Barclays Plc employees asked a judge to block their names from being published ahead of the U.K.’s first trial related to manipulation of the London interbank offered rate.
Broken-up RBS bank may be easier to sell – Posen
Reuters via Yahoo! Finance
LONDON – Breaking up Royal Bank of Scotland could make it easier to sell the part state-owned British lender, a former Bank of England monetary policy committee member said on Monday.
HSBC names new head of regulatory compliance
Reuters via Yahoo! News
LONDON – HSBC Holdings named a former auditor of the bank as its new head of global regulatory compliance on Monday in the latest move by Europe’s biggest bank to beef up its compliance functions.
HSBC Appoints Irene Dorner a Group Managing Director
Bank HSBC Holdings PLC said Monday that it has appointed Irene Dorner, President and Chief Executive Officer of HSBC North America Holdings Inc. and HSBC U.S.A, a Group Managing Director with effect from Feb. 1.
SIX Financial Information and Squawker Form Partnership
SIX Financial Information and Squawker, the negotiation venue for sell-side block trading, today announced the signing of a new partnership. According to the agreement, SIX Financial Information will supply Squawker with real-time, pan-European market data via its flagship product Market Data Feed (MDF) allowing Squawker participants to execute pan-European block trades always at consolidated mid-price and consolidated VWAP.
Goldman bankers get rich betting on food prices as millions starve
Tom Bawden – The Independent
Goldman Sachs made more than a quarter of a billion pounds last year by speculating on food staples, reigniting the controversy over banks profiting from the global food crisis.
Best Facebook Analyst Jobless Amid Kazakh Brokerage Cull
Nariman Gizitdinov – Bloomberg
Five months after Forbes magazine crowned Erlan Abdikarimov the best Facebook Inc. (FB) analyst, the 24-year-old Kazakh is out of a job as new rules in the Central Asian country force boutique investment banks like his to close.
Morgan Stanley Finds Opportunity in Distressed Property Assets
Distressed property markets where deals are difficult to finance and yield spreads are at all-time highs provide attractive investment opportunities, according to Morgan Stanley’s real estate unit.
CeFDex Becomes First CFD Provider With Branch Office In Austria
Branch Office Opened In Vienna Today – Customers In Austria Have Direct Access To Services And Extended Product Range – Following Spain, Second EU Market Tapped Within Very Short Time – CFD
BGC Partners Announces Its 2013 Annual Meeting of Stockholders
Indexes & Products
New Dow Jones Credit Suisse Hedge Fund Index Commentary Reviews Hedge Fund Performance in 2012
The Dow Jones Credit Suisse Hedge Fund Index team today released its 2012 Hedge Fund Market Review. The report includes statistics on hedge fund performance and asset flows in 2012.
Five db X-trackers on CSI300 sector index family launched on Xetra
ETF Securities now also lists ETPs on SIX Swiss Exchange [pdf]
SIX Swiss Exchange ETF Quarterly Statistics: 4th Quarter 2012
Samsung Launches Its First QFII ETF: Tracks The FTSE China A50 Index
Tradeweb Exchange-Traded Funds Quarterly Update
ETF Securities Now Also Lists ETPs On SIX Swiss Exchange
Tokyo Stock Exchange: New 4ETNs To Be Listed On Feb. 18, 2013 (Mon.)- Nomura Group,
Fixnetix Offers Microwave Access Between London And Frankfurt – Global Managed Services Provider Partners With Custom Connect MV
KYTE Group Automates Market Abuse Surveillance With b-Next CMC:Suite For Multi-Instrument Type Trading
Schroders trader arrested in probe
Brooke Masters, Alice Ross and Bryce Elder – FT.com
An equity trader at Schroders and four other people were arrested on Tuesday morning as part of a new insider dealing probe launched by the UK Financial Services Authority.
Ex-Goldman Sachs Programmer Seeks Dismissal of N.Y. Charges
A former Goldman Sachs Group Inc. programmer who successfully challenged a federal conviction for stealing internal code from the bank asked a judge to dismiss state charges filed against him for the same allegations.
BCSC alleges that woman perpetrated fraud and made false statements to the commission
Environmental & Energy
Climate Change Given Prominence in Obama’s Address
The New York Times
President Obama made addressing climate change the most prominent policy vow of his second Inaugural Address on Monday, setting in motion what Democrats say will be a deliberately paced but aggressive campaign built around the use of his executive powers to sidestep Congressional opposition.
**RKB — Article cites Yale survey that found that people across party lines, including 52 percent of Republicans, support taking action to reduce global warming.
Averting Climate Change May Cost $700 Billion a Year
About $700 billion a year of new spending on renewable power, low-carbon transport and energy efficiency is needed to meet the United Nations goal to cap temperature rises, a report for the World Economic Forum showed.
Davos: Investment-grade green infrastructure ‘a precondition for sustainable growth’
Global political and business leaders gathering at the World Economic Forum in Davos will today receive a stark warning that long-term sustainable economic growth can only be delivered through an overhaul in infrastructure investment practices that serves to stimulate trillions of dollars of investment in green technologies
Singapore Exchange Q2 net up 17 percent, boosted by derivatives
Reuters via Yahoo! Finance
Singapore Exchange Ltd (SGX), Asia’s second-largest bourse operator by market capitalisation, reported a 17 percent rise in quarterly net profit, helped by a strong performance at its derivatives business.
JP Morgan names Hussein Hassan as its global head of Islamic finance
Farah Khalique – Financial News
JP Morgan on Tuesday said it named Hussein Hassan, an industry veteran and former UBS and Deutsche Bank executive, as its new global head of Islamic finance as the US investment bank seeks to expand its sharia-compliant franchise.
DIFC Records Over 16% Employment Growth In 2012
Dubai Mercantile Exchange: Oman Included In First Commodity Fund
The Palestine Exchange (PEX) Announces Thursday 24 January 2013 An Official Holiday