John Lothian Newsletter: NYSE Euronext Explores Adding Partners To Amex Joint Venture; Private equity profits called into question; Osaka to delay key futures contract launch

Jan 24, 2012

NYSE Euronext is considering a plan to add more equity partners to its Amex stock exchange.  Studies, news and books are pointing out that returns from private equity organizations have done a great job of rewarding the PE managers, but not so much the investors. Japan’s OSE slows down plans to release a new futures contract; bad news for an exchange that is seeing dwindling volume.

Observations – Statistics – Commentary

Corzine Is Sued Under Racketeering Law by MF Global’s Commodity Customers
By Linda Sandler – Bloomberg
Jon CorzineMF Global Holdings Ltd.‘s former chief executive officer, was sued under U.S. racketeering law by commodity customers alleging he and other executives “unlawfully” took money from their accounts and failed to segregate their money as the law requires.

**** There is a lot of racket alright.  The number of retweets of stories about MF Global is mind bending.  If I was just a little more paranoid I would say there was a concerted effort to push the MFG story.  It uses some of the same techniques I see from the anti-Fed, pro-gold crowd.


The Astonishing Lack of Progress at MF Global
By Matt Koppenheffer | Motley Fool
On Jan. 10, the e-book version of The Motley Fool’s report on MF Global hit the digital shelves at In that report, we were hoping to provide a background for readers who wanted to get up to speed on the wild and head-scratching circumstances surrounding the eighth-largest bankruptcy in U.S. history. It was fully our expectation that much would have changed by the time 2011 had evaporated into 2012. Sadly, there has been a surprising lack of significant changes over the past month.

“As time has unnecessarily passed, the carnage has only become greater. Exchange volumes have plummeted, trader & customer boycotts of the exchanges and industry are growing, industry confidence has been shot, and affected businesses are shutting down.”
— Don Miller, former MF Global customer

**** Not much of a story, but this quote at the beginning is enough to make your stomach turn.


NYSE-Deutsche Boerse Said to Lack Support to Overturn EU Ban
NYSE Euronext and Deutsche Boerse AG are unlikely to garner enough support from European Union commissioners to overturn a looming veto over their plan to create the world’s largest exchange, according to four people familiar with the situation.

**** No support for the veto that has yet to come?  Are we getting ahead of ourselves?


CME Group Expands Centrally Cleared OTC Agricultural Offering with Eight New Grain and Oilseed Swaps
CHICAGO, Jan. 23, 2012 /PRNewswire/ — CME Group, the world’s leading and most diverse derivatives marketplace, today announced it has expanded its centrally cleared, over-the-counter (OTC) agricultural swap offering through the introduction of eight new grain and oilseed swaps. The new swaps will be available for clearing on February 13, pending regulatory review.

CME Broadens its Swaps Clearing
DTN / The Progressive Farmer
CME ClearPort now will include soybean products and crush calendar swaps, as well as a variety of one-day-settlement swaps.

**** I would like the CME Group team doing to the swaps training to stop by and give me and my team a session on how this works.


ICE Futures Canada Announces First Trades of New Wheat Contract
Press Release
WINNIPEG, Manitoba, Jan. 23, 2012 /PRNewswire/ — ICE Futures Canada, Canada’s leading agricultural exchange and a subsidiary of IntercontinentalExchange, announced the successful introduction of its new milling wheat futures contract, which began trading today.

**** A webinar on the new grain futures contracts, including a market overview, is available at


Uptick rule could curb quant fund risk: Man Group CEO
Reuters via Yahoo! News
LONDON (Reuters) – The head of Man Group, the world’s biggest listed hedge fund manager, is backing the reintroduction of the so-called ‘uptick rule’ to reduce the risk of a market crash prompted by lightning-fast computer traders.

**** Interesting recommendation considering it is coming from Man Group’s CEO.


Comment: SEC’s audit trail gamble
By RT Leuchtkafer – Financial Times
Just a few weeks after the notorious May 6 2010 “flash crash”, the US Securities and Exchange Commission proposed a multibillion-dollar supercomputer database. This project is a huge test of the SEC’s skill, and its fate will reveal whether the regulator can emerge from an existential crisis that began with the 2008 financial collapse and accelerated with the Madoff and Stanford scandals.

**** Can we give this to some college sophomores to work on?


Nasdaq enters currency battle
Tom Osborn – Financial News
Nasdaq OMX, the US-European exchange operator, is planning to hire staff in European derivatives clearing ahead of new clearing rules coming in this year.

****  Who?


Davos Man Diminished by Scandal With Murdoch Perennials Missing
Davos Man is approaching his annual Alpine get-together with humility after spending the past year getting fired, arrested, belittled and occupied.

Wall Street Goes to Davos: What It Wants
CNBC via Yahoo! Finance
Europe’s banking system is on the brink – and Wall Street is its bedfellow. So what does Wall Street want out of Europe’s most elite economic confab? Skiing, distressed debt deals, and above all: solvency….

Super-Rich Play Snow Polo as Igloo Agitators Heckle Davos Elite
Europe’s rich and famous faced tough decisions as they assembled at a chic Swiss ski resort this weekend: whether to drink Taittinger or whisky-infused hot chocolate, and which piglet to back in the afternoon race.


The great brokerage shake-out
Tim Cave – Financial News
The long-predicted bloodbath in investment banking has begun in earnest. Tens of thousands of jobs have been slashed across the industry and more pain is in the pipeline as banks downsize further. Behind the frenzy of cuts, however, a much deeper and wider re-engineering is taking place.


RiskAdvisory Webcast Stresses Need for Dodd-Frank Preparation
The weighty new Dodd-Frank regulations demand a revision of both business practices and technology solutions, from determining the correct compliance status for your company to ensuring your systems can adequately collect, retain and report transaction-related data. The time has come to fully prepare your operations and your systems for successful compliance.

Join RiskAdvisory, a division of SAS, for a complimentary webcast with Dodd-Frank thought leaders that provides a hit list of mission-critical “to do’s” to achieve regulatory readiness in 2012. Plus, learn the upside of revisiting your business processes, data management and reporting structures beyond new regulatory mandates.

For details and the view the webcast, visit


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Lead Stories

NYSE Euronext Explores Adding Partners To Amex Joint Venture
NYSE Euronext (NYX) may add more equity partners to its Amex stock-options exchange, expanding a strategy that has boosted trading volume and turned the platform into the Big Board parent’s largest U.S. derivatives market.

Private equity profits called into question
By Dan McCrum in New York – Financial Times
Private equity has proved better at enriching its own managers than producing investment profits for US pension funds over the past decade, according to a study prepared for the Financial Times by academics at Yale and Maastricht University.

Osaka to delay key futures contract launch
By Philip Stafford in London – Financial Times
The Osaka Securities Exchange, Japan’s second largest bourse by market capitalisation, has delayed a venture to launch a key new derivatives contract even as its principal markets suffered a heavy drop-off in volumes in the last quarter.

Connectivity Challenges Peaking As Market Fragmentation Accelerates Globally, TABB Says
Global Sell-Side Investment On Communications In 2012 Estimated To Reach Nearly $5.2 Billion, With Extranet Connectivity Capturing 45% Of Total Spend
Press Release

EU ministers push bondholders in Greek deal
Associated Press via Yahoo! News
European finance ministers piled the pressure on Greece’s private creditors Monday to reach an agreement with Athens to cut the country’s massive debt load, with the Dutch representative warning bondholders that they may be forced to take losses.

EU’s Barnier says will stick to bank capital plan
Reuters via Yahoo! News
LONDON (Reuters) – Michel Barnier, European Commissioner in charge of financial regulation, said on Monday that he would stick strictly to a timetable already agreed for implementing stricter Basel III bank capital requirements.

Berlin ready to see stronger ‘firewall’
By Gerrit Wiesmann in Berlin, Alex Barker in Brussels, and Kerin Hope in Athens – Financial Times
Germany is open to boosting the firepower of the eurozone’s rescue funds to E750bn in exchange for strict budget rules favoured by Berlin in a new fiscal compact for all members of the currency union.

There is no way back after NYSE-Börse talks
Michelle Price – Financial News
As the European Commission inches ever closer to what many believe will be the rejection of the merger between NYSE Euronext and Deutsche Börse, it is becoming clear that the entire merger saga has had an irrevocable impact on the exchanges themselves, and the industry at large.

Bold thoughts needed to stem banker exodus
By Tom Braithwaite – Financial Times
Kenneth Griffin, the head of Citadel, has a pile of CVs equivalent to half the population of Pittsburgh. Some 150,000 potential recruits are in the hedge fund’s “talent database”, he revealed last week in a letter to investors.

European Parliament To Scrutinize Credit Rating Agencies’ Work And Sovereign Debt Ratings
Press Release

Environmental Trading News

GreenX Introduces Spread Trading for California Carbon Allowance Futures
Effective Sunday, February 12, 2012 for trade date Monday, February 13, 2012, GreenX will introduce calendar spread functionality for trading in California Carbon Allowance Futures. Spread functionality will be available on CME Globex and through CME ClearPort.

RWE, Europe’s Biggest Emitter, Cancels Membership of BlueNext 
RWE AG, Europe’s biggest emitter of greenhouse gases, canceled its membership of the BlueNext SA spot carbon market, as the region is set to decide this year which exchanges will help sell billions euros of allowances.

EU Consultation Marks Start of Process To Regulate Carbon Emissions From Shipping
Bloomberg BNA
The European Union in 2012 will consider proposals on how best to regulate greenhouse gas emissions from international shipping, the European Commission said in a consultation document published Jan. 19. The proposals, which the Commission will publish before the end of 2012, are likely to mirror the inclusion of international aviation in the European Union’s Emissions Trading System (ETS), under which airlines must surrender carbon allowances for all flights into, out of, or within the European Union.

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

ICE Canada Wheat-Market Bid Slowed by Grower Fight With Harper on Monopoly
IntercontinentalExchange Inc.’s bid to profit from Canada’s first open markets for wheat and barley in seven decades may be hindered as some farmers seek to retain a monopoly on grain sales.

BATS Announces First Primary Listings; Welcomes New iShares ETFs
Press Release
KANSAS CITY, Mo., Jan. 12, 2012 /PRNewswire/ — BATS Global Markets (BATS), a global operator of stock and options markets, today announced that BlackRock, Inc.’s (NYSE: BLK) iShares® Exchange Traded Funds (ETFs) business, the world’s largest manager of ETFs, will list eight new ETFs on BATS Exchange, marking BATS’ first primary listings.

BME: AIAF Admits To Trading One Issue By Caixabank Specifically Aimed For SEND – The Value Of The Issue Reaches E3 Billion
Press Release
AIAF, BME’s Corporate Debt Market, has admitted to trading one issue of single bonds issued by CaixaBank, worth E3billion on SEND (Sistema Electrónico de Negociación de Deuda), AIAF’s electronic trading platform for retail investors.

MEFF New Members
Press Release

2011 WFE Market Highlights
Press Release

CME Group Clearing Advisory
IMPORTANT: Additions to Futures, Options, and Combo FIXML Product Reference Files, and Two New Valuation Methods Effective January 23, 2012

CME Group Clearing Advisory
New Cash with Interest Program (IEF5) Provider

CME Clearing – Performance Bonds / Margins
Performance Bond Requirements: REVISED: Petroleum Outrights; Interest Rate Intra-Commodity Spread Rates; FX Inter-Commodity Spread Credits- Effective Monday, January 23, 2012

Solvay admitted to NYSE Euronext in Paris
Paris, 23 January 2012 – Solvay, a leading global player in chemicals already listed on NYSE Euronext in Brussels, today celebrated its listing in Paris.

Banks, Brokers & Dark Pools

Fannie, Freddie writedowns too costly: Regulator
The regulator for Fannie Mae and Freddie Mac told lawmakers that forcing the two mortgage firms to write down loan principal would require more than $100 billion in fresh taxpayer funds.

GFI Group cuts broker headcount
Michelle Price – Financial News
US-headquartered interdealer-broker GFI Group has cut up to 4% of its world-wide broker headcount as the company reduces costs amid worsening market conditions, according to sources familiar with the situation.

Dealers frustrated by SG’s refusal to clear CDS
By Christopher Whittall – IFR
LONDON, Jan 23 (IFR) – The refusal by Societe Generale to clear eligible credit default swaps through a central counterparty is frustrating some market participants.

Credit Suisse Bonuses to Include Bonds Made From Derivatives
Credit Suisse Group AG plans to pay a portion of senior employees’ 2011 bonuses in bonds backed by derivatives, reviving a maneuver from 2008 that helped the firm dispose of risky assets while preserving the value for staff.

STREET MOVES: Wells Fargo Hires Five UBS Financial Advisers
FOX Business
Wells Fargo Advisors, the brokerage unit of Wells Fargo & Co. (WFC) recently hired five financial advisers from UBS Wealth Management Americas who managed a combined $644 million in client assets.

Pandit Pariah No More as U.S. Bankers Gain Ascendancy at Davos
Citigroup Inc. (C) ‘s Vikram Pandit, leader of the U.S. bank that took the most government aid in the financial crisis and that has the worst stock performance over the past decade, is ready for a starring role at Davos.

JPMorgan Sued by John Hancock Over Mortgage Securities
JPMorgan Chase & Co. was sued by Manulife Financial Corp.’s John Hancock Life Insurance unit, which accused the bank of fraud in connection with the sale of residential mortgage-backed securities.

HSBC Holdings Appoints Stuart Levey Group Managing Director
FOX Business
Global bank HSBC Holdings PLC (HBC) said Tuesday it has appointed Stuart A Levey, 48, Chief Legal Officer, a Group Managing Director with effect from Jan. 18 and he joins the Group Management Board.

End of the Party: Wall Street Tightens Belt
Sharp declines in annual profits at Wall Street institutions like Goldman Sachs, Morgan Stanley and Merrill Lynch have meant a rude awakening for high-flying investment bankers, whose pay packets are directly linked to the bottom line.

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.

Greater Penalties for Insider Trading
Sentences for insider trading have been on the rise since the Justice Department began its latest crackdown in 2009 that started with the arrest of Raj Rajaratnam. The past year had the highest sentences ever given for this type of crime, including the 11-year prison term for Mr. Rajaratnam.

An Antitrust Chief at Justice Is Leaving
A shuffling at the top of the Justice Department’s antitrust unit could lead to an election-year fight between President Obama and Senate Republicans.

Diamondback Capital Agrees to Settle SEC Insider Trading Charges
Washington, D.C., Jan. 23, 2012 — The Securities and Exchange Commission today announced that Diamondback Capital Management LLC has agreed to pay more than $9 million to settle insider-trading charges brought by the Commission on Jan. 18.

NFA takes emergency enforcement action against Georgia firm Crabapple Capital Group LLC and its principal, Robert Allen Christy
January 23, Chicago – National Futures Association (NFA) announced today that it has taken an emergency enforcement action against Crabapple Capital Group LLC (CCG), a commodity pool operator/commodity trading advisor located in Milton, Georgia, and its principal Robert Allen Christy.

CFTC Orders Conn. Resident Timothy Michael Murphy and His Company, Centurion Global Capital Management LLC, to Pay $360,000 for Commodity Pool Solicitation Fraud
Washington, DC – The Commodity Futures Trading Commission (CFTC) today announced that it filed and simultaneously settled charges against Timothy Michael Murphy of Redding, Conn., and his New York-based company, Centurion Global Capital Management LLC (CGCM), for fraudulently soliciting at least 40 customers to participate in a commodity pool.

ESMA Launches A Consultation On Short Selling And CDS
Press Release
In November 2011 the Council and the Parliament voted on a Regulation on short selling and certain aspects of credit default swaps. This is about to be published and should be applicable from 1 November 2012. According to the Regulation ESMA has to submit its technical standards to the Commission by 31 March 2012.

RiskAdvisory Webcast Stresses Need For Dodd-Frank Preparation – Industry Observers Outline Timely Compliance Steps To Align Business, Systems
Press Release

ASIC consults on transfer determinations by ASIC for trustee companies providing traditional trustee company services

ASIC improves disclosure by infrastructure entities

Citigroup Loses $17 Million Award in Employment Arbitration
Bill Singer rages against yet another uninformative FINRA Arbitration Decision. Why bother telling us that the Panel awarded nearly $17 Million?

Meet Robert Allen Stanford: Stanford Trial Begins Today
The trial of Robert Allen Stanford begins this week. Stanford, a billionaire who established well-known financial institutions in Antigua, Barbuda and elsewhere, was charged with orchestrating a $7 billion Ponzi scheme in 2009.

SEC, SIPC to argue in court over Stanford claims
Reuters via Yahoo! News
WASHINGTON (Reuters) – Securities regulators are due in court on Tuesday to argue that a brokerage industry-backed protection fund should let thousands of victims of Allen Stanford’s alleged Ponzi scheme file claims for compensation.

Investments – Indexes – Managed Futures – Managed Funds

Hedge Fund Investors and Managers Gather in Florida to Discuss Market Opportunities in 2012
Business Wire via Yahoo! Finance
Hundreds of hedge fund managers and investors have descended on Boca Raton to discuss how to find opportunities and returns for their portfolios amongst continued global market volatility.

Vanguard Chief Investment Officer Gus Sauter Calls for Greater Education Efforts from ETF Industry
Business Wire via Yahoo! Finance
Vanguard Chief Investment Officer Gus Sauter challenged the exchange-traded fund industry to be responsible in developing new products and called for greater efforts to educate investors about ETFs.

Avenue Capital raises $2bn for Europe fund
By Henny Sender in Hong Kong – Financial Times
Distressed debt investor Avenue Capital has raised $2bn for its second Europe-focused fund, joining a long list of rivals aiming to take advantage of the difficulties faced by the region’s governments and banks.

Morgan Stanley Is Said to Plan Sale of U.K. Wealth Manager to Bridgepoint
Morgan Stanley (MS) is in talks to sell U.K. wealth manager Quilter Holdings Ltd. to buyout firm Bridgepoint Capital Ltd., two people with knowledge of the plan said.

MarkitSERV Starts Interest Rate Derivative Trade Data Feed to New DTCC Global Trade Repository
London and New York, NY – MarkitSERV, the most widely used electronic trade processing service for OTC derivative transactions, today announced that it is now transmitting confirmed trade records to the Depository Trust and Clearing Corporation’s (DTCC) new Global Trade Repository (GTR) for over-the-counter (OTC) interest rate derivatives.

Comprehensive Study of Alternative UCITS Funds by PerTrac Finds Long/short Equity Most Popular Strategy
Business Wire via Yahoo! Finance
Long/short equity is the most popular strategy pursued by Alternative UCITS funds, and overall, funds invested in emerging markets have posted the best performance from January 2002 through October 2011, according to PerTrac, the world’s leading provider of analytics, reporting and communications software for investment professionals.

Daniel Charney Joins Cowen Group as Co-Head of Equities
Business Wire via Yahoo! Finance
Cowen Group, Inc. today announced that Dan Charney has joined the firm as Managing Director and Co-Head of Equities. Mr. Charney will join Tom O’Mara, Co-Head of Equities, in overseeing the Company’s domestic and international equity sales and trading businesses.

Aston Funds Cross $10 Billion Threshold for Assets Under Management
PR Newswire via Yahoo! Finance

Falcone fiasco
New York Post
New York billionaire hedge fund titan Phil Falcone’s LightSquared 4G venture, in danger of not getting the nod from Uncle Sam, tried to buy the approval of a key lawmaker, according to a shocking letter the senator released yesterday. Sen. Chuck Grassley (R-Iowa), who is leading a Capitol Hill…

Chasing the Mirage of Hedge Fund Returns
Hedge funds had another rocky year in 2011, down 6.4%, as measured by the Dow Jones Credit Suisse All Hedge Index. And yet industry assets under management have climbed back to $2 trillion, having reached $2.1 trillion in 2007 before plummeting in the 2008 market crash.

CalPERS Board Re-Elects Rob Feckner President – George Diehr Vice President, Pension Fund Earns 1.1 Percent Return For 2011 Calendar Year
Press Release

NYSE Euronext Global Index Group Announces 2011 Performance Of Indices And Yearly Recap
Press Release
NYSE Euronext’s (NYSE Euronext: NYX) Global Index Group today announced the 2011 performance of its benchmark indices.

Dow Jones Indexes To Launch The Dow Jones Lsp Position Sizing Equal Sector U.S. Large-Cap 50 Index
Press Release

Thomson Reuters Launches Fixed Income Global Snapshot To Provide Greater Transparency And Flexibility To Investors
Press Release
Thomson Reuters today announced the launch of a new evaluated pricing capability, the Fixed Income Global Snapshot (FIGS). All non US fixed income securities will be re-evaluated through the use of updated benchmark curves and credit spreads at both 3pm and 4pm, Eastern Daylight Time. FIGS will provide investors with updated, accurate fixed income evaluations and transparency they need to meet regulatory requirements and have a full understanding of the risks associated with the investment process.

16 new Commerzbank ETCs launched on Xetra

Technology News

CQG Joins UNX “Catalyst Marketplace” App Store to Deliver Global Commodity and Derivatives Trading Solutions
PR Newswire
NEW YORK, Jan. 23, 2012 /PRNewswire/ — Open trading technology provider UNX ( welcomes commodities and derivatives technology and data firm CQG ( as the latest provider to join the Catalyst Marketplace, UNX’s open-source software store.

Savvis Provides Ultra Low Latency Connectivity to Eris Exchange, the Leading Open Access Futures Exchange
PR Newswire via Yahoo! Finance

Portware Launches Portware PRO – Cloud-Based Trading Platform Brings Portware’s Power To Any Global Desktop
Press Release

Sentry Investments Deploys Eagle’s Hosted Investment Management Suite
citybizlist Boston

OpenLink’s Dodd-Frank Regulatory Packages Accelerate Compliance for Clients
PRWeb via Yahoo! News

Callan selects eVestment for Hedge Fund of Funds Data Collection
Business Wire via Yahoo! Finance

Media News

EDI Collaborate With 1View Solutions To Publish Comprehensive Reference Data
Press Release

Can ‘Trading on Tweets’ Really Make Money?
Social media websites like Twitter and Facebook have become increasingly important to high frequency traders looking to anticipate market moves before they happen, but could they eventually become as significant as traditional business news providers in the world of high speed trading?

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

Speeding Dragon, Hidden Debt Pile
Objects in the rearview mirror may appear closer than they are. But China’s rapid growth means objects in the rear view of the world’s economic powerhouse are actually shrinking at a rapid rate.

Osaka Securities Exchange Financial Statements – 3rd Quarter, FY2011
Press Release

Osaka Securities Exchange: Change In Launch Date For OSE DJIA Futures
Press Release

Frontier Markets

Saudi Arabia Foreign Shares Listing Rules May Boost Gulf Markets
Saudi Arabia’s decision to allow foreign companies to list securities in the Arab world’s biggest bourse may help the region’s equity markets lure investors and boost trading volumes.

NASDAQ Dubai And DFSA Hold Bond And Sukuk Listing Forum For Bankers And Lawyers
Press Release

Miscellaneous News

Robbie Gennet: Gambling Millions in Milliseconds: The Global Economic Risk of Automated Trading
The Huffington Post
Robots gambling with the world’s money so fast that they’ll stretch cables across oceans just to gain a few milliseconds of speed. Do not insult the term “investing” by calling this thing what it is: auto-gambling.

UBS Protesters May Be Evicted After Occupy London Group Drops Its Appeal
Occupy London protesters who took over a vacant UBS AG (UBSN) building in the city’s financial district in November dropped a challenge to their eviction at a U.K. appeals court.

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