John Lothian Newsletter: CFTC Won’t Delay Position Limits; Regulators inching forward on Dodd-Frank rules; Bring Back Boring Banks

Jan 4, 2012

The CFTC rejects the idea of further consideration on position limits, and moves forward with its rules.  With regard to Dodd-Frank, however, rule adoption continues at a snail’s pace.  Calls arise from economists and bloggers to return banks to an old and tested role:  that of a place where money is cultivated in a boring, slow and relatively-low-risk manner.  In the top box, JJLCO announces that GFI Group has joined as a JLN sponsor; and Leo Melamed takes aim at Bart Chilton’s cheetah.

Observations – Statistics – Commentary

GFI Group Inc. Becomes JLN IR & MarketsWiki Sponsor
John Lothian News is pleased to announce GFI Group Inc. has become a Partner level sponsor of JLN Interest Rates and a Friend level sponsor of MarketsWiki and MarketsReformWiki.

“We are pleased to begin an advertising sponsorship with John Lothian News, MarketsWiki and MarketsReformWiki. All are great news and reference sources for the financial services industry and we look forward to participating in the coming year,” said Helena Jarabakova, vice president and head of marketing for GFI.

“We are grateful for the support of GFI,” said Christine Nielsen, managing editor of John Lothian News and editor of JLN IR. “There is so much going on in the interest rate sector in terms of regulation and market development, and GFI is a part of it. We look forward to working closely with GFI in the coming year.”

About GFI Group Inc.

GFI Group Inc. (NYSE: “GFIG”) is a leading provider of wholesale brokerage services, clearing services, electronic execution and trading support products for global financial markets. GFI Group Inc. provides brokerage services, market data, trading platform and analytics software products to institutional clients in markets for a range of fixed income, financial, equity and commodity instruments.

Headquartered in New York, GFI was founded in 1987 and employs more than 2,200 people with additional offices in London, Paris, Nyon, Hong Kong, Seoul, Tokyo, Singapore, Sydney, Cape Town, Santiago, Bogota, Dubai, Dublin, Tel Aviv, Calgary, Los Angeles and Sugar Land (TX). GFI Group Inc. provides services and products to over 2,600 institutional clients, including leading investment and commercial banks, corporations, insurance companies and hedge funds. Its brands include GFI(SM), GFInet, CreditMatch, GFI ForexMatch, EnergyMatch, FENICS, Starsupply, Amerex, Trayport and Kyte.


Protect HFT cheetahs from regulatory poachers
By Leo Melamed – Financial Times
In June, Bart Chilton, a commissioner at the Commodity Futures Trading Commission, compared high-frequency trading to cheetahs. His metaphor is compelling: cheetahs are the fastest four-legged animal. The “market cheetahs”, he explained, are trying to hunt down micro dollars in milliseconds. “We need to do a better job of keeping up with the cheetahs,” he proclaimed. I agree, but the “cheetahs” also need protection.


U.S. futures cop to review presidential race gambling
Reuters via Yahoo! News
Washington – A proposal that would allow betting on the winner of the U.S. presidential election will face a 90-day review by the same agency charged with overseeing corn, oil and gold in the U.S. futures market, an agency official said on Tuesday. The U.S. Commodity Futures Trading Commission will review an application by the North American Derivatives Exchange (Nadex) seeking to list options contracts tied to election outcomes such as the 2012 presidential race or whether Democrats or Republicans will control the U.S. House of Representatives and Senate.

**** Would it be wrong to predict a winner of this competition?


Wall Street’s Big Swingers Get Biggest Breaks: Susan Antilla
On the surface, the year 2011 was one of ramped-up securities regulation and scary times for financial scammers, with enforcement cases soaring at the U.S. Securities and Exchange Commission and coverage galore about the humbling of inside traders and municipal-bond riggers. Along with the sexy headlines about felled lawbreakers, though, there were also troubling free passes and favors granted to the accused and the privileged.


2011 Volume Records

2011 Trading Volume At CBOE Futures Exchange Sets New Annual Record – Volume Of 12 Million Contracts Up 174% From 2010 – Numerous Milestones Achieved During Banner Year
Press Release

2011 A Record-Setting Year for KCBT HRW Wheat Futures, Exchange 
Press Release
Kansas City–January 3, 2012–The Kansas City Board of Trade set new annual volume records in 2011 for Hard Red Winter wheat futures and for the exchange as a whole.

MGEX Records Second Best Total Annual Volume in History
Press Release

OCC Cleared Contract Volume Reached 4.6 Billion Contracts In 2011 For Record Year
Press Release


The 2012 recovery: handle with care
By Martin Wolf – Financial Times
What does 2012 hold in store for the world economy? Let us start by looking at the battered high-income countries. Is there a good reason to expect healthy recoveries? Not really. The outcome in the eurozone might be a disaster that spreads around the world. Even the US recovery is likely to be fragile. The shadow cast by events before 2007 passes slowly.


[Video] Cohan on Psychopaths and the Financial Crisis
Jan. 3 (Bloomberg) — William Cohan, author of “Money and Power: How Goldman Sachs Came to Rule the World” and a Bloomberg View columnist, talks about an article in a recent Journal of Business Ethics that blames the financial crisis on corporate psychopaths at the helm of financial institutions. Cohan speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s “InsideTrack.


JLN FX Newsletter

2012: Hope and Expectations
Maurice Pomery, Strategic Alpha
Whilst I realise that this year of 2011 has been a difficult one for many, it appears that a lot of strategists are now seeing a lot of what we forecast for the year materialise, albeit belatedly. Thus they write of impending doom for 2012 and this wave of pessimism takes a lot of strength to get through.

Regular readers of my daily will however be aware that we see it as our task to start every year with hope and expectations that our elected (and in parts of Europe, non-elected) leaders will deliver us from impending peril (mostly being responsible for putting us in it in the first place) and set us on the road to recovery. What I aim to do is to try as hard as I can to maintain some of that hope and I fully expect our leaders to try to deliver but we must look at the risks to these thoughts as we are investors after all.

Running a portfolio through this turbulent forthcoming year will be difficult and flexibility and manoeuvrability are key. We must be aware, as we invest in markets, that depth of liquidity is crucial, so that we can get out as easily as we can get in, right or wrong quickly. A lot of the risks are now known and manifest themselves in the guise of the EU sovereign and banking issues but the risks run a lot deeper than that and the common belief that the world’s woes are cured if the ECB steps up and prints money are misplaced.

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


MarketsWiki Page of the Day
James Koutoulas


MarketsWiki Recent Updates


Richard G. KetchumJ. Christopher FlowersJohn J. LothianJames KoutoulasAthena Velie EastwoodJeremy Stein

Companies, Organizations and Groups

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MarketsReformWiki Recent Updates

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Lead Stories

CFTC Won’t Delay Position Limits
Andrew Ackerman, Dow Jones Newswires
WASHINGTON — The Commodity Futures Trading Commission has rejected a request by two trade groups to delay its implementation of position limits aimed at curtailing bets in the commodities markets, according to two people familiar with the matter.

Regulators inching forward on Dodd-Frank rules
Reuters via Yahoo! News
WASHINGTON (Reuters) – U.S. regulators have only met roughly a quarter of pre-2012 deadlines included in the controversial Dodd-Frank financial reform law, according to a report released on Tuesday. A year and a half after Congress passed Dodd-Frank, regulators are struggling to keep pace with deadlines for hundreds of rules they are tasked with writing to help stabilize markets after the 2007 …

Bring Back Boring Banks
New York Times
Governments must fully guarantee all bank deposits – and impose much tighter restrictions on risk-taking by banks.

Amar Bhide: Backstopped Banking Must Be Boring
Naked Capitalism
Amar Bhide, a former McKinsey colleague, one-time proprietary trader, and now professor at the Fletcher School, takes a position in the New York Times today that goes well beyond Volcker Rule restrictions. He argues that all financial deposits need to be guaranteed, and as a result, what is done with those deposits needs to be restricted severely. I could not have said this better myself:

The Bluffing Resumes: Greece Warns Will Leave Eurozone If Second Bailout Not Secured
Zero Hedge
First Morgan Stanley issued the first market forecast of 2012 before the market has even opened, and now it is Greece’s turn to threaten fire and brimstone (aka to leave the Eurozone, but according to UBS and everyone else in the status quo the two are synonymous) within hours of the New Year, if the second bailout, which as far as we recall was arranged back in July 2011, is not secured. Quote …

Minutes Of The Federal Open Market Committee, November 28 And December 13, 2011
Press Release

MF Global U.K. Staff May Not Get Bonuses Pledged Before Failure
MF Global Holdings Ltd.’s U.K. employees owed bonuses by the failed broker were placed behind most other creditors in the bankruptcy process and may never receive their money.

MF Global sold assets to Goldman before collapse: sources
Reuters via Yahoo! News
(Reuters) – MF Global unloaded hundreds of millions of dollars’ worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co , one of the sources said.

Environmental Trading News

UPDATE: NYSE To Book $25M Charge On Carbon Market Settlement
NYSE Euronext (NYX) will book a $25 million charge after its part-owned European carbon market settled charges by the French government that the platform was lax in catching alleged tax frauds carried out by traders on the market.

No Impact on Trading From California’s LCFS Ruling for Now
DTN / The Progressive Farmer
California ethanol trades higher despite a ruling striking down the state’s low carbon fuel standard.

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 CEO Says Takeover Will Be Determined in ‘Next Few Weeks’
The fate of NYSE Euronext’s merger with Deutsche Boerse AG will be determined in “the next few weeks” as European officials rule whether it will stifle competition, Chief Executive Officer Duncan Niederauer wrote.

CBOE Holdings: Daily Trading Volume Averages Record 4.8 Million Options Contracts In 2011 – CBOE Volume Tops One Billion Contracts For Fourth Straight Year – CBOE Futures Exchange Record Volume Up 174% From 2010
Press Release

ISE Reports Business Activity for December and Full Year 2011
The International Securities Exchange (ISE) today reported average daily volume of 2.3 million contracts in December 2011, a decrease of 10.6% over December 2010. Total options volume for the month was 47.8 million contracts. Average daily volume for full year 2011 was 3.1 million contracts, an increase of 4.4% over 2010. Total volume for the year was 778.1 million contracts. ISE was the third largest U.S. equity options exchange in 2011 with market share of 19.1%*.

BATS Global Markets Earns 25.4% European Market Share in December

The Options Industry Council Announces December Options Volume Down 6% While 2011 Volume Sets Ninth Consecutive Record
Press Release

Key Figures SIX Swiss Exchange And Scoach Switzerland: Year 2011
Press Release

TOM Insight December 2011
Press Release

EPEX SPOT / EEX Power Derivatives: Power Trading Results in December

NASDAQ OMX Holds Fourth Quarter 2011 Investor Conference Call

NASDAQ OMX acquires the Central Securities Depository of Lithuania

CBOE Representative Director Nominees

[CBOE] Restrictions on Transactions in Poniard Pharmaceuticals, Inc. (“PARD/PARD1”)

[CBOE] Annual Reporting Pursuant to CBOE Rule 9.8 – Supervision of Accounts

TSX Venture Exchange Daily Bulletins
CNW Group via Yahoo! Finance

Banks, Brokers & Dark Pools

ICAP completes restructure
LONDON (SHARECAST) – Interdealer broker ICAP has completed the restructure of its strategic interests in Japan. ICAP Totan Securities , a 60% majority owned subsidiary of ICAP, has completed the sale of its JGB business to Central Tanshi Securities , earning the firm £1m.

Citigroup Sues Hedge Fund Manager in Singapore Over Gold Losses
Citigroup Inc.’s Singapore unit sued Hong Kong-based hedge fund manager Raghavendran Rajaraman, seeking to recoup $1.03 million in trading losses the bank says he incurred after gold fell from a record high in September.

U.S. charges 3 Swiss bankers in tax evasion case
By Lynnley Browning – Reuters
(Reuters) – Prosecutors accused three Swiss bankers on Tuesday of conspiring with wealthy U.S. taxpayers to hide more than $1.2 billion in assets from tax authorities, and sources briefed on the matter said the three worked for Wegelin & Co, one of Switzerland’s oldest private banks.

Swiss bankers had fondue for brains
New York Post
Meet the Three Swiss Stooges. Michael Berlinka, Urs Frei and Roger Keller – bankers for Switzerland’s oldest private bank, Wegelin & Co. – were indicted yesterday by Manhattan federal prosecutors for conspiring with wealthy US tax cheats to hide some $1.2 billion in assets. What makes the scheme so harebrained is that it was allegedly triggered by news that the IRS was investigating Swiss banking giant UBS for also helping tax cheats.

JPMorgan sued for $95 million over mortgage securities
(Reuters) – JPMorgan Chase & Co has been sued for $95 million by the trustee for securities marketed in 2005 by the former Bear Stearns Cos over alleged misrepresentations regarding the underlying mortgage loans.

BofA suffers setback in Countrywide case
By Tom Braithwaite in New York – Financial Times
Bank of America is at risk of another increase in its mortgage losses after a judge sided with MBIA, the bond insurer, on a crucial point in a long-running lawsuit.

Pay and Restructuring Rile Staff at Jefferies
Several executives and other employees in Jefferies Group Inc.’s prime-brokerage unit threatened to leave the firm in a dispute over issues including a recent restructuring and year-end compensation, people familiar with the matter said.

Unable to Raise Capital, Brokerage Firm Calls It Quits
WJB Capital, a tiny broker dealer that was pushing to expand in the shadows of large Wall Street banks, has decided to close up shop after being unable to raise money from investors in recent weeks.

KBW Announces Significant Hires in Investment Banking
Business Wire via Yahoo! Finance
KBW, Inc. , a full-service investment bank that specializes in the financial services sector, today announced that investment bankers James Harasimowicz and Joseph Gulash have joined the firm as Managing Directors in the Depository Investment Banking Group.

Credit Suisse Hires MF Global’s Barker as Japan Equity Analyst
Credit Suisse Group AG hired Stephen Barker, an analyst at MF Global Holdings Inc. before its collapse, to cover medium-sized Japanese companies, according to a Credit Suisse document obtained by Bloomberg News.

Citigroup Issues $2.5 Billion of Bonds in Biggest Sale Since ’09
Citigroup Inc., the third-largest U.S. bank, sold $2.5 billion of five-year notes in its biggest bond offering since 2009 as relative yields on its debt expand.

VTB Capital Hires Ex-Merrill Lynch Managing Partner As CEO Asia
By Marietta Cauchi, Of DOW JONES NEWSWIRES
LONDON -(Dow Jones)- VTB Capital Tuesday said it has appointed Damian Chunilal, one of Merrill Lynch’s managing partners, as its new chief executive for Asia to oversee the bank’s development and expansion across the region.

TD Ameritrade to Host Earnings Conference Call
Business Wire
OMAHA, Neb.–(BUSINESS WIRE)–TD Ameritrade will release its first quarter financial results for fiscal year 2012 on Tuesday, Jan. 17, 2012.

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.

SEC Names Pamela A. Gibbs As Director Of The Office Of Minority And Women Inclusion
Press Release

SEC Charges Life Settlements Firm and Three Executives with Disclosure and Accounting Fraud
Press Release
Washington, D.C., Jan. 3, 2012 — The Securities and Exchange Commission today charged Texas-based financial services firm Life Partners Holdings Inc. and three of its senior executives for their involvement in a fraudulent disclosure and accounting scheme involving life settlements.

Jeff Connaughton: The Glacial Response of the S.E.C. to the Rise of High-Speed Trading and Market Volatility
The Huffington Post
For those who want the Securities and Exchange Commission to fulfill its mission of protecting investors, the New Year brings more bleak reality.

[AMF Canada] Complaint Reporting System (CRS) – Firms have until January 30, 2012 to file their report
Press Release

Rajat Gupta Seeks Court Order to Dismiss ‘Improper’ Counts
Rajat Gupta, the former Goldman Sachs Group Inc. director charged with insider trading as part of the Galleon Group LLC investigation, sought dismissal of some of the counts against him.

Mary Schapiro’s skeletons in the closet
CNN Money
Will we learn in 2012 if SEC chair Mary Schapiro and former senior executives at FINRA engaged in a fraud?

Investments – Indexes – Managed Futures – Managed Funds

DealBook: Hedge Funds End 2011 on a Very Bad Note
New York Times
Last year was dismal for hedge funds, according to an index maintained by Eurekahedge, an independent research firm that specializes in hedge fund data.

Asset managers hope 2012 will be brighter
By Kate Burgess
“Let’s hope for a better 2012,” said the head of one of the world’s biggest bank-owned asset managers as Christmas loomed. It may be a forlorn hope. Analysts and industry insiders foresee rising regulation, continued economic and political uncertainty and relentless pressure on businesses to hold on to their assets under management.

Investors steer clear of Chinese IPOs in US
By Sarah Mishkin in Hong Kong – Financial Times
The value of Chinese companies delisting from US exchanges in 2011 exceeded the amount Chinese companies raised via initial public offerings in the US, a stark sign of how high-profile fraud allegations and slowing growth have made many foreign investors bearish on Chinese groups.

Pimco Total Return Lost $5 Billion to Withdrawals Last Year
Bill Gross’s Pimco Total Return Fund had $5 billion in client redemptions last year as the world’s largest mutual fund trailed rivals, its first year of withdrawals in records going back to 1993, according to Morningstar Inc.

Hartford’s Conning taps Michael Haylon
Hartford Business Journal
Former Phoenix Cos. and Gen Re executive Michael Haylon has joined Hartford asset manager Conning Inc. as managing director, overseeing investment products.

Ted Weschler: More on Warren Buffett’s Reluctant Sidekick
Wall Street Journal Blogs
Hedge-fund manager Ted Weschler is about to step out of the shadows and start working for Warren Buffett’s Berkshire Hathaway. The courtship of Buffett and Weschler started 18 months ago, and had to overcome resistance from Weschler and his family, used to a comfortable and quiet life in Charlottesville, Va.

First Annual Solin Award for Worst Financial Blog
Daniel Solin – US News & World Report
Some blogs encourage investors to adopt strategies likely to harm their financial well-being.

DTCC Media Statement On Clearance And Settlement
Press Release

CBRE Clarion Securities Announces Launch of CBRE Clarion Long/Short Fund
Business Wire via Yahoo! Finance

Nuveen Closed-End Funds Declare Monthly Distributions
Business Wire

Jim Rogers Says Has Short-term Bet on Euro, Bearish on Gold
International Business Times
The euro could rebound in the near-term despite the problems affecting continental Europe, as investors are overly bearish on the currency, investor Jim Rogers said on Tuesday.

Technology News

Orc Group AB: Orc Group Invites to a Press and Analyst Meeting on January 19
Press Release

Fiserv to Release Fourth Quarter and Year-End Earnings Results for 2011 on February 2, 2012
Business Wire via Yahoo! Finance

RIM close to stripping CEOs of chairmanship: report
Reuters via Yahoo! News
TORONTO (Reuters) – Research In Motion is close to a decision on stripping its co-chief executives of their other shared role as chairman of the board, a newspaper said on Tuesday, a change that could meet a key demand from angry and disillusioned investors.

Media News

Spam Finds New Target
Facebook Inc. and Twitter Inc. are building up their forces to fight an emerging enemy: “social” spam.

Twitterize Yourself makes visual sense of big data
The need for data analysis continues to grow, so look for new ways to analyze and visualize data to make it more consumable.

Goldman Sachs Said to Seek Buyer for Canada’s Alliance Films

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

Tough year ahead for under-pressure Noble
By Henny Sender – Financial Times
For years, Noble Group, the Hong Kong-based commodities trading house and supply chain manager, has been the darling of investors. It rode the China wave, increasing its sales to almost $57bn in 2010 from zero 25 years earlier and selling a large stake to China’s sovereign wealth fund and a much smaller stake to the Korean Investment Corp along the way. But today, Noble is under pressure.

Uncorking China’s Wine Market
Knowledge at Wharton
Although China’s bustling metropolises and staid Bordeaux may seem worlds apart, the two are becoming increasingly intertwined. Indeed, China recently overtook the traditional strongholds of Germany and the United Kingdom to become Bordeaux’s largest export destination. This transformation is particularly remarkable given the country’s short history of mass wine consumption.

HKEx Chief Executive Charles Li Launches Blog
Press Release
HKEx Chief Executive Charles Li today (Tuesday) launched his blog – Charles Li Direct. The blog is available on the HKEx website:

HKEx Hosts Hong Kong’s First Securities Market Open Ceremony
Press Release

[TSE] New year’s Message from President Saito
Press Release

[TSE] Trading Conditions (Outlook & Initial Figures) 2011
Press Release

Thailand Futures Exchange: Thai Derivatives Trading Volume Up 120 Pct In 2011
Press Release

Tokyo Commodity Exchange: Final Settlement Price Of Crude Oil For December 2011 Contract
Press Release

Tokyo Financial Exchange: Trading Volume In December 2011 And Year 20101
Press Release

Tokyo Commodity Exchange: New Year’s Message From Tadashi Ezaki, President & CEO
Press Release

Tokyo Grain Exchange Volume And Open Interest For 2011
Press Release

HKFE Announces Margin Rates For Adjusted Swire Pacific A Futures
Press Release

Frontier Markets

Indian stock market: halfhearted reform
Financial Times
Something is better than nothing. India’s decision to allow foreign investors direct access to its stock market sends the right message. It serves, too, to highlight the government’s failure to open its economy more broadly to long-term inward investment.

DGCX 2011 Annual Volumes Rise 110% To Record Over 4 Million Contracts
Press Release

Miscellaneous News

Don’t expect economic boost from cash-rich companies
By John Plender – Financial Times
Growth in the developed world will continue in 2012 to be hostage to the deleveraging process that is required to address the huge debts that piled up during the credit bubble.

John Lothian Newsletter

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Rick Lane

CEO, Trading Technologies

Past JLN Newsletters

Market Narratives Have Pushed Aside Fundamentals

Market Narratives Have Pushed Aside Fundamentals

First Read $46,041/$300,000 (15.3%) ++++ Hits & Takes John Lothian & JLN Staff We have a new and improved version of The Spread today. We have overhauled our approach to this video series and have the whole JLN team contributing to it. Suzanne Cosgrove has...

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