First Impressions

Focused: What The Industry Knows About Transparency
JohnLothianNews.com

Back in November, the industry gathered for the annual FIA Expo event in Chicago. There, John Lothian News used an exhibitor booth (Thanks Cinnober!) as its studio to ask industry participants key questions about transparency issues in today’s markets.

  1. Where do we need to improve transparency in the markets today?
  2. What is the solution to achieve that?
  3. How will futures and options markets look in the future, in terms of transparency?

The final product is these three short videos featuring 15 participants from across the industry – trading platforms, FinTech firms, exchange executives, traders and more. Watch the video »

Quote of the Day

“Did things go wrong? Oh yeah, absolutely… I may be weak, I may be naive, I may be negligent or incompetent, but I am not a thief.”

Eric Bloom in the story “
Money manager sentenced to 14 years in prison for massive fraud”.

Lead Stories

Battle Brews Over Bids for Broker GFI Group; Mickey Gooch Has Plans for His Firm. So Does Rival Howard Lutnick and BGC Partners.
By Liz Hoffman, Katy Burne And Telis Demos, WSJ
A takeover fight between hard-charging rivals over a broker to Wall Street’s biggest banks is coming to a head, a showdown that has split the firm’s board amid dueling claims about management conflicts and the hostile bidder’s motivations.
jlne.ws/1yKoj2o

Money manager faces up to 20 years in prison for massive fraud
By Jason Meisner, Chicago Tribune
The onetime leader of a well-connected Northbrook money management firm is scheduled to be sentenced Friday for defrauding clients of more than $665 million in what prosecutors believe is the largest fraud case ever brought in federal court in Chicago. Prosecutors are asking for at least 20 years in prison for Eric Bloom, 49, who was convicted by a jury last March on 18 counts of wire fraud and one count of investment adviser fraud stemming from the spectacular collapse of Sentinel Management Group Inc. in 2007.
jlne.ws/1DeuiRn

Penny Stock Pawnbroker Had a Clever Trick to Get Paid
By Matt Levine
A sign of a good scam is that it’s hard to tell who’s being scammed. So here is a charming little story about International Capital Group, which agreed to pay $4.3 million to the Securities and Exchange Commission to settle charges of penny-stock misbehavior. ICG basically ran a pawn shop for penny stocks. Lots of founders/promoters/chief executive officers of tiny public companies own lots of stock in their companies, and not much else. And some of them would like to turn that stock into money.
jlne.ws/1DesZSs

NYSE to Launch a New Trading Platform Dubbed Pillar
Anthony Malakian, Waters Technology
NYSE Group, a wholly-owned subsidiary of the IntercontinentalExchange (ICE), announced a new trading technology platform named Pillar, which is expected to start rolling out to its various markets in the second half of 2015.
jlne.ws/1Hra5hK

Cheap Oil Burns $390 Billion Hole in Investors’ Pockets
by Asjylyn Loder,Elizabeth Dexheimer, Bloomberg
Investors have a message for suffering U.S. oil drillers: We feel your pain.
jlne.ws/1ye6oSQ

Central Banks

Russian central bank makes surprise interest rate cut
By Jason Bush, Lidia Kelly and Alexander Winning – Reuters
Russia’s central bank unexpectedly cut its main interest rate on Friday as fears of recession mount in the country following the fall in global oil prices and Western sanctions over the Ukraine crisis.
The bank reduced its one-week minimum auction repo rate by two points to 15 percent, a little over a month after pushing it up by 6.5 points to 17 percent after a run on the rouble.
jlne.ws/1LsiXTB

Currencies

FXCM Adopts Shareholder Plan to Block Unwanted Takeovers
by Zeke Faux, Bloomberg
FXCM Inc., the currency brokerage that almost failed because of trading losses, adopted a stockholder rights plan making it harder for anyone to take control of the company.
jlne.ws/1CT5uRd

Swiss Central Bank’s Foreign-Exchange Reserves Soar in 2014; Increase Raises Questions Over How the SNB Will Manage Reserves After Scrapping of Swiss Franc Cap
By Neil MacLucas, WSJ
The Swiss National Bank said Friday its foreign currency holdings rose 8% to top 500 billion Swiss francs ($539 billion) as 2014 drew to a close, raising questions about how the central bank will manage its considerable reserves after scrapping its cap on the value of the Swiss franc.
jlne.ws/1Eu1vMK

A Currency Bet Nearly as Certain as Cartel Profits
Isabella Cota – Bloomberg
There’s a way to make a quick profit thanks to Mexico’s drug cartels. And it’s perfectly legal. It’s a currency trade, of all things, available every day inside Mexico City’s airport, where there’s a gap of about 3 percent between rates offered at dedicated exchange houses and local banks. Dollars bought cheaply from the currency dealers can be deposited at bank windows just a few feet away for a higher rate.
jlne.ws/1zGaoSh

Q&A: BATS president sees huge opportunity in foreign exchange market
James Dornbrook – Kansas City Business Journal
BATS Global Markets’ announcement that it would acquire Hotspot FX for $365 million showed just how badly it wanted to become a major player in the foreign exchange market.
jlne.ws/1CH0wGK

A Currency Bet Nearly as Certain as Cartel Profits
by Isabella Cota, Bloomberg
There’s a way to make a quick profit thanks to Mexico’s drug cartels. And it’s perfectly legal. It’s a currency trade, of all things, available every day inside Mexico City’s airport, where there’s a gap of about 3 percent between rates offered at dedicated exchange houses and local banks. Dollars bought cheaply from the currency dealers can be deposited at bank windows just a few feet away for a higher rate.
jlne.ws/1zGaoSh

FXCM Adopts Poison Pill With 10% Trigger; Foreign-Exchange Broker’s Shareholder Rights Plan Helps Prevent Hostile Takeover
By Lauren Pollock, WSJ
FXCM Inc. has adopted a shareholder rights plan with a 10% trigger, a move intended to reduce the chance of a hostile takeover attempt at a low valuation.
jlne.ws/1zdHUNJ

Indexes & Index Products

VIX Calls Most Shunned Since 2012 as Volatility Ignored
by Callie BostMichelle Davis, Bloomberg
Even with stock swings nearly doubling since 2014 and U.S. equities poised for their worst month in a year, traders aren’t signaling too much concern.
jlne.ws/15OUt6d

Traditional Equal Weighting May Not Be as Diversified as You Think
ETF Trends
The core belief that we have held at PowerShares since we were founded back in 2002, and continue to hold today, is that funds tracking market-capitalization-weighted indexes may not represent the optimal investment strategy. Why?
jlne.ws/1Eu4owW

Bourses aim to enlarge index business pie; This and data business to emerge as key areas of development, say officials, as bull market takes wing
Sneha Padiyath, Business Standard
The country’s two major bourses, BSE and the National Stock Exchange (NSE), are betting big on the index development business, currently only a small portion of their overall revenue.
jlne.ws/1ERvmMy

ChinaA MC Licenses MSCI China A Index for New China A Shares ETF
MarketWatch
MSCI Inc. MSCI, +1.13% a leading provider of investment decision support tools worldwide, has licensed the MSCI China A Index to China Asset Management Co., Limited (ChinaAMC) for a new ETF, the ChinaAMC MSCI China A ETF, to be listed on the Shanghai Stock Exchange in March. With over USD 50 billion in assets under management1, ChinaAMC is one of the largest asset managers in Mainland China, and launched the first ever ETF there in 2005. http://jlne.ws/1Eu3ZKY

MSCI Names Three New Independent Directors
Herald Online
MSCI Inc. announced that it has agreed to appoint three new independent directors, Wayne Edmunds, D. Robert Hale, and Wendy E. Lane to the company’s Board of Directors, effective March 10, 2015. With these additions, MSCI’s Board will increase from nine to twelve directors, eleven of whom are independent.
jlne.ws/1Eu44OU

New Indexed Annuities Grab Market Share as Banks Jump In
Bloomberg Business
Buyers of U.S. annuities are clamoring for new products linked to indexes that may use elaborate strategies to control risk, attracting regulatory scrutiny as they widen a market that favors more traditional structures.
jlne.ws/160FpTO

FTSEurofirst 300 index heads for best month in three years
Reuters
The pan-European FTSEurofirst 300 index edged higher on Friday and headed for its best monthly performance in three years, with positive German retail sales data improving sentiment and helping the benchmark DAX index.
jlne.ws/1CTd6Dm

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