First Impressions

Donald Wilson, CEO of DRW Trading Group – Reminiscences (and Prognostications) of a Futures Operator
JohnLothianNews.com

“My focus was on combining the disciplines of trading and risk management with quantitative research and computer science.”

Donald Wilson, CEO of DRW Trading Group, gives his story of how he found his way into the financial industry, starting with his realization that he enjoyed mathematics and then discovering how to connect it with trading currency futures. Having no connections to the financial industry, Wilson was persistent in sending his resume out to firms until finally landing a job where he started by observing traders on the trading floor. Wilson also discusses DRW Trading Group, giving a brief history of the firm and its growth throughout the years, as well as giving insight on what he thinks the future holds for the financial industry. While regulatory change may seem to have created a burden on the industry, Wilson believes that there are still plenty of opportunities that can be created from new rule changes.

Watch the video »

Quote of the Day

“Everyone sees the lack of liquidity as a potential risk in the corporate bond market. But there hasn’t been a major event to test the market.”

Sumit Desai, the lead analyst for corporate credit funds at research firm Morningstar Inc. in the story, “Bond funds stock up on Treasuries in prep for market shock”.

Lead Stories

Bond funds stock up on Treasuries in prep for market shock
Tim McLaughlin – Reuters
U.S. corporate bond funds this year are adding Treasuries to their holdings at more than twice the rate of corporate debt amid concern that the struggling European economy and potential changes in Federal Reserve policy will drag down profits at U.S. corporations.
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ECB commences covered bonds amid intrigue
Solomon Teague – Euromoney Magazine
The ECB commenced its covered bonds purchasing programme last week, but no sooner had it started than rumours surfaced about a new plan to purchase corporate bonds. The fevered speculation demonstrates the lack of confidence in the ECB’s existing plan, reviving questions about full-scale QE and its seniority in bond holdings.
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ECB expected to delve into more dangerous markets
Claire Jones in Frankfurt – Financial Times
Just days after the European Central Bank launched its latest bond-buying plan, investors are already clamouring for policy makers to delve into more dangerous markets to pull the eurozone out of economic stagnation.
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Hedge Funds Expose Argentina to $14 Billion Payment Risk
Katia Porzecanski – Bloomberg
The relative calm in Argentina’s debt markets since its default in July may be shattered as the risk increases that holders of $14 billion in bonds will ask for their money back immediately, according to Bank of America Corp.
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Exchanges’ bond platforms in US push
Sarah Krouse – Financial News
Bond trading platforms run by Nasdaq and the London Stock Exchange are expanding operations in the US, as exchanges position themselves to benefit from structural changes to the markets for trading debt securities.
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Africa bond rally halts amid Ebola fear
Elaine Moore – Financial Times
The rally in African debt markets has come to an abrupt halt as countries in the west of the continent battle to contain the spread of Ebola.
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Agence Française de Développement opens Euronext markets with first climate bond issue
Euronext, the primary exchange in the Euro zone, today congratulated Agence Française de Développement (AFD) on the success of its EUR1 billion “Climate Bond” issue on 17 September 2014. Funds raised will finance and support development projects actively working to fight climate change, in the first socially responsible issue by a French state-owned agency.
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How an ECB Corporate Bond Program Could Work
Ben Edwards – MoneyBeat – WSJ
Reports Tuesday suggesting that the European Central Bank might be preparing to buy corporate bonds sent stocks soaring and the euro diving, even without any clarity on how likely it is to happen, what it would buy, or what the impact might be.
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Central Banks

How Quantitative Easing Contributed to the Nation’s Inequality Problem
William D. Cohan – Dealbook – NY Times
Janet L. Yellen, the chairwoman of the Federal Reserve, is regarded as a person of the highest integrity. And that is what’s so utterly confounding about the speech she gave in Boston last week about inequality. She did a wonderful job highlighting the growing disparity between rich and poor and how it is beginning to impinge upon what it means to be an American, but she ignored the fact that, in many ways, the Fed’s policies have compounded the problem.
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Fed’s Loan Scrutiny Leaves Banks Passing on Buyout Deals
Christine Idzelis and Alex Sherman – Bloomberg
Heightened U.S. regulatory scrutiny of leveraged lending is leading the biggest banks to back away from funding some takeovers financed by debt, creating an opportunity for smaller competitors to step in.
JPMorgan Chase & Co., Bank of America Corp., Credit Suisse Group AG, Deutsche Bank AG, Barclays Plc and Morgan Stanley are among banks that have passed on the chance to fund deals the past few months, according to people with knowledge of the matter who asked not to be identified because they weren’t authorized to speak publicly.
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ECB Bond Purchases Seen by Traders Exceeding $1 Billion
Alastair Marsh – Bloomberg
The European Central Bank bought at least 800 million euros ($1 billion) of covered bonds since starting an asset-purchase program on Monday, according to estimates from three traders familiar with the matter.
The central bank acquired securities from Portugal to Germany this week, said the people who asked not to be identified because they’re not authorized to talk about it. It bought 1.5 billion euros in the first month of the last covered bond program in November 2011, according to ECB data.
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Currencies

RBI warns firms on lack of FX hedging
Business Standard
Alarmed at the currency risks that Indian companies are running on their books, the Reserve Bank of India (RBI) might consider making hedging mandatory if banks cannot persuade corporate customers to seek protection, several market sources told Reuters.
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BitBeat: Bitcoin Coding Allstars Launch Sidechains Project to Boost Innovation
Michael J. Casey – MoneyBeat – WSJ
Some of the biggest names in bitcoin’s coding community have unveiled a new cryptocurrency software project that’s likely to cause a stir. The so-called sidechains project was officially launched Wednesday with a whitepaper that proposes the creation of new sideline versions of bitcoin’s “blockchain” transaction ledger.
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Indexes & Index Products

U.S. SEC plans to deny proposals for non-transparent ETFs
Ashley Lau – Reuters
U.S. regulators said they plan to deny proposals for a new breed of actively managed exchange-traded funds that want to keep their holdings secret for months at a time.
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Gold

The Swiss Gold Vote: Should Investors Worry?
Chiara Albanese – MoneyBeat – WSJ
If it’s a yes, the SNB will need to hold at least 20% of its (pretty huge) assets in the shiny yellow stuff, from around 8% now. It will have five years to get into line. So, will it vote yes? And if it does, what happens next to gold, and to the Swiss franc?
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Top bullion consumer China works on first gold forwards, options
A. Ananthalakshmi and Fayen Wong – Reuters
The Shanghai Gold Exchange (SGE) is working on plans for China’s first forwards and options in gold, sources say, potentially putting China ahead in the race to set an Asian pricing benchmark that might eventually rival the London gold fix.
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Goldcorp chief says Asia buying will support price of gold
James Wilson and Michael Hunter – Financial Times
Demand from China and other parts of Asia will support the price of gold, the chief executive of one of its largest miners said, as the precious metal traded near its strongest level in six weeks.
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Gold Demand Rises in China, India – WSJ
Biman Mukherji And
Huileng Tan – WSJ
Appetite for physical gold in India and China has rebounded in recent days, with low prices boosting demand during India’s Diwali festival, the country’s biggest gold-buying occasion of the year.
Demand surrounding this year’s Diwali festival, which was celebrated Thursday, rose by around a third from last year, said Rahul Gupta, managing director of New Delhi-based P.P. Jewelers, a jewelry retail chain.
“The gates seem to have come off for festival buyers in the last couple of days,” he said.
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