Internal Affairs: NFA CEO Dan Roth Highlights Changes in the Wake of MF Global and Peregrine Bankruptcies
After the twin scandals of MF Global and Peregrine Financial rocked the futures industry in 2011 and 2012, the National Futures Association, underwent a review, not only of its internal procedures, but also of its rules. In Part One of this two-part John Lothian News exclusive, NFA CEO Dan Roth points to a study conducted by the Berkeley Research Group of NFA’s audit procedures, and he reviews the changes made to the way the agency audits, hires employees, and delivers its message to NFA members.
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Quote of the Day
“Postcrisis, banks started to realize that keeping up with Joneses just for the sake of it wasn’t necessarily the smartest thing to do. We saw banks pulling out of businesses altogether, retreating from regions or having watered down versions of what they previously had.”
Joseph Leung, managing partner at Aubreck Leung LP in the story, “Wall Street Staffing Falls Again”.
Greece Aid Extension Agreed Pending Measures from Athens
Jonathan Stearns and Rebecca Christie – Bloomberg
Euro-area finance ministers reached a provisional deal intended to keep aid flowing to Greece in return for a commitment to continued economic reforms, buying time to work out the detail of longer-term Greek financing.
Talks in Brussels between officials from the 19 euro-area countries concluded Friday evening with an agreement to extend bailout funds to Greece for four months. In return, on Monday Prime Minister Alexis Tsipras’s government must submit a list of reform measures it will undertake. Finance chiefs will then decide whether the Greek measures go far enough.
A Stronger Dollar May Make Big U.S. Banks Look Even Bigger
by Yalman Onaran, Bloomberg
The dollar’s gain against the euro is prompting U.S. bank executives to raise alarms that the largest lenders will face higher capital charges. The numbers tell a different story.
Wall Street Staffing Falls Again; Report finds head count of bankers and traders down 4% last year
By Justin Baer And Daniel Huang, WSJ
Squeezed by new rules and tough markets, Wall Street is taking the ax to its workforce. The number of investment bankers, traders, salespeople and research analysts at the world’s largest banks has fallen 20% globally since its recent peak in 2010, a report by Coalition Ltd., a London research firm, shows.
If Coca-Cola Can Be Disrupted, So Can Your Bank
Banking is even more vulnerable to disruption than these once impregnable purveyors. The industry is being pummeled by the same forces of technological change and shifting consumer preferences, as well as by regulations that redefine banking in often-uneconomical ways and limit the sector’s ability to quickly adapt to shifting environments.
Howard Lutnick’s BGC Wins Fight to Acquire Broker GFI
by Ambereen Choudhury, Zeke Faux, Bloomberg
Howard Lutnick’s BGC Partners Inc. won an agreement to acquire interdealer broker GFI Group Inc., capping a six-month campaign against a rival bidder and GFI’s founder.
Rebuilding Trust By Getting Pay Right In The Financial Markets
by Dina Medland, Forbes
The UK financial regulator, the Financial Conduct Authority (FCA), has conducted a review finding that “limited clarity over price and quality of services makes it difficult for clients to assess whether they are getting value for money” in investment and corporate banking.
FCA to Investigate Competition in Investment and Corporate Banking Services Following Review of Wholesale Markets
The Financial Conduct Authority (FCA) today announced plans to launch its first wholesale market study into investment and corporate banking to assess whether competition in the sector is working properly.
Mandatory clearing in Europe may still be “a ways off”: ESMA responds to proposed amendments on interest rate swaps clearing RTS and postpones consideration of FX NDF clearing – Lexology
Mandatory clearing in Europe may still be “a ways off”
ESMA responds to proposed amendments on interest rate swaps clearing RTS and postpones consideration of FX NDF clearing
Chief, and Novelist, Helps to Fix Britain’s Troubled Financial Markets
By JENNY ANDERSON, NY Times
As the chief executive of Allianz Global Investors, one of Europe’s biggest money managers, Elizabeth Corley is familiar with suspense.
A trading firm with a notorious New York tie is coming to Chicago
By Lynne Marek
Chicago usually grows its own trading firms, but an outsider with a past will parachute into the city come May.
Trillium Management, a New York-based stock-trading company led by non-executive chairman, founder and principal owner Lee Maschler, plans to open an office in the city.
GC Interview: DTCC’s Mark Jennis on DTCC-Euroclear Joint Venture
Last year, DTCC and Euroclear announced a joint venture that will see the two develop a new open architecture infrastructure that will provide collateral solutions for both derivatives and financing activity. The project, named “DTCC-Euroclear Global Collateral Limited”, is set to go live in fourth quarter of this year with the launch of the ‘Margin Transit Unit’, which will enable straight-through processing of margin calls.
Derivatives Are for Hedging, Not Bundling, Farkas Says
by Ben Moshinsky, Bloomberg
Europe’s biggest banks say synthetic asset-backed securities can be as simple and transparent as the plain vanilla variety. Adam Farkas disagrees.
Citigroup cut CEO Corbat’s pay by 7 percent to $13.1 million in 2014
Citigroup Inc (C.N) cut Chief Executive Michael Corbat’s pay by about 7 percent in 2014, a year in which the bank’s profit nearly halved due to higher legal costs and a slump in bond trading.
Rand Paul vents to Glenn Beck about Fed criticism – Nick Gass
Nick Gass – Politico
Sen. Rand Paul fired back at a POLITICO article published earlier this week about his push to audit the Federal Reserve as mentioned in an interview with Glenn Beck on his radio program Thursday.
The Kentucky Republican and would-be presidential contender addressed an assertion from former Fed Chairman Donald Kohn that “there is essentially no credit risk on the Federal Reserve’s balance sheet right now” and that no institution in the U.S. is “subject to more oversight.”
Fed lobbies against Rand Paul
Kevin Cirilli – TheHill
The Federal Reserve is pushing back against mounting criticism of the central bank, as those pushing for reforms ratchet up their attacks.
Fed officials have in recent weeks met in private with staffers from both parties, focusing primarily on the Senate, according to sources familiar with the meetings. Meanwhile, Chairwoman Janet Yellen and other Fed officials have publicly sounded off against a proposal championed by Sen. Rand Paul (R-K.Y.) that would give Congress more sway over the bank.
How Some Central Banks Are Reviewed Around the World – Real Time Economics
Kate Davidson – WSJ
Federal Reserve officials for years have balked at congressional proposals that would subject the central bank’s interest-rate decisions to lawmakers’ scrutiny.
But the practice is not that unusual abroad.
Several central banks in other countries have undergone detailed evaluations of monetary policy by outside experts in recent years, in some cases at the behest of their governments.
Yellen Confronts Economists’ Ignorance
by Rich Miller, Bloomberg
Productivity is probably the most important measure of economic health that policy makers know the least about.
Federal Reserve Exit Strategy: Number 11
John M. Mason – Seeking Alpha
Well, the Federal Reserve conducted its third straight offering of 21-day “term” deposits. This week, the Fed raised $107 billion in the offering. On February 5, the total raised was $188 billion; on February 12, the total raised was $109 billion. For the three weeks, the amount raised was $404 billion.
These funds raised from the commercial banks are short term with an early withdrawal feature so that banks have the greatest amount of flexibility in the arrangement so that they can get their funds back if they want them as soon as possible. Thus, they are extremely liquid in that sense.
CURRENCIES: Euro Gets A Lift From Reports Of Greek Debt Accord
Joseph Adinolfi – MarketWatch via NASDAQ
The euro closed higher against the dollar Friday, but finished lower on the week, after the Eurogroup announced it had agreed to a four-month extension of Greece’s bailout.
The shared currency (EURUSD) traded at $1.1377, down from its session high of $1.1430. It had traded at $1.1369 Thursday. Greece’s bailout agreement is set to expire on Feb. 28. The shared currency recorded a 0.1% weekly loss against the U.S. dollar.
China’s exchange-rate policy: Currency peace
CHINESE officials tired of defending their exchange-rate policy can at least appreciate the irony in the latest charges levelled against them. For years foreigners accused them of keeping the yuan artificially weak to boost exports. Now, domestic critics say, they are doing just the opposite: keeping the currency artificially strong and, in the process, wounding the economy. Some predict China will soon change course and engineer a devaluation. But just as the Chinese authorities did not resort to a big one-off appreciation when the yuan seemed too weak, they are unlikely to embark on a dramatic devaluation now that it is looking strong.
Denmark ready to impose capital controls to protect currency
Mehreen Khan – The Telegraph
Denmark’s central bank is ready to impose capital controls to stop the inflow of money that has threatened its currency peg with the euro.
The country’s central bank has already made a series of drastic moves to protect the value of the krone as the euro has continued to weaken on news of eurozone QE and worries about Greece.
Bitcoin: The non-alcoholic beer of currencies
The Manila Times Online
Last week, the China-based virtual currency exchange Bter announced that it had lost 7,170 bitcoins to a hacking theft. The heist, which was worth about $1.75 million in actual money, was the second such major loss for a bitcoin exchange so far this year; last month, electronic bandits relieved the Slovenian exchange Bitstamp of about $5 million worth of bitcoins.
The loss at Bter came less than a week after the operators of the Hong Kong-based MyCoin disappeared with HKD 3 billion ($387 million) in customer deposits. In the case of MyCoin, however, investors were the victims of an apparent Ponzi scheme rather than hackers.
Indexes & Index Products
Market Attributes: Risk & Volatility Dashboard, February 2015
S&P Dow Jones Indices
Tim Edwards, Senior Director, Index Investment Strategy at S&P Dow Jones Indices has analysed the VIX for February, noting that it has declined for the month because U.S. equities are performing well, most likely due to the strong U.S. dollar. This is in contrast to 13 out of the 15 measures of volatility for other markets that are above their average.
Nasdaq nears all-time highs as exuberance yields to reason
As the technology-heavy Nasdaq Composite Index closes in on the all-time high it reached in March 2000, investors are facing a market that barely resembles the go-go era of 15 years ago. Valuations, as measured by what investors are willing to pay for the last 12 months of earnings, are an eighth of what they were at the peak of the dot com bubble, when the Nasdaq hit an intraday record of 5,132 before falling more than 63 percent in 12 months.
SSGA launches four MSCI Value Weighted smart beta ETFs
tate Street Global Advisors (SSGA), the asset manager behind the SPDR brand of exchange-traded funds, has announced the launch of four smart beta ETFs linked to the MSCI Value Weighted Index family.
Weathering Market Volatility with Smart Beta
Like all smart beta strategies, min vol blends aspects of traditional active and passive investing: active in that the strategies attempt to improve risk-adjusted return; passive in that portfolio construction is generally objective and based on pre-set rules.
Russell proposes changes to Russell Smaller Companies Pool and Russell Smaller Companies Class
Russell Investments Canada Limited
Russell, a leading global provider of multi-asset solutions, is seeking to approve a change to allow each of the Funds to provide long-term capital appreciation principally through exposure to both global and Canadian equity securities of issuers with a smaller market capitalization. Russell also proposed changing the names of the Funds to Russell Global Smaller Companies Pool and Russell Global Smaller Companies Class, which reflects the change in investment objectives.
Deutsche Börse to make unscheduled adjustment in MDAX: Bertrandt AG to replace Gagfah S.A. (tendered)
Deutsche Borse Group
Deutsche Börse: Due to its anticipated merger with Deutsche Annington SE, the tendered share class of Gagfah S.A. (ISIN LU1152862774), which is currently listed in MDAX, will be delisted from stock trading as of 24 February 2015 upon request of the company.
Saudi King Salman’s ‘King’s Bonus’ Sparks Gold-Buying Boom
By Lubna Hussain, NBC News
RIYADH, Saudi Arabia — The recent death of Saudi Arabia’s king provoked a public outpouring of grief in the Gulf kingdom — but it also appears to have sparked a gold and jewelry-buying boom.
As has become customary for incoming Saudi rulers, new King Salman announced last month that he would pay a “king’s bonus” of two months’ wages to every government employee and student. According to buyers and sellers in Riyadh’s open-air gold and jewelry market — or “souk” — the recipients cannot spend it fast enough.
ICE Benchmark Administration to Administer the LBMA Gold Price from 20 March 2015
Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, announced today that ICE Benchmark Administration (IBA) expects to launch the new LBMA Gold Price, which replaces the long established London Gold Fix, on 20 March 2015.
Why Analysts Want You to Stop Buying Gold
The affinity for gold among Indians is well-known. Gold prices are tracked religiously in many households across the country and people tend to buy jewellery whenever prices dip for auspicious events months in advance.
But there’s a case for holding on to gold purchases ahead of the Budget later this month, analysts say.
Deals in the wind for Australian gold sector as big firms put mines on market
Peter Ker, The Sydney Morning Herald
The gold sector is primed for another round of mergers and acquisitions after big miners put three local mines up for sale in the past week.
Quick on the heels of Newcrest Mining’s decision to put the Telfer mine in the shop window, the world’s biggest goldminer, Barrick, confirmed on Thursday morning that its Cowal mine in New South Wales and its stake in the Porgera mine in Papua New Guinea are up for grabs.