First Impressions

Better Mousetrap Tech? NinjaTrader looks to disrupt with new IB
Jim Kharouf, John Lothian News
Brokers, exchanges and technology firms are always changing and evolving. The reality of a tough regulatory, trading and economic environment is pushing firms to diversify and adjust their business models.

Sometimes, however, those changes can fall into the category of disruptive. Such may be the case with Ninja Trading Brokerage, a new introducing broker that is the result of Denver-based NinjaTrader’s acquisition of Chicago-based Mirus Futures.

What makes the deal interesting is that NinjaTrader has done well to spread its software in a unique and collaborative way with the retail futures community since its launch in 2003. It has a staff of 40 in Denver and Europe, and about 400 “developers” who have built and contributed their own widgets to the NinjaTrader platform, which also works with other ISV platforms such as CQG and others. This has helped grow the NinjaTrader user-base to about 40,000.

For the rest of the commentary, go to

Quote of the Day

“It is critically important that international regulators continue to work together to harmonize swap data reporting, exchange trading and [central counterparties] clearing before market fragmentation and contraction of liquidity hardens and becomes permanent.”

Scott O’Malia in the story, “US, EU differences on cross-border rules risk permanent liquidity drain”.

Lead Stories

US, EU differences on cross-border rules risk permanent liquidity drain: O’Malia
US and European regulators must quickly come together to harmonize international derivatives trading rules before market fragmentation and low liquidity become lasting fixtures of the swaps and futures markets, Commissioner Scott O’Malia of the US Commodity Futures Trading Commission said Tuesday.

***DA: Ironic that just as stock market regulators are coming to grips with the fragmented system they helped create, the swaps and futures markets seem headed toward a similar fragmented system.

BlackRock Results Show a Shift Away From Stocks
William Alden – NY Times
With stock market indexes near record highs, investors committed more money to BlackRock in the second quarter, helping increase profit for the giant asset management firm.
BlackRock reported on Wednesday that its assets under management grew 4 percent, to $4.59 trillion, from the first quarter and 19 percent from the period a year earlier. Individual investors were particularly attracted to funds that offered something other than a traditional stock market investment, while institutional investors withdrew billions of dollars from stock funds.

***DA: Equity exhaustion?

Pimco Names Mogelof as Asia-Pacific Head Amid Leadership Changes
By Benjamin Purvis, Bloomberg
Pacific Investment Management Co. named Eric Mogelof to head its business in the Asia-Pacific region as the company reshapes its leadership following the departure of former Chief Executive Officer Mohamed El-Erian.

Lloyds nears deal with regulators on Libor fines
The Telegraph
Lloyds Banking Group is believed to be nearing a settlement with regulators in the US and UK over alleged Libor rigging, making the taxpayer-backed lender the latest in a long line of banks to face heavy fines.

***DA: I wonder why bank robbers are not allowed to negotiate a percentage of the money they will return in exchange for a non-admission of guilt.

ETFs to Surpass Hedge Fund Assets by 2015
The summer is typically quiet time for Wall Street, but not in the fast-moving ETF marketplace.
Never mind that a Winklevoss Bitcoin ETF is on the verge of being launched, the adoption rate of ETFs among financial advisors is through the roof.
“We predict annual growth rates of 15%-30% around the globe over the next five years and believe the ETF industry could surpass the hedge fund industry in assets under management during the next 12–18 months,” said EY in its 2014 ETF Global Survey.

**DA: Seems like we’re splitting hairs between the Winklevoss Bitcoin Trust and a hedge fund.

Basel III in Canada Seen Spawning $25 Billion in Bonds
Cecile Gutscher – Bloomberg
Royal Bank of Canada’s offering of C$1 billion ($930 million) in subordinated debt is likely to be the first of about $25 billion in sales over the next decade by Canadian lenders seeking to meet Basel III capital requirements.
The sale of non-viability contingent capital bonds was the first attempt by a Canadian bank to meet new regulations through subordinated debt that converts to equity if a lender gets into financial distress. Toronto-based Royal Bank priced the 3 percent notes on July 11.

***DA: I feel so much safer now.

BondView Releases Intelligent Bond Surveillance, Empowering Municipal Bond Investors With Round-the-clock Monitoring and Alerts
ROSLYN HEIGHTS, N.Y., July 16, 2014 /PRNewswire/ — Intelligent Bond Surveillance from BondView ( automatically provides 24-hour monitoring of key municipal bond investment metrics and sends early warning alerts about significant fluctuations. It’s a first-of-its-kind service intended for both financial advisors and individual investors that need a more proactive investment approach and is available now as part of a free BondView subscription.

ICAP confirms broker cull as revenue falls
By Clare Hutchison, Reuters
* Confirms cutting jobs in voice broking
* 100 brokers said leaving – IFR
* Q1 revenue down 14 pct (Recasts, adds detail, background, fresh CEO quotes)
ICAP, the world’s biggest broker of transactions between banks, is downsizing its voice broking unit to concentrate on investments in the more profitable area of electronic broking and post-trade services.

***DA: In other news, IBM is shifting production away from its Selectric typewriter and redeploying toward something called the “personal computer.”

Japan’s Holdings of U.S. Treasuries Rose to Record in May
Brendan Murray – Bloomberg
Japan’s holdings of U.S. government debt rose $10.4 billion to a record $1.22 trillion in May, Treasury Department data in Washington showed.

***DA: Japan is on track to issue about $2 trillion in debt this year, but it would like its investments to be in U.S. debt.

Central Banks

Yellen’s jibe at stock sectors echoes Greenspan’s warning in 1996
David Berman – The Globe and Mail
Janet Yellen, chair of the U.S. Federal Reserve, has an important message for investors: Stocks trading at 100-times earnings have “stretched” valuations.
While that may sound a bit obvious to anyone who prefers to invest in stocks with price-to-earnings ratios in the mid-teens, her comments hit a nerve among some investors who turned value conscious after hearing the warning.

***DA: Rational exuberance.

Yellen Watches American Paycheck for Signals on Shadow Slack
Federal Reserve Chair Janet Yellen is keeping a closer eye on the American paycheck these days.
The central bank chief referred to the “slow pace of growth” in measures of hourly compensation in remarks to the Senate yesterday as a sign of “significant slack” in labor markets.

***DA: Gee, we hadn’t noticed

Fed’s Yellen Hedges Her View on Rates
Jon Hilsenrath – WSJ
Federal Reserve Chairwoman Janet Yellen defended keeping interest rates low before Congress on Tuesday, but opened the door a crack to earlier-than-planned rate hikes if the labor market continues its surprising improvement.
“If the labor market continues to improve more quickly than anticipated by the [Fed],” she told the Senate Banking Committee, “then increases in the federal-funds rate target likely would occur sooner and be more rapid than currently envisioned.” The Fed has held its benchmark short-term rate near zero since late 2008.


Forex effects felt as banks restock reserves
Delphine Strauss – Financial Times
Central banks are back in the foreign exchange market.
After a decade in which reserve managers built ever greater stockpiles to shield themselves against external shocks, global reserve growth stalled last year as the US Federal Reserve’s plans to taper stimulus prompted a flight from emerging markets. From Turkey to Ukraine, India to Indonesia, authorities stepped in to defend their currencies by selling dollars.

Regulators push for widening of forex fix time
By Daniel Schäfer and Sam Fleming in London, FT
Global regulators have proposed to centralise foreign exchange trading at a crucial daily fix on a global platform in a move that would undercut banks’ role in the currency market.

***DA: Bigger data set = better approximation.

Euro healing, but still distant No. 2 to US dollar
David McHugh – AP (via
FRANKFURT, Germany International investors are regaining their appetite for euros as the shared currency recovers from a debt crisis that threatened to break it up.
But the euro, which is shared by 18 countries, fell further behind the U.S. dollar last year in another key measure of importance and prestige: its use as a reserve currency by the world’s central banks.

Indexes & Index Products

Dissecting the Japan Hedged Equity Rebalance
Jeremy Schwartz – ETF Trends
We think it is important to be mindful of how an annual rebalance back to an underlying fundamental such as dividends can help manage valuation risks. With market capitalization-weighted indexes, when constituents increase in price compared to other stocks, they gain greater weight and increase their impact on the performance of the index. WisdomTree Indexes employ a rules-based rebalancing mechanism that adjusts relative weights based on underlying dividend trends. This is all the more important as Japan transitions from a momentum-led market in 2013 toward a more traditional value opportunity that we believe Japan represents today.


London Gold Fix to Undergo Major Overhaul; Move Follows a Similar Shakeup to The Silver Fix
By Francesca Freeman, WSJ
LONDON—The 95-year-old London gold fix is poised to undergo a major overhaul, as the banks that set the daily benchmark begin the search for a third-party administrator to run the process, people with knowledge of the matter said Wednesday.

Overhaul of London gold “fix” expected imminently -source
By Jan Harvey and Clara Denina, Reuters
A statement on the overhaul of the century-old system of benchmarking gold prices is expected imminently ahead of the implementation of new regulations governing financial benchmarks, a source familiar with the matter said on Wednesday.

The real reason Yellen’s comments sent gold lower
As Janet Yellen testified before the Senate Banking Committee, gold sank 1 percent in 10 minutes, taking the metal back below $1,300 for the first time in nearly a month. But rather than being the victim of a single massive bearish trade, it appears the metal was reacting to a slightly less dovish outlook from the Fed chair than some gold holders were expecting or hoping for.

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