John Lothian Newsletter: Barclays Dark Pool Volume Fell 37% in Week of Lawsuit; Traiana expands CreditLink initiative with kill switch support for single dealer platforms; New dawn as non-bank enters interdealer order book

Jul 15, 2014

First Read

World Of Opportunity Chicago 2014: Ben Van Vliet (Promo)

Our MarketsWiki World of Opportunity Summer Intern Education Series in Chicago is quickly approaching. Ben Van Vliet, assistant professor at the Illinois Institute of Technology, will be discussing the organizational structure of High Frequency Trading as well as what key components help give traders a competitive advantage.
For more information on the event and how to register, click here.

Watch the video »


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


Don’t Bet Your Sporran on a Scottish Stock Market
By Alen Mattich, WSJ
As Scotland builds up to its mid-September vote on whether it should become independent, plenty of attention has focused on how its economy might fare outside of the United Kingdom. The latest comes in the form of an analysis of what a Scottish stock market would look like, produced by a pair of economists from the London Business School and Walbrook Economics, a consultancy.

***** I can’t wait for the sporran market indicator.


Diane Saucier Fundraising for Climate Ride Midwest
Longtime John Lothian News friend Diane Saucier has signed up and have begun training for Climate Ride Midwest, a 300 mile, 4-day bike ride from Grand Rapids, Michigan to Grant Park in Chicago from September 6th to 9th. She is helping raise awareness about climate issues & sustainability, and to raise funds for the Alliance for the Great Lakes, a champion in Great Lakes conservation for more than 40 years. Here goal is $4000 and she is more than half way there. Please help Diane meet her fundraising goal.

***** I can’t wait to see her finish the 300 mile ride.


Reporter Whose Rant Helped Launch Tea Party Gets Put In His Place
The CNBC reporter whose rant helped launch America’s tea party movement was told off Monday amid — what else — one of his epic rants. As Rick Santelli shouted from the floor of the Chicago Board of Trade against the Federal Reserve’s policies on “Fast Money Halftime Report,” CNBC reporter Steve Liesman took him down a peg.

***** This was a disgrace. CNBC should take a good look at themselves for allowing this kind of antics on television. The actions of Rick Santelli were an embarrassment to CNBC, this industry and the civil discourse everywhere.


CNBC’s Rick Santelli Had His Biggest On-Air Blowup In A Long Time, And It Ended With Him Walking Off Air
Myles Udland, Business Insider
Rick Santelli had a meltdown on CNBC today. During CNBC’s “Fast Money Halftime Report,” CNBC reporters Rick Santelli and Steve Liesman, as well as the members of CNBC’s Halftime Report panel, went at it over Fed policy.

***** Rick Santelli’s actions were not journalism, they were not market commentary, they were an embarrassing theatrical effort to get attention for his discredited economic/political ideas. Steve Liesman finally let him have it, but it should never have gotten that far. Television can be better than what CNBC is giving us with Santelli’s rants. We deserve better.


Arabica Coffee, Sugar Trading Volumes Fell During World Cup
by Leslie Josephs, WSJ
Brazil may be bidding auf wiedersehen to shortened work hours during the World Cup, but the soccer tournament left a mark on some commodities markets in which the South American nation is a major player.

***** Yes, but births will be up in Germany in about nine months.


Fantasy Sports Meets Wall Street: Intrade Co-Founder Resurfaces
By Steven Russolillo, WSJ
After the closure of popular betting site Intrade, one of the company’s founders is back and looking to reinvigorate the online-predictions market in a new way. His new niche: sports. Just don’t call the venture a betting site.

***** This is the company co-founder who did not die on Everest with a pregnant wife at home.


Revved Up: CME Europe’s Knottenbelt Says Currencies Just The Beginning

CME Europe launched in March with an eye on currencies. William Knottenbelt, head of European business operations for CME Group and the CEO of CME Europe, says that the exchange has a core group of seven clearing members with more on the way and its currency products are positioned well for the market. And that, he says, is just the beginning for the European exchange.

“We’re starting now to see the volume beginning to come into the market,” Knottenbelt told JLN at the IDX conference in London. “As we get more and more clearing members and execution members coming on board, we’re getting a good flow of business and we just see that building.”

Watch the video »


Bond Giant Pimco and Founder Bill Gross Struggle to Heal Strains; Tensions Persist Six Months After Abrupt Resignation of Previous CEO
By Gregory Zuckerman and Kirsten Grind
NEWPORT BEACH, Calif.—In early June, before hundreds of employees at Pacific Investment Management Co.’s new 21-story headquarters here, Chief Executive Douglas Hodge spoke effusively about Bill Gross’s enduring passion for investing.

****** The wheels on the bus go round and round, until they fall off.


CME Jobs
Software Engineer / Quantitative Developer- London
CME Group
Chicago Mercantile Exchange, Inc. (“CME”) seeks a Software Engineer / Quantitative Developer for its London, England location.

Pricing & Valuation Associate – London
CME Group
Chicago Mercantile Exchange, Inc. (“CME”) seeks a Pricing & Valuation Associate for its London, England location.

Clearing House Solutions Internship -Chicago
CME Group
This internship role with the CME Group’s Clearing Solutions BPM team will provide broad exposure to all facets of Clearing’s core processes and projects enabling great interaction with Operations, Risk and Financial teams.



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Lead Stories

Barclays Dark Pool Volume Fell 37% in Week of Lawsuit
By Michael J. Moore, Bloomberg
Barclays Plc (BARC) saw a 37 percent decline in the number of U.S. shares that traded in its dark pool during the week that it was sued by New York for allegedly lying to customers of that venue.

Traiana expands CreditLink initiative with kill switch support for single dealer platforms
London, 15 July 2014 – Traiana, the leading provider of pre-trade risk and post-trade processing solutions, announces today that it has extended the scope of its CreditLink service to include a kill switch capability for single dealer platforms in foreign exchange (FX) trading. Citi’s platform, Velocity, is the first single dealer platform to enhance its connectivity with CreditLink to support this new capability.

EBS Direct grows month-on-month since launch in November 2013; ANZ became the 14th liquidity provider on the platform in June
London and New York, 15 July 2014 – EBS, ICAP’s market-leading electronic FX business, announces today that EBS Direct has averaged month-on-month growth in average daily volumes of 70% since launching in November 2013. EBS Direct now has 458 liquidity consumers in 35 countries committed to using the service, with 176 active users. New functionality and further currency pairs have also been added to the platform since launch, adding to the demand for this product.

New dawn as non-bank enters interdealer order book
Dodd-Frank’s intention to move over-the-counter swaps into an exchange-like format has taken another step towards reality, as one US firm has become the first non-bank to execute interest rate swaps within an interdealer broker’s anonymous order book platform.

Cynk Short Squeeze Blamed by Trader for Costing Him Job
By Zeke Faux and Jing Cao, Bloomberg
A Wall Street trader said Cynk Technology Corp.’s (CYNK) 36,000 percent stock surge cost him his job, and he blames a short squeeze and regulators who didn’t halt the shares before the company’s value shot past $6 billion.

Sifma’s Suggestions for Reforming the Stock Market
by Bradley Hope, WSJ
Wall Street’s industry group has come out this morning with its own recommendations for reforming the stock market, joining a growing chorus of commentators and market participants angling for changes.

Autilla goes live with innovative marketplace for precious metals trading
Cinnober’s TESS Connect & Go solution enabled short time to market
The global precious metals marketplace, Autilla Ltd., today announced that it is now live with their new electronic trading platform, powered by Cinnober Financial Technology. The migration of the over-the-counter (OTC) broking of precious metals onto a proven electronic trading platform enables Autilla to provide banks with a highly flexible and compliant trading system. This innovative initiative, which is available to wholesale participants in the London Bullion Market Association (LBMA), is enabled by Cinnober’s TESS Connect & Go.


Rampant insider trading rarely leads to prosecution, says study
Janet McFarland, The Globe and Mail
Insider trading continues to be “pervasive” before merger and acquisition deals but rarely leads to prosecutions, according to an analysis of unusual trading patterns by a team of professors in Canada and the United States.

Esma calls for feedback on market abuse regulation
by Joe Parsons, FOW
Europe wants to extend the rules to include more complex forms of trading
The European Securities and Markets Authority (Esma) is seeking opinions from stakeholders on the draft technical standards for the new market abuse regulation (Mar). The proposed framework is set to broaden the rules to new products, venues and electronic trading techniques, such as over-the-counter (OTC) derivatives, dark pools and high…

Equity Crowdfunding: New ‘Secret’ Rules For Social Media Users – A “Terrifying Misuse Of Legislation”
A briefing and submission to Ministers handed to Treasury officials today documents how the FCA (Financial Conduct Authority) is abusing legislation created before the social web existed to gag its use with equity Crowdfunding. Their action, which extends to anyone even mentioning a crowdfund online, is also threatening free speech and free expression, according to leading lawyers.

MiFID II is giving market makers mixed messages
by Johannah Ladd, European Principal Traders Association secretary general
Proposed revisions to the Market in Financial Instruments Directive (MiFID II) is giving market makers, many of whom use high frequency trading methods, mixed messages. This could hurt their ability to provide liquidity to European financial markets, especially if their remuneration is limited by lawmakers, writes Johannah Ladd.

The Right Size for DOJ Settlements: More Than What Banks Have Set Aside
Maureen Farrell and Christina Rexrode, WSJ
Citigroup and the government’s lawyers had a protracted back and forth on what the bank should pay to redress investors for allegedly selling shoddy mortgage securities before the financial crisis. The ultimate penalty: $7 billion. Of that, Citigroup took a $3.8 billion charge because the bank had not put enough aside to cover these potential liabilities.

IFRS Foundation And ESMA Sign Joint Statement Of Protocols
The IFRS Foundation and the European Securities and Markets Authority (ESMA) today announced the agreement of a joint Statement of Protocols to serve as the basis for future co operation in areas of mutual interest.

Exchanges & Trading Facilities

CME Group Announces Record Trading Volume and Open Interest for NYMEX Brent (BZ); Open Interest in NYMEX Brent (BZ) Surpasses 100,000 for First Time
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it reached trading volume and open interest records for its NYMEX Brent (BZ) crude oil futures contracts on Friday, July 11, 2014. Open interest for NYMEX Brent set a record of 101,425 on July 11, surpassing the 100,000 contracts milestone for the first time ever. The previous open interest record was 99,520 contracts, which was set on July 9, 2014.

SGX welcomes Frasers Hospitality Trust to Mainboard
Singapore Exchange (SGX) is pleased to welcome Frasers Hospitality Trust (FHT) to Mainboard under the stock code of “ACV”.

Euronext Launches Three New Futures Contracts On CTT, Portucel And Semapa Shares
Euronext launched today on the Portuguese derivatives market three new futures contracts on CTT, Portucel and Semapa shares, in the context of its strategy to develop and promote the Group’s derivative Markets.

Oslo Børs: Xcite Energy Lists Its First Bond Issue On Nordic ABM
Xcite Energy Resources lists its first bond issue on Nordic ABM today.

Five New ETNs From ETF Securities Launched On Xetra –
Five ETNs on currency baskets from the ETF Securities product offering have been tradable on Xetra since Monday. The new ETNs track the performance of four tactical and one strategic currency basket.

WSE Modifies WIG20 Options Expiry Cycle
WSE modifies the WIG20 options expiry cycle as of 18 August 2014. As a result, some options in trading will always expire in the nearest calendar month.

Hedge Funds & Managed Futures

Experts suggest investing in arbitrage funds to beat tax woes
Everybody is in with love arbitrage funds since the Union Budget was announced last Thursday. Soon after the finance minister changed the tax treatment on long-term capital gains on nonequity funds, many experts have started exhorting investors to take a close look at arbitrage funds to earn better post-tax returns. Long-term capital gains tax on non-equity funds has been hiked to 20 per cent from 10 per cent. The lock-in period has also been increased to 36 months from 12 months.

Banks & Brokers

Goldman’s Earnings and Revenue Rise, Beating Expectations; Investors Closely Watch Results From FICC Trading Business
By Saabira Chaudhuri, WSJ
Goldman Sachs Group Inc. said second-quarter net income rose 5.5% on strength of its investment banking and investing and lending arms.

Trading Doldrums Won’t Sink Morgan Stanley, Goldman Sachs
By John Carney, WSJ
The wind may have come out of Wall Street’s trading sails, but that doesn’t mean Morgan Stanley and Goldman Sachs Group Inc. are stuck treading water.

Ex-Goldman director Rajat Gupta fails to void conviction
By Jonathan Stempel, Reuters
Former Goldman Sachs Group Inc director Rajat Gupta, serving a two-year prison term, has failed to persuade a federal appeals court to overturn his insider trading conviction.

JPMorgan profit falls 8 percent as securities trading income drops
JPMorgan Chase & Co (JPM.N), the biggest U.S. bank by assets, reported an 8 percent decline in second-quarter profit as a pullback in trading of bonds and currencies by big institutions hit revenue in its securities trading business.

Morgan Stanley Is Winning the Marriage Market
By John Carney, WSJ
It’s not exactly a secret that financial advisers are on the rise on Wall Street. James Gorman has put wealth management at the center of Morgan Stanley, a move which helped the venerable Wall Street firm buck the tide of declining earnings last quarter. Even Goldman Sachs GS +1.32%, which is still led by a commodities trader, is looking to expand its once sleepy financial-advisory operation.
The revival of financial advisory services doesn’t just show up in quarterly earnings, though. It can also be seen in the Weddings & Celebrations section of the New York Times.

Clearing & Settlement

Banks shake up clearing
By Christopher Whittall, IFR
Leading investment banks are set to raise the price they charge to clear derivatives trades on behalf of clients, as two high-profile exits in the space of six months have highlighted the shake-up needed to make OTC client clearing a viable service under Basel III.

Open access brings new clearing efficiencies
The Trade News
New regulations will dramatically change the clearing landscape across Europe. The MiFID II requires central counterparties (CCPs) to clear derivatives trades for any venue across the continent, known as the open access rule. The overhaul is in line with increasing transparency and competition within the derivatives market.

Indexes & Products

Head of S&P Capital IQ Departs; Lou Eccleston Leaving to Pursue Other Opportunities, According to Memo
By Timothy W. Martin
Lou Eccleston, who led the fast-growing S&P Capital IQ division at McGraw Hill Financial Inc., MHFI +1.06% departed Monday to pursue other opportunities, according to an internal company memo.


New Site to Track Activist Short-Sellers Launches As Bears Gain Prominence
by Juliet Chung, WSJ
In a sign of the increasing importance of so-called short-activists, investors who speak up publicly about their bearish bets, a database dedicated to tracking their campaigns launched Monday.

Squawker Adds Fidessa Support
By James Rundle,
High-touch block-trading venue Squawker has announced that it is now available through Fidessa Spotlight.
The venue has also added program trading modules, which aim to increase straight-through processing through aligning with dark pool and algorithmic workflows, while retaining its human-to-human negotiation premise.

OTAS Technologies Introduces OTAS Intrade, The First Real Time TCA And Trading Performance Analysis System
OTAS Technologies, the preferred decision support partner to the world’s largest global institutions, announces the introduction of OTAS InTrade, the first ever real time transaction cost and trading performance analysis system that enables trades to be executed more efficiently while minimizing costs.

Nickel in early iPad likely triggered allergy in boy: study
Nickel in a first-generation iPad likely triggered an allergic skin reaction in an 11-year-old boy, a case that highlights an increasingly common condition linked to the rapid adoption of consumer electronics, according to a study published by the American Academy of Pediatrics on Monday.

Options Partners with Orchestrade to Deliver A Fully Managed Platform for Cross-Asset Trading
Options will deploy the solution via the firm’s Momentum platform
New York / London – July 15, 2014 – Options, the leading private financial cloud provider for the global capital markets industry, today announced that it has partnered with Orchestrade Financial Systems to deploy its fully integrated position keeping, operations and risk management software to the Options platform. The partnership sees the IaaS provider offer clients a flexible, fully managed and hosted platform for cross-asset trading.


DoJ probing possible price coordination in music publishing -WSJ
The U.S. Department of Justice is investigating possible pricing coordination among music publishing companies as it reviews the decades-old rules that govern the cost of licensing songs, the Wall Street Journal reported, citing people familiar with the matter.

SEC Charges Ernst & Young With Violating Auditor Independence Rules in Lobbying Activities
The Securities and Exchange Commission today charged Ernst & Young LLP with violations of auditor independence rules that require firms to maintain their objectivity and impartiality with clients.

Environmental & Energy

Coal’s Crisis Cuts Deep Down Under
By Ben Winkley, WSJ
Coal is in crisis. Declared non-grata in pollution-conscious Western economies, there is an oversupply of the black stuff. Prices have more than halved in three years.

Texas carbon capture venture aims to boost oil production
By Rory Carroll, Reuters
NRG Energy and Japan’s JX Nippon on Tuesday announced plans to capture carbon emissions from a Texas coal plant and use the pollution to boost oil production at an aging field, the latest attempt to bring to life a troubled technology seen as a key to combating climate change.


Chinese Banks Halt Experimental Yuan-Remittance Program; Yuan-Remittance Program Halted Following Criticism in State Media
By Lingling Wei, WSJ
BEIJING—China’s major banks have halted an experimental program, sanctioned by the country’s central bank, that helped citizens transfer large sums overseas despite government capital controls, according to people with knowledge of the matter.

If China Stops Being A Currency Manipulator Will The Yuan Rise Or Fall?
by Tim Worstall, Forbes
As we know every year certain very angry US politicians get together to insist that the President must declare China to be a “currency manipulator”. The thought is that the country artificially keeps its currency low in value against the dollar, thereby boosting exports from China to the US

Frontier Markets

OTC Markets Group Welcomes Chilean Metals to OTCQX®
OTC Markets Group Inc. (otcqx:OTCM), operator of Open, Transparent and Connected financial marketplaces, today announced that Chilean Metals Inc . (otcqx:CMETF), a junior mineral exploration company, has qualified to trade on OTCQX®, the best marketplace.


How a trader’s brain REALLY works
Raj Mahal, CNBC
I was a profitable trader for many years and have trained many successful ( and not so successful) traders. I found the recent research about what goes on inside a trader’s brain interesting — but not quite right.

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