First Read

Ben Van Vliet, IIT – HFT: The Need for More Than Speed
JohnLothianNews.com
“Change is a proxy for opportunity in the financial markets.”

Technology has significantly changed the state of the financial industry. Several years ago, the financial industry was more about groups of individual traders – it thrived on whether or not those traders had a competitive edge in the markets. In today’s world, the financial industry centers around organizations creating better trading systems to gain a competitive edge.

Watch the video »

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An Email Exchange
John J. Lothian & Company, Inc. this week switched its email provider. We are now using Microsoft Office 365 as our email and office application provider. As a result, there may have been emails that were sent to us that bounced back to you.

If you emailed us and we did not respond, please email us back, or email me directly for access to the JLN staff. Not all their email boxes are up and running.

Our apologies for any inconvenience.

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Silver Price Going Electronic in Quest for Transparency
Nicholas Larkin – Bloomberg
The silver-pricing method begun during the reign of Queen Victoria ends today in London as the $5 trillion market shifts to a more transparent process and regulators expand scrutiny of how commodity benchmarks are set.
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*****All good things must come to an end, and some bad things too.

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SEC aggressively investigates media leaks
Sheila S. Coronel : Columbia Journalism Review
If you think investigations of media leaks are confined to issues of national security, think again. Since 2008, one particular federal government agency has aggressively investigated leaks to the media, examining some one million emails sent by nearly 300 members of its staff, interviewing some 100 of its own employees and trolling the phone records of scores more. It’s not the CIA, the Department of Justice or the National Security Agency. It’s the Securities and Exchange Commission.
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***** Normally media leaks have something to do with lots of beer drinking.

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Once Powerful, Mary Jo White’s S.E.C. Is Seen as Sluggish and Ineffective
JESSE EISINGER – Dealbook – NY Times
Mary Jo White took the helm of the Securities and Exchange Commission facing high hopes that she could turn around the once-proud agency. More than a year into her tenure, she has disappointed a wide swath of would-be allies.
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***** I am having a hard time remembering when the SEC was a “proud agency.”

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What this wave of vendor M&A will bring
Hamish Purdey – Futures & Options World
A new wave of consolidation is washing its way through the futures vendor community. Hamish Purdey believes it’s not the wave that matters, but the ripples it leaves behind. The smart money is on the newly emerging vendor landscape of 2014 heralding some long overdue technological change in the industry.
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***** My money is on startups and firms that act like startups.

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Three Engagement Strategies That Pay It Forward in Finance
Rajat Paharia – Wall Street & Technology
Gamification has gotten a bad rap over the past year under a common misconception that it is all fun and games. However, some of the most serious players in the financial industry, where analysis is especially focused on ROI, have used gamification tactics as a means to drive revenue, engage new customers, educate existing customers, introduce them to new services, and keep them from jumping ship every time a competing bank offers free checking, or a competing investment firm offers free trades.
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***** Phone a friend, poll the audience and 50/50?

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No Room at the Bin for Grain Amid Buffett’s BNSF Rail Jam
Megan Durisin – Bloomberg
With the start of the spring-wheat harvest in Arnegard, North Dakota, a week away, the bins on Bob Wisness’s 11,000-acre farm are half full with last year’s crops that have been stranded by a train traffic jam.
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***** It is good to own the railroads, but I still like Boardwalk and Park Place.

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MarketsWiki

MarketsWiki Page of the Day
LME Clear
jlne.ws/15JXRIB

MarketsWiki Recent Updates

People

Jourdan Brunson; Derek West; Thomas A. Kloet

Companies, Organizations and Groups

LME Clear; Moscow Exchange; Moscow Interbank Currency Exchange; BATS Global Markets

Miscellaneous

Volatility

Statistics

51,905,930 pages viewed, 8,016 articles, 185,163 edits
MarketsWiki Statistics

Lead Stories

Barclays Index Unit Said to Draw Offers From Nasdaq, CME Group
Matthew Monks and Sam Mamudi – Bloomberg
Barclays Plc’s index business drew offers from Nasdaq OMX Group Inc., Bloomberg LP, and CME Group Inc., people with knowledge of the matter said. The Index Portfolio and Risk Solutions, or IPRS, unit, which manages indexes including the U.S. Aggregate Bond Index, could fetch about $1 billion, one of the people said, asking not to be identified because the matter isn’t public.
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Surprisingly good start for European derivatives reporting mandates
Jon Watkins – The Trade
The start of collateral and valuations reporting under the European market infrastructure regulation (EMIR) has been smoother than OTC and listed derivatives transaction reporting requirements introduced in February, according to industry experts.
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Hedge Fund Holdouts Fail to Reach Private Deal Over Argentine Debt
ALEXANDRA STEVENSON – Dealbook – NY Times
Aurelius Capital Management, one of the hedge funds that has battled with Argentina over billions of dollars in bond payments, said on Wednesday that efforts to reach a deal with private parties in the wake of the country’s default had collapsed.
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Markit beats revenue and earnings estimates with maiden results
Nicole Bullock in New York – Financial Times
Markit, the UK financial data and service provider that listed in New York in June, beat expectations for revenue and earnings in its debut report as a public company.
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European lender bars customer from hedging with US banks
Peter Madigan – Risk.net
One European bank has barred a borrower from hedging its loan with a US bank, apparently over fears that the hedge could drag the lender into the Dodd-Frank Act’s swap dealer regime in the event of the borrower defaulting. It is not clear how common the practice is, but the loan terms – seen by Risk – provide new evidence of the extent to which swap regulation is dividing the market into US and non-US segments.
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As Saudi bourse opens, foreigners face clash of investment cultures
Marwa Rashad and Andrew Torchia – Reuters
Seventy-year-old Saudi Arabian stock speculator Mohamed al-Otaibi says he lost hundreds of thousands of dollars in the crash of 2006, but he’s back trading again as the Arab world’s biggest bourse prepares to open to direct foreign investment.
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Banks face tough decision over future – report
Luke Jeffs – Futures & Options World
The world’s largest investment banks face a tough decision between going fully electronic or focusing on traditional sales and trading services if they want to ensure long-term profitability, a new report has said.
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Regulatory

FCA department heads promoted in management shuffle
Paige Long – Risk.net
The Financial Conduct Authority (FCA) has promoted three heads of department to director level, expanding the regulator’s senior management capacity.
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Fed and FDIC living wills ‘wholly misunderstood’ by US banks
Jessica Meek – Risk.net
US banks have misunderstood what is expected of their resolution plans, an expert warns. The comments come after the US Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve released a joint statement criticising the resolution plans of the 11 US banks – or ‘first-wave filers’ – that submitted plans in 2013.
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Warning about persons purporting to be acting for AMF
The Québec Autorité des marchés financiers is warning the public about e-mails sent by persons purporting to be employees of or consultants to the Autorité des marchés financiers of Québec or France asking for personal information.
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Exchanges & Trading Facilities

LME’s new COT report; a beginner’s guide
Andy Home – Reuters
When the London Metal Exchange (LME) consulted with its industrial users on what it should do about long load-out queues at some of its warehouses, the only point of general agreement in a polarized response was that it should improve transparency. Well, the LME has now delivered. Indeed, it has sprung something of a surprise by going beyond the weekly reporting format used in the U.S. to provide daily reports, albeit released weekly and with the customary two-day time-lag that characterizes its existing dominant position reports.
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SuperDerivatives goes live with exotic options trading venue
Farah Khalique – Euromoney Magazine
SuperDerivatives has gone live with a new trading platform to trade exotic foreign-exchange options electronically, and plans to expand the number of tradable asset classes from metals and FX to include oil, equity derivatives, credit and interest rates.
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Hedge Funds & Managed Futures

Bill Ackman plans to raise $4bn by listing new investment vehicle
Stephen Foley – Financial Times
Bill Ackman is planning to raise around $4 billion by listing a new investment vehicle in London, in the latest example of a hedge fund manager looking for capital that cannot flee in a crisis.
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Barings multi-asset managers Stanion and Cole quit
Dan Jones – Investment Week
Barings has hired two former Schroders managers to strengthen its investment team after multi-asset managers Andrew Cole, Percival Stanion and Shaniel Ramjee quit the group.
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Schroders to merge away climate change fund
Anna Fedorova – Investment Week
Schroders is set to merge its Global Climate Change fund into the QEP Global Core fund at the end of September.
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Deutsche Asset & Wealth appoints managing director for Americas
Reuters
Deutsche Asset & Wealth Management, the asset and wealth management arm of Deutsche bank AG, appointed Carolyn Patton as a managing director in its Americas unit.
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Managed Futures Endure A Tough July – All Newedge Managed Futures Indices Posted Negative Performance Over The Month
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Banks & Brokers

Banks Said to Get Enforcement Letters in FX-Rigging Probe
Jesse Hamilton, Dakin Campbell, Suzi Ring and Gavin Finch – Bloomberg
Banks including JPMorgan Chase & Co., Citigroup Inc. and Morgan Stanley have been notified regulators are preparing enforcement actions on currency rigging, people familiar with the investigation said.
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Govt can sue French bank over ‘mis-selling’ to Northern Rock
Investment Week
The government has been told it can sue French banking giant Societe Generale for allegedly mis-selling financial products to Northern Rock that were partly to blame for UK lender’s collapse.
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UBS Rising Star Rodney Reid pays London office a flying before Evercore switch
Alec Macfarlane – Financial News
A UBS private equity adviser who relocated to London to help fill a gap left by a raft of defections to Evercore Partners, is off to join his former colleagues at the US investment bank.
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Clearing & Settlement

LME Clear Receives Settlement Finality Designation
Press Release
LME Clear, the new clearing house for the London Metal Exchange (LME) market, has received a designation order made by the Bank of England under the Financial Markets and Insolvency (Settlement Finality) Regulations 1999.
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Duco Operational Insight
So now the operations team can set up recs in 30 minutes. A good starting point. Now see at a glance if the business is clean, measure where your operations time is being spent, spot break trends. Across hundreds of recs. User-defined dashboards have come to Duco Cube. And they work on iPad, iPhone and Android.
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Indexes & Products

Shanghai-Hong Kong Convergence Spurs Record ETF Inflows
Belinda Cao, Fion Li and Weiyi Lim – Bloomberg
The Shanghai-to-Hong Kong stock price convergence trade is spurring record inflows into exchange-traded funds that invest in mainland China.
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CEO discusses ETF landscape, value of advice
Bill McNabb – Vanguard
Are we reaching a tipping point in terms of ETF product introductions?
ETFs are one of the most important investment innovations of the past quarter century. They have provided advisors with low-cost, diversified tools for building long-term portfolios for their clients. However, the dark side of innovation is proliferation. We now see some ETF providers thinly slicing market and country exposures. Others are basing products on back-tested data, bringing to market only those that “promise to outperform” broad markets. Our research shows that after these ETFs are launched, most actually underperform the market.
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Two New db x-Trackers Equity Index ETFs Launched On Xetra – ETFs Provide Access To S&P 500 Equal Weight And MSCI World Index
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Technology

CQG Unveils ‘Stripped’ Data, Charting Terminal
Max Bowie – WatersTechnology
Denver, Colo.-based data, trading and analytics software vendor CQG has released a new, low-cost market data workstation, dubbed CQG Select, to provide an alternative to more expensive terminal displays for proprietary trading firms facing cost pressures.
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Fidessa Signs Five for China Connect
James Rundle – WatersTechnology
Five brokers have enlisted Fidessa to assist with connectivity for the upcoming Shanghai-Hong Kong Stock Connect program, ahead of its go-live in mid-October. The brokers, including Standard Chartered Securities and ICBC, will use Fidessa to trade shares on mainland China.
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Financial cloud provider Options hires NYSE Euronext’s Stephen Morrow
Reuters
Financial cloud services provider Options Information Technology LLC named Stephen Morrow, a former executive of NYSE Euronext, owner of the New York Stock Exchange, as senior vice president and global head of account management.
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HKEx Bows ASP Partner Program
Max Bowie – WatersTechnology
Hong Kong Exchanges and Clearing has set up a program to allow application service providers to establish direct links to HKEx’s trading and data systems to provide managed connectivity services to clients, which exchange officials can lower participants’ operating costs and increase their performance.
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BMO Global Asset Management Asia to use Charles River in Hong Kong and London
BMO Global Asset Management, a global fund manager with assets under management of US$280 billion, has said it is acquiring the Charles River ‘Investment Management Solution’ product for its Hong Kong and London operations.
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Capital markets missing out on big data opportunities
Virginie O’Shea – Aite Group via The Trade
Buy- and sell-side firms have so far failed to capitalise on opportunities offered by big data, according to new research, but a growing number of market participants are using unstructured data in their trading strategies.
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Enforcement

London gold fix lawsuits to be consolidated in New York
Andrew Longstreth – Reuters
A federal judicial panel on Wednesday ordered that 18 lawsuits alleging a conspiracy to manipulate gold prices be consolidated into one proceeding in New York.
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Environmental & Energy

Brazil readies big push on solar energy but companies are wary
Reuters
Grappling with its worst energy crisis in more than a decade, Brazil is making its first big move to develop a local solar power industry that could help reduce its dependence on a battered hydro power system.
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***LB: Also in this story “In October, Brazil will hold an auction to negotiate energy to be produced exclusively by solar farms, the first ever of the kind in the South American country.”

Brazil bank BNDES outlines plans to finance solar-power plants
Reuters
Brazil’s state-owned development bank BNDES will offer loans to power companies to cover up to 65 percent of the cost of new solar generation projects in the country, part of the government’s plan to rapidly develop a local solar energy industry.
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Central America poised for clean tech investment boom
BusinessGreen
Mexico is on track to deliver record levels of clean energy investment this year, further reinforcing Central America’s position as one of the world’s leading emerging clean tech markets.
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Asia-Pacific

Russia Swaps London Banks for Hong Kong
Gregor Stuart Hunter – MoneyBeat – WSJ
Might it be bond, yuan bond? Expect Hong Kong’s financial sector to find increased demand for capital from Russian companies as funding is yanked from London in the wake of European sanctions, UK investment bank Barclays said in a note released Thursday.
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DBS taps into Chinese FX futures market
Futures & Options World
DBS China, a unit of Singaporean bank DBS, said it has completed a series of renminbi foreign currency derivatives transactions for corporate clients across China under the country’s new State Administration of Foreign Exchange (SAFE) regime.
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Thai Bourse Market Report For July 2014
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Broadridge Signs MOU With Taiwanese Depositary To Cooperate With StockVote System
Successful Cooperation Will Support Improved Corporate Governance Processes In Taiwan Through International Proxy Voting Automation
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Frontier Markets

High-Yield Sukuk Faces Test as Pakistan Readies: Islamic Finance
Yudith Ho and Liau Y-Sing – Bloomberg
A shortage of global sukuk will probably help cut borrowing costs on Pakistan’s first Islamic bonds since 2005, boosting a government besieged by opposition street protests.
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Securities Commission Malaysia: The King Of Malaysia To Present The Royal Award For Islamic Finance On 2 September 2014
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Lahore Stock Exchange Market Holiday Notice, 14th August 2014, Independence Day
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Jordan Capital Market Development Update
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