Bits & Pieces
By John J. Lothian
The New York events in our Summer Intern Education series were a success and well received by interns and other attendees. We had over 100 people attend the two events, had terrific presentations and gave out a bunch of swag, including three Series 3 training kits from The IFM.
Thank you to our line up of speakers for their participation; Stacey Cunningham, Peter Borish, James Woods, David Krein, Boris Ilevsky, Chris White, James Gellert, Chris Ferreri, Haim Bodek and John Edge
Thank you to the NYSE and ICE for hosting the event in the old members dining room. Thank you to the CME Group, our Global Premier Sponsor, and our event sponsors, ICE, NADEX, Barchart.com, Illinois Institute of Technology Stuart School of Business, Trading Technologies, and The IFM for their support.
We also had a nice contribution from our friends at ISE in the form of swag to give away at the events, so thank you ISE.
We had an error in our lead story yesterday in JLN. We mistakenly attributed the lead story to the Wall Street Journal rather than the New York Times. Thank you to a Dow Jones reporter for pointing that out.
I am pleased to report that two of the scouts in my Boy Scout Troop have passed their Eagle Board(s) of Review and have earned the rank of Eagle. David Cooke and Owen Rehling will attend the World Scout Jamboree in Japan later this month sporting their Eagle rank badges.
Word was the Advantage Futures Trading Tech 300 merit badge fair went well in their offices yesterday. I will follow up with more details.
Shrinking trading floor does not reduce NYSE’s influence
Philip Stafford, FT
Less than a decade ago, a three-hour halt to trading on the floor of the New York Stock Exchange would likely have meant activity in the world’s biggest equity market ground to a halt.
***** The interns who visited the floor yesterday between our events were fascinated by the trading floor. The NYSE brand remains strong in the minds of many people around the world.
CBOE’s Andy Lowenthal To Lead Business Development For CBOE, CFE, Livevol
CBOE Holdings, Inc. (NASDAQ: CBOE) today announced it promoted Andy Lowenthal from Vice President to Senior Vice President, Business Development. Lowenthal’s promotion comes as part of a reorganization designed to better leverage the company’s business development efforts across its expanding line of futures and options products and services.
***** Great choice for the CBOE. Andy will be presenting at our Summer Intern Education Series on August 7.
BlackRock warns on China intervention
Stephen Foley in San Francisco and Richard Blackden in New York, FT
The Chinese government’s intervention to prop up its stock market has damaged the country’s reputation and risks alienating international investors, according to the head of the world’s largest asset manager.
****** It is important to protect the integrity of the price discovery process. Futures markets are about two things, price discovery and risk transfer. If you harm price discovery, risk transfer does not work.
Is Trump really the great stock picker he claims to be?
Yahoo Finance By Michael Santoli
Leave it to Donald J. Trump to turn a bureaucratic disclosure forum into a chance to boast about how good he is even at things he doesn’t try hard at.
****** He is a picker all right.
***DA: I have referred to Trump as a modern-day P.T. Barnum, except he is not just the carnival barker but also the freak show.
Back to the Future: Trading & Regulation 2015
82 Annual Market Structure Conference – Registration Now Open
The STA is pleased to announce that registration for your 82nd Annual Market Structure Conference is now open. Keynote Speaker SEC Commissioner Kara Stein
Guiding a Clearing House’s Ebb and Flow, Kim McGarry, CFO, Options Clearing Corporation
CFO Thought Leader Podcast
Beijing’s battle with bears moves into futures
By Pete Sweeney and Samuel Shen, Reuters
China’s index futures traders are still betting jittery markets will fall further even as Beijing tries to prop them up, making the futures markets a key battleground in Beijing’s campaign to restore market confidence.
Wall Street Is Betting on Bush and Clinton; Financial disclosures show the candidates raising cash from investment firms
By BETH REINHARD and REBECCA BALLHAUS, WSJ
Wall Street opened its wallet for Republican presidential contender Jeb Bush and Democratic front-runner Hillary Clinton in their first weeks as candidates, despite the sometimes tough talk on the campaign trail about closing the nation’s wealth gap.
Treasury trading swept up in rapid change
Joe Rennison in New York, FT
More than ever, the lyrics of Bob Dylan resound for traders, regulators and investors in the US Treasury bond market: the times they are a-changin’ — and quickly.
Nasdaq Ditches Plan to Tinker With Its Closing Auction in U.S.
by Ryan Hoerger, Bloomberg
The Nasdaq Stock Market won’t tinker with the software that runs its daily closing auctions after all, deciding that any benefit from preventing a rare problem were overshadowed by the potential risks from doing something.
Billionaire Paul Singer: China Crash Is ‘Way Bigger Than Subprime’
by Beth Jinks, Simone Foxman, Bloomberg
Hedge fund manager Paul Singer said that,China’s debt-fueled stock market crash may have larger implications than the U.S. subprime mortgage crisis, echoing warnings from fellow billionaire money managers Bill Ackman and Jeffrey Gundlach.
How Lynn Tilton Went From Company Savior to SEC Target; The founder of Patriarch Partners says she protects American families from ruin; The SEC says she defrauded investors
by Sheelah Kolhatkar, Bloomberg
Lynn Tilton was rushing to get dressed at her home in Paradise Valley, Ariz., when she got a tip that the Securities and Exchange Commission was about to charge her with fraud. Taking in the news, she froze for a moment, then grabbed her laptop. It happened to be March 16, the 35th anniversary of her father’s death, a devastating event that occurred when Tilton was 19. She took the timing as an omen.
U.K. Sells 10% of Lloyds in Past Five Months in Trading Plan
by Stephen Morris, Bloomberg
The U.K. government has sold 10 percent of Lloyds Banking Group Plc in the past five months through its trading plan, reducing its stake to less than 15 percent.
Icahn, Blackrock’s Fink argue over who is more dangerous
By William Watts, MarketWatch
Billionaire investor Carl Icahn and BlackRock founder Larry Fink squared off in a wide-ranging face-off Wednesday, touching on everything from activist investing to the perils of high-yield investing, in a lively exchange that, at times, drew chuckles from attendees at the Delivering Alpha conference.
Forex Broker FX World Under Investigation by City of London Police
Currencies-trading firm’s license was suspended in June, says FCA
By CHIARA ALBANESE, WSJ
The City of London police are conducting a fraud investigation into currencies-trading firm FX World, according to a person familiar with the matter.
BlackRock’s Latest Fix for Bond Trading Is Circumventing Banks
by Tracy Alloway, Mary Childs, Lisa Abramowicz, Bloomberg
BlackRock Inc. is muscling into trading venues that had long been the exclusive territory of big banks as the world’s biggest asset manager seeks to make up for declining liquidity in the bond market.
Wild Treasuries Trading Spurs Washington’s Transparency Push
he historic swings that rocked the $12.7 trillion Treasury market in October are spurring U.S. authorities to consider expanding public reporting of trading activity to government bonds. An assessment of publicly available information on Treasury market transactions and pricing is one recommendation in a 76-page report released Monday as the Treasury Department seeks to prevent excessive volatility.
BOE Urges Longer Jail Terms for Market Manipulators
The Bank of England on Wednesday recommended lengthier jail sentences for traders found guilty of manipulating financial markets, as part of a sweeping review into how to stamp out market abuse following a series of scandals.
Banks coaxed to adopt LEIs as growth stalls
Neil Roland, MLex
Trader identification tags are limited to the derivatives sector because global banks have lagged in expanding adoption to other asset classes, a top regulator said.
Esma goes ‘back to the drawing board’ on bond transparency
By James Rundle, Financial News
The chairman of Europe’s securities watchdog has admitted that it will not be able to create a perfect system to balance transparency and liquidity in bond markets, despite having gone “back to the drawing board” to re-assess the different approaches.
Belgian data watchdog defends its ‘political’ Facebook case
Duncan Robinson in Brussels, FT
The head of Belgium’s data protection agency has defended its “politically motivated” decision to sue Facebook over alleged privacy abuses.
Policy for annulment of trades undertaken on stock exchanges
Policy for annulment of trades undertaken on stock exchanges
MCDC Initiative (Applications Received)
The following is a list of firms that have consented to making public that they have filed with FINRA an MC-400A Application as a result of the SEC’s Municipalities Continuing Disclosure Cooperation (MCDC) Initiative:
Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
- MIAX: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend Exchange Rules 307 and 309 to Extend the SPY Pilot Program (Release No. 34-75448; File No. SR-MIAX-2015-46; July 14, 2015); see also Exhibit 3, Exhibit 3A, Exhibit 5
- NASDAQ: Notice of Filing of Proposed Rule Change Relating to the Listing and Trading of Shares of the First Trust SSI Strategic Convertible Securities ETF of First Trust Exchange-Traded Fund IV (Release No. 34-75447; File No. SR-NASDAQ-2015-075; July 14, 2015)
- NYSE Arca: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services (Release No. 34-75449; File No. SR-NYSEArca-2015-55; July 14, 2015); see also Exhibit 5
- Phlx: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Exchanges Pricing Schedule under Section VIII with Respect to Execution and Routing of Orders in Securities Priced at $1 or More Per Share (Release No. 34-75446; File No. SR-Phlx-2015-58; July 14, 2015); see also Exhibit 5
Exchanges & Trading Facilities
ASX to hire former UBS MD to run derivatives
Futures & Options World
The Australian Securities Exchange is set to hire as its head of derivatives Helen Lofthouse, a managing director at UBS, drawing a line under a search by the exchange which is keen to tap Asia’s growing derivatives market. Lofthouse has been UBS’s London-based European head of exchange-traded derivatives clearing sales for almost four years since joining the Swiss bank from JP Morgan where she was an executive director and head of fixed income prime brokerage sales for 14 years.
Equity options: Introduction of Permanent Market-Making for the equity option on Hochtief AG (HOT)
The Management Board of Eurex Deutschland and the Executive Board of Eurex Zürich AG have decided with effect from 20 July 2015 to introduce a Permanent Market-Making (PMM) scheme for the equity option on Hochtief AG (HOT). Please refer to the attachments for the parameters.
The vicious rivalry of Indian stock exchanges and why they should not list
The space is rife with unhealthy rivalry marked by deep sense of distrust, proxy wars and vicious whisper campaigns
N Sundaresha Subramanian, Business Standard
Like Arnold Schwarzenegger and the dinosaurs of the Jurassic age, the constituency in favour of listing Indian stock exchanges is back.
BIOPHYTIS LISTS ON ALTERNEXT PARIS; Raises EUR 10 million, market capitalisation EUR 32.7 million
EnterNext, the Euronext subsidiary dedicated to promoting and growing the market for small and medium-sized companies (SMEs), today celebrated the listing of Biophytis, a French company that develops drugs to treat degenerative illnesses associated with aging. Biophytis is listed on Alternext in Paris.
Hedge Funds & Managed Futures
Anglo American Adapts to New Commodity Reality
by Helen Thomas, WSJ
First come the price falls, then come the write-downs. Anglo American Thursday said it expected to take up to $4 billion in non-cash impairments to its Brazilian iron ore and Australian coal assets, thanks to lower commodities prices.
The Obscure Metal That’s Beating Any Other Investment
by Eddie Van Der Walt, Bloomberg
The best asset over the past week is a metal you’ve probably never heard of: rhodium.
The Disastrous Loan Deal That Shows Wall Street Still Has a Wild West
by Laura J Keller, Bloomberg
JPMorgan Chase & Co. knew federal authorities were investigating the largest drug-testing lab in the U.S.
Banks & Brokers
Santander Consumer USA names former JPM commodities chief Masters as chairman
Santander Consumer Holdings USA has named former JPMorgan Chase & Co executive Blythe Masters as its non-executive chairman, the auto lender said on Wednesday. Masters, 46, succeeds interim chairman Stephen Ferriss at the Dallas-based company. She currently serves as the CEO of Digital Assets Holdings LLC, a Bitcoin-related technology company.
ICAP’s Spencer Sees More Days of Wild Volatility in Treasuries
ICAP Plc Chief Executive Officer Michael Spencer said there will probably be more unusual moves in Treasury trading as markets are increasingly electronic, complex and dominated by computerized firms.
Convergex To Launch New ‘ETF Direct’ Platform
Functionality for the new platform will include the ability to request competitive quotes simultaneously from multiple liquidity providers including those in niche markets and sectors, complete anonymity for clients and market makers, access to an aggregated competitive market and a comprehensive audit trail, highlighting transparency.
ICAP Global Broking launches first matching session in South African rand government bonds
ICAP plc (IAP.L), a leading markets operator and provider of post trade risk mitigation and information services, announces today that ICAP Global Broking has launched its first matching session in South African rand (ZAR) local currency government bonds.
Benchmark change drives FX towards agency model
Changing in the way currency benchmarks are calculated has seen FX trading transition to a more agency-style model, according to research from Pragma Securities.
Clearing & Settlement
Depository Trust & Clearing Corporation: Statement On House Passage Of H.R. 1847 – Swap Data Repository And Clearinghouse Indemnification Correction Act
“DTCC applauds House passage of the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2015. Bipartisan passage of H.R. 1847 is a key milestone in the process to remove the Dodd-Frank Act’s indemnification provisions. These provisions pose a significant barrier to U.S. and global regulators as they seek to leverage the data and transparency benefits offered by swap data repositories. To help ensure regulators obtain a consolidated and accurate view of the global over-the-counter derivatives marketplace, we urge the Senate to move swiftly to support this non-controversial, technical fix.”
Wells Fargo to offer clients clearing member services for Nodal Exchange
Nodal Exchange, LLC announced today that Wells Fargo Securities, LLC, through its LCH.Clearnet Ltd membership, is now offering clients clearing member services for Nodal Exchange. Since Nodal Exchange’s launch in April 2009, it has become a significant part of the North American power market, providing the most granular and diverse set of locations for trading of cleared power contracts in North America.
CHAPS adds BNP Paribas as direct participant for same-day payments
CHAPS, which stands for Clearing House Automated Payment System, is a very well known entity in the United Kingdom which is used by retail and commercial banking customers alike. The addition of further direct participants means that FX firms and other online business which bank with several banks can use the CHAPS system for fast deposits and withdrawals.
Indexes & Products
April Peaks and Troughs in the S&P/Case-Shiller U.S. National Home Price Index
Indexology: S&P Dow Jones Indices
In this post, we are going to look at how April 2015 has fared compared with historical April months for the S&P/Case-Shiller U.S. National Home Price Index. Exhibit 1 depicts the historical monthly returns (April over March) of the S&P/Case-Shiller U.S. National Home Price Index, since 1987. All returns refer to April over March returns unless otherwise specified.
Leveraged ETFs don’t pack as much punch these days
Chris Dieterich – Barron’s
Leveraged exchange-traded funds are throwing around less weight as major stock benchmarks see milder zigs and zags.
FTSE Russell Introduces New US Quality Dividend Index
Press Release – Mondovisione
Leading global index provider FTSE Russell today announced the launch of the FTSE US Qual / Vol / Yield Factor Index. The Index represents an expansion of the FTSE Global Factor Index Series and reflects specific factor characteristics – quality, low volatility and yield – for U.S. large- and mid-cap companies.
Barclays partners with ‘Dr Doom’ for global stock indexes
Chris Dieterich – Barron’s
UK banking giant Barclays teaming up with Nouriel Roubini on factor-based stock indexes.
OptionsCity Announces CityTrader, a Cloud-Based Futures and Options Trading Platform
CityTrader, built on OptionsCity’s new REST-based City API, offers a scalable, white-label solution for brokers and FCMs.
OptionsCity Software, a global provider of electronic trading solutions for professional futures and options traders, today announced its cloud-based futures trading platform, CityTrader. CityTrader brings advanced functionality, such as custom spread-building and RFQs, with the ease of an online trading platform to a broad audience of active traders and commodity market participants. OptionsCity also announced the availability of City API, a REST-based, easy-to-implement API for accessing futures and options on futures market data and analytics. These solutions together complete OptionsCity’s integration of futures trading technology provider Optionshop, which it acquired last year.
Thomson Reuters Launches Regulatory Diagnostic Tool for Insurance & Asset Management Professionals
In collaboration with Solvency II Wire, Thomson Reuters has created a tool to help insurance & asset managers assess readiness to comply with Solvency II regulatory obligations
Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today announced the launch of an online diagnostic tool in collaboration with Solvency II Wire. The tool is intended for insurers & asset managers who need to determine their state of readiness to address Solvency II and its associated obligations.
TradingScreen, Long-Only AMs Launch Corporates Crossing Network
Trading venue is the latest to join bonds fray. TradingScreen and 15 of Europe’s largest long-only asset managers have partnered on TradeCross, a buy side-designed crossing platform for fixed income corporate bonds.
ISDA Publishes Recommendation for FpML version 5.8
The International Swaps and Derivatives Association, Inc. (ISDA) today published its Recommendation for Financial products Markup Language (FpML) version 5.8.
Monthly Disciplinary Actions July 2015
Environmental & Energy
It’s a Troubled World When Oil Is a Refuge for Equity Investors
By Rakteem Katakey, Bloomberg
You know the world is in trouble when investors look to the oil industry for safety. Oil stocks, the worst performing shares in the world, are starting to lure investors, with dividend yields the highest since the financial crisis that began in 2008.
Investors Get Caught in Oil’s Slippery Wake; Value of shares in many energy firms sold this year in follow-on offerings has declined
By RYAN DEZEMBER And CORRIE DRIEBUSCH, WSJ
Falling oil prices are hitting investors who bought energy shares this year.
EU Carbon Market Reserve Seen Absorbing 85% of Glut by 2021
By Mathew Carr – Bloomberg
An unprecedented overhaul of the European Union’s carbon market will probably remove 85 percent of a glut of permits that sent prices tumbling and eroded incentives to reduce emissions.
UK running out of money to pay for clean energy
By Rajeev Syal – The Guardian
The government is struggling to pay for new clean energy supplies which could result in a rise in household bills or a major cut in investment in renewable technologies.
Hong Kong Financial Bodies Unite To Raise Standards
Two major financial organisations in Hong Kong have merged to help strengthen professionalism within the region’s insurance and financial services market.
Why China’s stock market bubble was always bound to burst
The sudden collapse of the nation’s share boom left tens of millions of investors in shock. But a massive government intervention to prop up the market has laid bare the contradictions of a capitalist China
Stock rout shows reforms needed to get a market-driven economy
The Fiscal Times
The Chinese stock market rout has highlighted the need for further financial reforms and moves toward a market-driven economy, even as Beijing’s measures have kept the plunge from turning into a financial crisis.
FMC will have to wait for police report to take action in NSEL case
By Ram Sahgal, ET
ommodity market regulator Forward Markets Commission (FMC) cannot act against any broker in connection with the Rs 5,600-crore NSEL fiasco unless it receives credible evidence of their complicity in the scam, a senior government official told ET.