John Lothian Newsletter: BME May Evaluate NYSE Technology Units, Won’t Buy Euronext Stake; ICE Dumps Pepper in Singapore to Pave Way for Asia Growth; Markit and Virtu race for New York IPOs

Feb 25, 2014

First Read

The Case for Regional Exchanges
Vincenzo La Ruffa – TabbFORUM
A return to regional exchanges and the capital markets infrastructure that supports smaller-cap public listings could deliver multiple advantages, including a whole new world of market participants and brand-new opportunities for alpha.

***** We are in a global business, not a regional business.


Who is Timothy Massad?
Tom Osborn –
He cooks, he’s quiet, he’s confident, and he will cope with everything Wall Street throws at him. That is the picture painted by former colleagues – and adversaries – of the US Treasury Department’s Timothy Massad, probable new chairman at the Commodity Futures Trading Commission

***** The question is can he stand up to the Democratic Senators who bedeviled Gary Gensler.


CME Group fines traders for transactions that worried regulator
CME Group Inc, the largest U.S. futures exchange operator, on Monday announced fines against nine traders and clearing members for violating rules governing a type of transaction that U.S. regulators expressed concerns about last year.

***** I first saw this from Gary DeWaal’s blog post about it. See below.


CME Publicizes a Plethora of EFRP Fines Involving Incomplete Documentation, Late Submissions and Improper Parties
Gary DeWaal and Associates LLC
This morning, even before lunchtime in the US, the Chicago Mercantile Exchange publicized nine disciplinary actions against a cross section of clearing members and traders involving violations of its rules related to Exchange of Futures for Related Positions.


CTA/CPO Capital Requirements – More Harm than Good?
Turnkey Trading Partners
On January 23, 2014, the National Futures Association (NFA) issued a request for comment from its members on the possibility of adding capital requirements and other customer protection measures. Over the past month Turnkey Trading Partners has spent many hours talking to our clients and contemplating this proposal. Based on our experience and research the following presents our perspective on the most important of these questions.

***** My CTA has $100 in the bank. Is that enough?


ICE Endex Achieves Daily Volume Record In Dutch TTF Natural Gas Futures
IntercontinentalExchange Group, the leading global network of exchanges and clearing houses, today announced that ICE Endex reached a daily volume record of 20,630 contracts in Dutch TTF natural gas futures on February 21, 2014. The previous record of 15,125 contracts was set on December 3, 2013.

***** Stories like this show me I still have lot to learn about all the different futures contracts offered by the exchanges.


OCC’s Board of Directors Joins Board Leadership Organization NACD
OCC announced today its Board of Directors has become a Full Board Member of the National Association of Corporate Directors (NACD). This NACD membership demonstrates OCC’s commitment to the highest standards of corporate governance and board leadership.

***** I would have liked the OCC to join the NCAA.


Eris Exchange Open Interest Crosses $10,000,000,000 Notional
Eris Exchange announced that open interest in its USD Interest Rate Swap Futures products surpassed $10,000,000,000 in notional value, equivalent to 100,000 contracts, on Friday, February 21, 2014. The Exchange achieved this major milestone just days after the highly anticipated first day of mandatory trading of interest rate swaps on Swap Execution Facilities in U.S. markets.

***** That is ten billion U.S. dollars with a B.


Bitcoin Website Mt. Gox Unavailable
The website of bitcoin exchange Mt. Gox became unavailable Tuesday and trading in bitcoin at the site appeared to have stopped, signaling a new stage in troubles that have dented the image of the virtual currency.

***** You get what you pay for. If you did not want protection from fraud, then you don’t get it. You get this. But hey, at least you saved on fees.


@GSElevator Tattletale Exposed (He Was Not in the Goldman Elevator)
A three-year parlor game has been taking place on Wall Street to identify the Goldman Sachs employee behind a Twitter account that purports to reveal the uncensored comments overheard in the firm’s elevators. There is a good reason Goldman Sachs has been unable to uncover its Twitter-happy employee: He doesn’t work at the firm. And he never did.

***** Goldman employees are again allowed to talk in elevators.


Saving the financial markets from themselves
William Wright – Financial News
You don’t have to be a rampant anti-globalisation bank-bashing socialist to think that sometimes capitalism doesn’t work as well as it should. And one of the main reasons for that is that capitalists can get in the way.

***** Where does this opening lead sentence come from? Does the writer assume no one in the financial markets has a sense of self awareness?


Old School/New School: Mark de Souza says County Cork blends experience with technology
The managed futures space is always producing new managers with new takes on the market.

County Cork LLC, a managed futures firm, is looking to bring experience to its clients with traders in the agriculture and equity markets who’ve seen it all. John Lothian News sat down with Mark de Souza, president of County Cork to talk about what sets the firm apart from other funds at the Emerging Manager Forum in Miami in December. “The uniqueness of what County Cork has brought to the marketplace in terms of those discretionary programs is our managers don’t come from trading backgrounds,” de Souza said. “The come from production backgrounds, hedging backgrounds. They are true industry experts whether its in production, supply chain management, even procurement. They bring a real understanding of supply and demand.”

Watch the video »



MarketsWiki Page of the Day
Eric A. Bloom

MarketsWiki Recent Updates


Peter Reitz; Sallie L. Krawcheck; Charles Mosley; Eric Bloom; Marianne Brown; Paul Finnegan; Buck Haworth

Companies, Organizations and Groups

European Energy Exchange AG; Sanford C. Bernstein & Co., LLC; Sentinel Management Group


NYSE Liffe US 100-ounce Gold; NYSE Liffe US 10-Year Note Futures



47,255,710 pages viewed, 7,823 articles, 179,689 edits
MarketsWiki Statistics

Lead Stories

BME May Evaluate NYSE Technology Units, Won’t Buy Euronext Stake
Nandini Sukumar – Bloomberg
Bolsas & Mercados Espanoles, operator of the Spanish stock exchange, may consider buying NYSE technology units that IntercontinentalExchange Group Inc. is selling but won’t purchase a stake in European market operator Euronext NV before its initial public offering.

ICE Dumps Pepper in Singapore to Pave Way for Asia Growth
Chanyaporn Chanjaroen and Nandini Sukumar – Bloomberg
IntercontinentalExchange Group Inc. (ICE) began renovating its newly purchased Singapore Mercantile Exchange, delisting all contracts such as black pepper and metal futures.

****** For sale cheap, 10,000 schwag pepper shakers.

Markit and Virtu race for New York IPOs
Arash Massoudi in New York –
Two unique financial technology companies are preparing multibillion dollar initial public offerings, with both Markit and Virtu Financial seeking New York listings in the coming months.

U.S. and Britain Join Forces in Bank Misbehavior Cases
It seemed to be a thumb in the eye of the Justice Department. Britain last week criminally charged a former Barclays employee suspected of trying to manipulate global interest rates, even though the authorities in London were aware that the employee had been assisting American prosecutors in a related investigation for more than a year.

U.S. bank regulator says details ‘worked out’ on leverage rules
A U.S. financial regulator said on Monday that tough new leverage requirements that will limit excessive borrowing by the biggest banks would be finished “soon.”

Swaps body seeks independent administrator for ISDAFIX rate
The International Swaps and Derivatives Association (ISDA) has started looking for an independent administrator for the ISDAFIX benchmark interest rate that is being investigated over alleged rigging.

MCA finds lapses by NSEL promoters; SEBI probes MCX, FTIL
Zee News
The Ministry of Corporate Affairs is believed to have found serious violations of companies law by the owners of crisis-ridden NSEL, while market regulator SEBI is also investigating corporate governance-related lapses by the group’s two listed entities — FTIL and MCX.

Japan’s Authorities Decline to Step In on Bitcoin
Investors with funds tied up at Mt. Gox are looking for guidance from local authorities on how to get their bitcoin back, but without success, highlighting the regulatory vacuum in which the bitcoin exchange operates in Japan. Japanese financial authorities decline to take responsibility for the crypto-currency.

“As with any new industry, there are certain bad actors…”
Joseph Cotterill | FT Alphaville
Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading.


House Panel to Examine Key Trading Rule
Andrew Ackerman – MoneyBeat – WSJ
House lawmakers plan Friday to examine the effects of a 2007 Securities and Exchange Commission rule designed to encourage faster and cheaper electronic trading that critics warn has unintentionally harmed investors.

U.K. Regulator Poised To Change Rules for Foreign Banks
British regulators are poised to make it easier for foreign banks to set up shop in the U.K., a reversal of years of intensified supervision following the financial crisis. The U.K.’s Prudential Regulation Authority, the primary overseer of banks operating here, plans to unveil a proposed new approach Wednesday to supervising the U.K. arms of foreign banks.

FMA draws attention to enhanced customer due diligence in the context of business relationships with politically exposed persons from Ukraine

Exchanges & Trading Facilities

Euronext AI ppoints Hans Schinkel, Senior Vice President, Human Resources
Euronext, a wholly owned subsidiary of IntercontinentalExchange Group, today announced that Hans Schinkel has been named Senior Vice President of Human Resources, effective April 1st 2014. This appointment is part of the on-going process of the separation of Euronext from ICE.

Bahamas International Securities Exchange 2013 Annual Statistical Report

Hedge Funds & Managed Futures

Inside the Showdown Atop Pimco, the World’s Biggest Bond Firm
Tension increased at Pacific Investment Management Co.’s headquarters here last summer. The bond market was under pressure, losses grew and clients pulled billions of dollars from the firm. Bill Gross, who co-founded Pimco in 1971 and is largely responsible for building it into a behemoth overseeing almost $2 trillion in assets, struck some of his colleagues as testier than usual.

Why Venture Capital Has The Hots For Financial Services
Karl Antle – Wall Street & Technology
In the past few years, we have seen an explosion of venture capital investment into Financial Services (if you want to see data around dollar inflow into the sector, check out this CB Insights report).

Pension Funds Sue on a Deal Gone Cold
Sitting around a table in Baton Rouge, La., in February 2008, a handful of board members of the Firefighters’ Retirement System of Louisiana heard an investment pitch that would later come back to haunt them.

From Buffett, Lessons From His Farm
Investors around the world hang on Warren Buffett’s every word, hoping for a scrap of advice from a legendary businessman. Mr. Buffett often dishes out a few morsels of that advice in a letter that coincides with the annual report from his firm, Berkshire Hathaway.

CalPERS Names Wylie A. Tollette Chief Operating Investment Officer
The California Public Employees’ Retirement System (CalPERS) has named Wylie A. Tollette as the pension fund’s Chief Operating Investment Officer (COIO). Tollette takes over the position previously held by Janine Guillot, who left CalPERS in July 2013. Tollette will start as COIO on March 31.

Avantium Investment Management shuts down
Harriet Agnew – Financial News
Avantium Investment Management, an emerging markets hedge fund, is shutting down after almost two-and-a-half years in business, becoming the latest victim of a torrid year for developing markets.

Banks & Brokers

JPMorgan Chase to cut thousands more jobs
Tom Braithwaite in New York –
JPMorgan Chase is planning more job cuts in its mortgage business on top of the 13,000-15,000 positions already due to be slashed because of plunging demand for home loans.

Barclays investment bank chairman to retire
Ben Wright and Matt Turner – Financial News
Hans-Joerg Rudloff, one of the longest-standing investment bankers in Europe, is retiring from his role as chairman of Barclays investment bank, according to an internal memo reviewed by The Wall Street Journal.

Investment banking grows at Germany’s oldest bank
Matt Turner – Financial News
Berenberg, the German private bank which made a name for itself last year with roles on a number of large initial public offerings, saw 2013 profits increase almost 10% from a year previous, with the investment bank leading the way.

Credit Suisse To Testify on Offshore Tax Evasion
Credit Suisse Group AG Chief Executive Brady Dougan is scheduled to testify Wednesday at a U.S. Senate subcommittee hearing on offshore tax evasion, a move that comes as the Swiss bank seeks to settle allegations it helped Americans evade their obligations.

Bilateral compression takes off as banks tackle leverage
Lukas Becker –
It used to mean the tearing-up of perfectly matching trades, but compression has become something bolder and more ambitious in recent months – at the same time, it has also become more confusing, and smaller banks fear they may have the wool pulled over their eyes.

High hopes for Brazil’s onshore structured products market
Richard Jory –
Starting with $80 million of issuance its debut month, the new market is set to explode into life and there are hopes of $500 million of products each month

ING Goes Social: Rolls Out LinkedIn for Advisors
Becca Lipman – Wall Street & Technology
Despite regulatory hurdles, ING will support preapproved and FINRA compliant LinkedIn profiles for its 2,400 advisors.

Ocwen targets $1bn in new finance deal
Tracy Alloway in New York –
Ocwen Financial, the biggest non-bank servicer of US mortgages, is aiming to sell as much as $1bn of a new type of debt this year to help finance its future growth. But Ocwen may face an uphill battle to sell the new breed of bonds, which are backed by its mortgage servicing rights, after pricing its first such deal last week amid growing regulatory scrutiny over the company’s rapid expansion.

Clearing & Settlement

ASX eyes shorter trade settlements
Elizabeth Redman | Business Spectator
ASX Ltd is consulting on the introduction of a shorter settlement cycle for cash market trades.

The European Association Of CCP Clearing Houses Elects New Executive Committee And Defines Strategic Priorities

Clearstream Launches Market Approach For Supporting The Internationalisation Of The Renminbi Currency
Renminbi Currency Has Potential To Become Next Major International Currency – Clearstream Launches Renminbi Approach As Part Of Its Asia Strategy

CME Group New Product Advisory: Middle East Refined Products

Indexes & Products

Accessing offshore renminbi through synthetics and ETFs
Vita Millers –
Confronted by the slow pace of China’s liberalisation of cross-border trading, investors are shrugging off regulatory fears and using synthetic structures to meet demand for access to renminbi assets, while exchange-traded fund providers are teaming up with Asian financial institutions to help boost the funds’ liquidity.

Cash Flies Into Bond ETFs
Investors are piling into exchange-traded bond funds at the fastest clip ever, the latest sign of a bond-market revival driven by uneven economic data, emerging-market volatility and the thirst for income-generating investments.

ETF Securities eyes London’s China A Shares market
Philip Georgiadis – Financial News
The opening of China’s domestic equity market continues to accelerate, with investors in line for another potential opportunity to invest through a London-listed exchange-traded fund.

Change Of Shares Under Consideration Of Moscow Exchange Indices


Moody’s Analytics Adds Structured Finance Portal
Timothy Bourgaize Murray – WatersTechnology
The new web-based platform will provide enhanced content to a range of portfolio managers, underwriters, and risk professionals, with an initial focus on collateralized loan obligations (CLOs).

Globit Partners with Numerix to Provide an Integrated Software Solution for the Pricing and Selling of FX Derivatives
Numerix, the leading provider of cross-asset analytics for derivatives valuations and risk management, and Global Information Technologies (Globit), today announce a new partnership agreement where Numerix analytics will be leveraged and implemented by Globit in the Turkish market.

Numerix takes top spot in Structured Products Technology Rankings 2014
Clive Davidson –
Despite increasing demand for technology that makes pricing and trading structured products more efficient, the biggest initiatives in the past year have been the integration of regulatory edicts and the creation of individual and multi-dealer platforms around which future practice will be based.

Broadridge Expands Central And Eastern European Footprint By Centralizing Reconciliations Processing For Raiffeisen Bank International

Tokyo Stock Exchange To Offer CorvilClear Latency Performance Management To Trading Network Users

Thomson Reuters Announces Buy-Side Focused Enhancements To Its Financial Markets Desktop Thomson Reuters Eikon
Thomson Reuters Integrates Datastream Charting And Explorer Apps, New StarMine Models, Enhanced Analytics And Publishing Tools


Second Madoff aide testifies at trial, denies knowledge of fraud
Longtime Bernard Madoff assistant Annette Bongiorno on Monday testified that she had no idea her boss was operating a vast Ponzi scheme, despite the decades she spent helping run the trading business where it originated.

Paying the Price for Insider Trading Profits
Can a criminal be held responsible for what others gained from his violation? An appeals court answered “yes” when the crime was insider trading and the profits went to a hedge fund rather than directly to the defendant.

Deutsche Bank to pay $20 million to settle Brazil charges
Deutsche Bank AG (DBKGn.DE) agreed on Monday to pay $20 million to settle charges in Brazil that Europe’s largest investment bank by revenue helped manage funds embezzled by former city of São Paulo officials in the 1990s, a prosecutor said on Monday.

FINRA Fines Berthel Fisher and Affiliate, Securities Management & Research, $775,000 for Supervisory Failures Related to Sales of Non-Traded REITs and Leveraged and Inverse ETFs

NFA Regulatory Actions: Ashish M. Yagnik

NFA Regulatory Actions: Equity Swarm LLC and Daryl P. Jamison

[AMF Canada] Illegal Distributions – Ressources Pershimco inc. and president fined $82,500

[AMF Canada] Suspicious Internet Solicitation – Caution when dealing with Affluential Group Corp.


Hong Kong Bourse Profit Estimated to Jump Most in Six Years
Kana Nishizawa – Bloomberg
Hong Kong Exchanges & Clearing Ltd. (388), the world’s third-biggest bourse operator, will post its biggest quarterly profit growth in almost six years after new listings in the city surged, according to analysts.

Private banking: China’s wealth set to overtake Japan’s this year – HSBC
Helen Avery – Euromoney magazine
‘Plenty of work for wealth advisers’ in Asia, says HSBC in a report this week, citing how the region ex-Japan’s wealth will eclipse the US by the end of 2015.

Notice regarding Next Generation Derivatives Trading System Solutions Provider(JPX)
Japan Exchange Group, Inc. (JPX) announced “Notice regarding Next Generation Derivatives Trading System Solutions Provider”.

Japan Exchange group to host RI Asia 2014 Conference (JPX)
Japan Exchange Group, Inc. (JPX) is proud to be hosting Responsible Investor’s third annual “RI Asia” conference at the Tokyo Stock Exchange on 5th & 6th March 2014.

Compliance becomes hotter issue for U.S. firms in China: report
U.S. companies in China placed greater focus on compliance last year after several high profile probes into corruption and high pricing, but rising costs and a skills shortage remained their main concerns, the American Chamber of Commerce in Shanghai said in its annual report.

Thai Exchange Appoints New President Of Alternative Bourse For SMEs

Hong Kong’s Securities And Futures Commission Bans Choi Yuet Yan For Life

Dalian Commodity Exchange: Notice On Issues Related To Listing And Trading Of PP Futures Contracts

Shenzhen Stock Exchange Market Bulletin 24 February, 2014 – Issue 6

Osaka Securities Exchange: Futures & Options Trading Rules Upon Derivatives Markets Integration (Information Sheet)

Frontier Markets

Making sense of the fragile-five category of emerging-market laggards
Sid Verma, Simon Watkins – Euromoney magazine
Although market players discern substantial differences between the fragile-five economies – notably in their current-account profiles – they remain, as a group, especially vulnerable to domestic and international market shocks, says bearish analysts.

Private banking: Family offices trending out of emerging-market equities
Helen Avery, Sid Verma – Euromoney magazine
After braving the exodus of retail and crossover investors, embattled bourses in emerging markets (EMs) have faced a new challenge in recent months: outflows from family offices. However, the prospects for EM debt allocations look relatively brighter this year, say analysts.

Launch of India Vix futures driven by institutional investor demand
Justin Lee –
By launching India Vix futures (NVix) later this week, the National Stock Exchange of India (NSE) hopes to tap into domestic institutional investor demand for equity futures and options. However, concerns remain over the lack of market-makers for the product.

India listed derivatives market faces infrastructure hurdle
Blake Evans-Pritchard –
India stock exchanges are predicting strong growth in the market for listed derivatives. With algo traders driving volume growth, can current infrastructure cope with the increased requirements?

Nigerian Stock Exchange To Introduce New Trade Notification System

Egyptian Exchange Adds Live Feed For Nile Index On EGX’s Website

John Lothian Newsletter

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CEO, Trading Technologies

Past JLN Newsletters

How Ken Griffin rebuilt Citadel’s ramparts

How Ken Griffin rebuilt Citadel’s ramparts

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