First Read

New Captain: SGX’s Boon Chye Navigates Tough Asian Markets
Jim Kharouf – JLN

Loh Boon Chye took the reins as CEO of Singapore Exchanges (SGX) in July. A former SGX board member and Bank of America Merrill Lynch’s deputy president and head of global markets in Asia Pacific, he said there is much opportunity for the exchange to grow, and perhaps even benefit from the competition that has moved in around him from ICE and others. Boon Chye spoke at SGX’s headquarters with JLN Editor-in-Chief Jim Kharouf about his management style, the game plan for the exchange going forward and just where SGX fits in the global market landscape.

Q: You took the CEO position in July at SGX. How did you go about setting your priorities as a CEO and for SGX?

A: My philosophy is, you have to listen first, then you have to engage, observe, take feedback. I know some CEOs like to come out with a grand plan after 90 days, but frankly with any new CEO in any organization, how much can you know in 90 days? No doubt I had the benefit of being on the board, but that is different than being in management. So I took the time to listen, engage and interact, not just internally but externally with stakeholders.

Read the rest of Kharouf’s interview with Loh Boon Chye at


Vote Doug Bry and Ernest Jaffarian for NFA Board, CTA/CPO Category
Editorial by John Lothian
With the permission of Doug Bry, Ernest Jaffarian and NFA election guidelines, I am writing you to urge your support of Doug and Ernest in the current NFA Board of Directors election. You should be receiving your ballots shortly. Doug Bry and Ernest Jaffarian deserve the votes of NFA member Commodity Trading Advisors and Commodity Pool Operators in the upcoming contested election for the Board of Directors of the National Futures Association. They have worked …

***** The ballots went out today. Vote Bry and Jaffarian for CTA/CPO!


Ballot Enclosed for Voting in NFA’s Annual Election in the CPO/CTA Category
This year, NFA has two contested elections to elect representatives in the CPO/CTA category on NFA’s Board of Directors. Enclosed is your ballot for voting in this election. No write-in votes will be accepted. NFA is a membership organization and each Member’s vote is very important.


Alun Green, SunGard – The Technology Roadmap, 2015 Edition

“We as human beings have not evolved to be very good at reading and writing.”

Alun Green asks, “is the written word dying?” Perhaps dying is too strong a word, but Green makes an excellent point in that humans have walked the planet for millions of years, and only began using the written word within the past few hundred years – much too short a time span to have “evolved” to cope with the written word. Meanwhile, as technology continues to disrupt any and all human processes, our species may well revert back to the forms of oral and visual communication to which we are better suited.

As a career technologist facilitating the automation of manual processes, Green asks what human beings will do when the computers and robots take over. His answer? Machine learning is not the same as artificial intelligence, and we sentient beings will be needed for decision making and communication, but not necessarily the written kind.

Watch the video »

What do former Bank of England Governor Mervyn King, Abby Joseph Cohen of Goldman Sachs, and Central Bank of Chile President Rodrigo Vergara all have in common?
They reckon former Federal Reserve Chairman Ben Bernanke’s memoir of battling the financial crisis, The Courage to Act, was one of the best books they read in 2015.

***DA: Central banker, overexposed investment banker, emerging market central banker. What’s not to love about Bernanke’s leadership during the crisis?


Lead Stories

Borsa Istanbul Goes Live on Nasdaq Technology Suite
Borsa Istanbul Goes Live on Nasdaq Technology Suite
BISTECH Transformation Will Give Turkey One of the World’s Most Advanced Exchange Technologies; Marks Completion of Phase One Delivery of Nasdaq’s Suite of Technologies and Advisory Services; Borsa Istanbul, in partnership with Nasdaq, continues to build a world-class capital markets hub for Eurasia region; Equity market, clearing and settlement launched first with risk management and other supporting systems; Derivatives, debt securities and precious metals markets will be launched later.
Borsa Istanbul and Nasdaq (Nasdaq:NDAQ) have announced that Borsa Istanbul has officially gone live on nine of Nasdaq’s market-leading technologies including trading and clearing, settlement, market data management, index calculation, market surveillance, business intelligence, and pre- and post-trade risk management. The initial implementation is for Borsa Istanbul’s equity market. The Turkish exchange will also go live on Nasdaq technology for all other markets, including derivatives, debt securities, and precious metals markets.

Miami International Holdings Announces Plans to Launch a Price-Time Options Exchange in 2016
Miami International Holdings, Inc.
Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Options Exchange announced its plans to launch a second U.S. options exchange. The new exchange will leverage MIAX’s industry leading technology and infrastructure to employ a price-time allocation model, and will enable MIH to compete for a segment of order flow that does not trade on the pro-rata market that MIAX currently operates. MIH anticipates launching its new price-time exchange in the third quarter of 2016, pending SEC approval.

High-Yield Fund Blocks Investor Withdrawals
The New York Times
A large mutual fund specializing in risky, high-yielding bonds has blocked investors from getting their money back, citing difficult trading conditions for its securities. The move, announced Thursday by Third Avenue Management funds, was a troubling sign of the recent deterioration in junk bonds, a category that has been hurt in particular by the debt of energy companies struggling with the slump in oil and gas prices.

Substantive issues surround IEX exchange application –
The sparks have been flying since IEX submitted an application to become a US equity exchange in September. The Securities and Exchange Commission has received more than 30 comment letters on it, including one by yours truly. To put this into context, there was only one letter submitted when BATS Global Markets made its application in 2008, and three for Direct Edge in 2009.

Stock buybacks enrich executive pay even when business sags
A Reuters Special Report
Most major U.S. companies tie part of executive pay to earnings per share and other metrics to align the interests of management and shareholders. The trouble is, these numbers can be – and often are – influenced by buybacks and other maneuvers that have little to do with operating performance.

U.S. Listed Options Volumes Slumps 11% In November
Traders News
The U.S. Thanksgiving holiday didn’t give options traders much to be thankful for as volume in the sector dropped 11 percent from October’s levels. According to market consultancy TABB Group’s recently published Options LiquidityMatrix, options traders capped their third-slowest month of trading of 2015 in November with executed contracts falling to 323.3 million contracts.

End of Crude Oil Export Ban Is Possible
For months, Senator Lisa Murkowski, Republican of Alaska, and Senator Heidi Heitkamp, Democrat of North Dakota, formed a quiet, persistent alliance as they sought to convince their colleagues that it was time to end a more than 40-year ban on crude oil exports.

Open Interest for TOCOM Dubai Crude Oil Futures Renews All-Time High for Two Consecutive Days
The Tokyo Commodity Exchange, Inc. announced today that Dubai Crude Oil futures open interest reached 72,093 contracts, renewing an all-time high since the launch on September 10, 2001 for two consecutive days. Open interest increased by 14.5% in a day from 62,967 contracts

Bubble Boys; The antic Big Short plays the collapse of 2008 for laughs—but it’s still a tragedy.
By Dana Stevens – Slate
“Explain it to me like I’m a golden retriever,” asked the investment banker played by Jeremy Irons in Margin Call, as he faced the imminent collapse of his firm in the 2008 financial crisis. Those of us with a golden retriever’s comprehension of the financial markets laughed appreciatively, but in The Big Short, writer-director Adam McKay finds a more human way into the crisis. The Big Short, more comedic than Margin Call but, by the end, no less tragic, explains it to us—”it” being the murky process by which a housing-market bubble somehow turned into a global financial catastrophe—not as if we’re friendly floppy eared pets, but as if we’re intelligent human beings.

Building a Better Credit Hedge Is Proving Much Harder Than Expected; A derivatives index on corporate bonds has been rallying as the underlying market deteriorates.
Tracy Alloway – Bloomberg
Credit investors hoping that the revamp of a popular derivatives index would make it a better hedge for their portfolios of corporate bonds say they’ve been left disappointed.


Fund managers brace for SEC proposal on derivatives
A potential move by the U.S. Securities and Exchange Commission to broaden regulation of derivatives use has industry officials worried it could hamper the ability of exchange-traded funds and mutual funds to amp up returns.

International Accounting Regulators Not Doing Cartwheels Over SEC’s Idea
MoneyBeat – WSJ
The SEC is mulling a recommendation from its staff to allow U.S. companies to provide information under the global rules as an add-on to their main financial statements, which would still be calculated under U.S. accounting rules. But Hans Hoogervorst, chairman of the International Accounting Standards Board, is unimpressed with the move. He says the SEC’s idea wouldn’t actually prompt significantly greater U.S. use of the global rules – because companies think they already have to disclose too much and are trying to reduce the volume of their disclosures, not increase it.

Corporate Bond Liquidity Healthy by Most Measures: FINRA Research
Analysis of TRACE Data Also Finds Potentially Significant Changes in Market Structure
The Financial Industry Regulatory Authority (FINRA) today issued new research that provides a deep and focused look at the state of liquidity in the U.S. corporate-bond market. Analyzing all TRACE transactions from 2003 to September 2015, the research found:

Counting the cost of EU regulation for commodity firms
Reuters, via Yahoo! News
The European Commission said a delay is needed as regulators are not ready for an original January 2017 start for the Markets in Financial Instruments Directive (MiFID II). MiFID II will significantly increase reporting requirements for banks and brokers but final rules have yet to be published, meaning time is too short to get computer systems ready.

Dodd-Frank section raised immediate red flags but took five years to repeal
Neil Roland, MLex
?US regulators became aware soon after the 2010 Dodd-Frank Act was enacted that a derivatives trading section could become an international irritant.

Corporate, government attorneys disagree on whistleblowers
By LYNNE MAREK – Crain’s Chicago Business
Whistleblowers may be considered “nutjobs” by some corporate lawyers, but government attorneys said they’ve proven helpful in new Securities and Exchange Commission and Commodities Futures Trading Commission programs.

Exchanges & Trading Facilities

CME Europe Trading Exceeds 1,000,000 Lots Since Launch
CME Group, the world’s leading and most diverse derivatives marketplace, announced today that one million contracts have now been traded on its London-based derivatives exchange, CME Europe. CME Europe launched in April 2014, and the total volume of contracts traded since launch stood at 1,002,497 as of 10 December 2015.

S.Korea, Shanghai exchanges to research stock and bond trading link – KRX
The Korea Exchange (KRX), the South Korean bourse, said on Friday that it has agreed with the Shanghai Stock Exchange (SSE) to study a plan to link the two marketplaces for trading stocks and bonds.

LME to move trading floor to new premises on February 1
The London Metal Exchange (LME) will move its open outcry trading floor to its new home in London’s financial district on Feb. 1, the exchange said on Thursday.

NYSE Governance Services launches innovative service for corporate boards
Business Wire
The New York Stock Exchange, a subsidiary of Intercontinental Exchange’s global network of exchanges, today announced a new initiative to support companies and their boards in navigating the ever evolving economic, business and regulatory landscape. FORGE – the Future of Responsibility, Governance and Ethics – is a quarterly forum of executives, directors and industry influencers that will produce actionable insights and meaningful data on the most pressing boardroom topics.

New ICE white sugar contract to feature fewer eligible ports
Intercontinental Exchange’s new contract for white sugar shipped in containers will feature fewer eligible delivery ports than the current break bulk contract, an executive said in a presentation on Thursday.

Modern Markets Weighs In on IEX Exchange Application and HFT Assertions
Traders Magazine Online News
Last week, we filed a comment letter on the IEX Form 1 application to become a registered stock exchange. We were silent on the issue for a while, mostly because other industry participants were doing a great job articulating unintended consequences of IEX’s unorthodox business model. Besides, we are a High Frequency Trading (HFT) advocacy group and even though IEX marketed its HFT “protections” broadly and famously, the 600+ page application itself didn’t even use the term or any derivative of it. But then came their comment letters that did.

BATS Global Markets
BATS Global Markets (BATS), the #1 U.S. market for the trading of exchange-traded funds (ETFs), today welcomed a new issuer, Elkhorn Investments, to its U.S. market with the listing of the Elkhorn FTSE RAFI U.S. Equity Income ETF (BATS: ELKU).

Hedge Funds & Managed Futures

Here’s the new paradigm for 2016: Mohamed El-Erian
Allianz Chief Economic Adviser Mohamed El-Erian said Thursday the new paradigm for financial markets in 2016 is divergence. “Are divergent central banks … still able to repress the volatility that comes from geopolitics … [and] economics? That is going to be the great question,” the former Pimco co-CEO told CNBC’s “Squawk Box.”

The Volatility of Bond Markets
Indexology – S&P Dow Jones Indices
China’s onshore bond market recorded strong growth in the first 11 months of 2015 and has increased 6.98% year-to-date (YTD), as measured by the S&P China Bond Index. The S&P China Composite Select Bond Index, an investable index that tracks the performance of Chinese sovereign bonds, agency bonds and bonds issued by Central State-Owned Enterprises (CSOEs) rose 7.00%; the USD index that accounted for currency fluctuation gained 3.04% in the same period.

More money enters hedge funds in December
Investors pumped money into the $3 trillion hedge fund industry in December, data from the world’s second-biggest hedge fund administrator showed on Thursday, seeking to capitalise on an increase in market volatility.

China Goes for Gold as Central Bank Expands Reserves; With the precious metal at multiyear lows, China and several other countries including Russia have been scooping it up
While gold has crashed to multiyear lows as the strengthening U.S. dollar spooks investors, the bearish sentiment hasn’t daunted one quiet operator: China’s central bank.

Banks & Brokers

ICAP’s 23rd Charity Day Raises £7.5 Million
ICAP plc, a leading markets operator and provider of post trade risk mitigation and information services, announces today that it has raised £7.5 million on its 23rd annual global Charity Day, held yesterday. This is equivalent to approximately 3% percent of ICAP’s full year pre-tax trading profits.

BGC Partners – Nicole Shaughnessy joins BGC Partners as Managing Director, Environmental Products
BGC Partners
A highly recognized advisor/broker to the environmental and energy sectors, Ms. Shaughnessy will run BGC’s Environmental Product Desk through the Company’s BGC Environmental Brokerage Services L.P. subsidiary. She reports to Shawn McLoughlin, Senior Managing Director of New Business Development, BGC.

BAML’s Kathryn Woodfine joins Citigroup
Financial News
Citigroup has recruited an anti-money-laundering expert from its Wall Street rival Bank of America Merrill Lynch – reflecting the growing importance of such skills for banks’ compliance teams in the wake of hefty fines on both sides of the Atlantic.

Morgan Stanley in $225 million deal with U.S. regulator over mortgage bonds
Morgan Stanley has agreed to pay $225 million to settle claims that it sold toxic mortgage-backed securities to credit unions that later failed, the National Credit Union Administration said on Thursday. The deal boosts to nearly $2.43 billion the amount the NCUA has recovered from banks through lawsuits it began filing in 2011, the U.S. regulator said.

Clearing & Settlement

T2S delays hit Clearstream
Financial News
Europe’s largest settlement house Euroclear revealed in October that its planned March 2016 migration to Target2-Securities would be pushed back to ensure a safe and stable switch.

?SEC inaction on clearinghouses drags down US financial-stability ranking, report says
Neil Roland, MLex
The US Securities and Exchange Commission’s slowness to adopt rules for clearinghouses and other financial-market plumbing puts the United States behind most other economic powers in a global financial-stability ranking. Higher-ranking jurisdictions include the European Union, Japan, Australia, Hong Kong and Singapore, according to the report by international authorities.

R3 Developing Open Source Blockchain for Banks, says Head of Research
Bitcoin Magazine
In September Bitcoin Magazine reported that nine global banks were pooling resources to fund R3, a next-generation global financial services company focused on applications of cryptographic technology and distributed ledger-based protocols within global financial markets. Several other top banks joined R3 soon thereafter, and five more banks – ING, BNP Paribas, Wells Fargo, MacQuarie and the Canadian Imperial Bank of Commerce – joined in November.

Indexes & Products

Size & Liquidity Factors as Top Developed European Market Influencers; FTSE Russell Indexes – EIN News
Size has been the biggest factor performance driver within the FTSE Developed Europe Index in 2015, with a +6.3% return year-to-date as of 30 November, according to recent analysis by global index provider FTSE Russell. Liquidity has been the second strongest performing factor (+5.4%) for this same time period. The lowest performing market factor within Developed Europe this year has been Yield, which has fallen 3.2% YTD, according to the same report.

Getting a Rise out of Rates: FTSE Russell Historical Analysis Suggests Possible Short Term Bumps for US Small Caps
Since the FOMC issued its last policy statement on October 28, apparently opening the door to begin tightening US interest rates at its scheduled meeting next week, US small-cap stocks as measured by the Russell 2000 Index (+1.8%) have led US large cap stocks as measured by the Russell 1000 Index (+0.7%).

BATS Welcomes iShares FactorSelect MSCI Emerging ETF
Business Wire
BATS Global Markets, the #1 U.S. market for the trading of exchange-traded funds (ETFs), today welcomed the iShares FactorSelect MSCI Emerging ETF (BATS: EMGF), which began trading today on The BATS ETF Marketplace.


The long, perplexing search for the creator of Bitcoin just took another weird turn
By Sarah Kaplan – Washington Post
On Tuesday afternoon, separately and within two hours of each other, two well-known tech websites suggested that they’d solved a mystery that had eluded the online world for more than half a decade.

Bitcoin: What’s in Store for 2016; The list reads like a fantasy novel, with unicorns, miners and a mysterious creator
Olga Kharif – Bloomberg
While the hype may have faded a bit, 2015 was still a busy year for bitcoin. Venture capital investments topped $1 billion for the first time. People are finding it easier to invest in the digital currency, thanks to the debut of firms such as Bitcoin Investment Trust. Big financial companies—Nasdaq, American Express and Visa— invested in bitcoin startups, “a game changer in terms of attitude towards the technology,” said Gil Luria, an analyst at Wedbush Securities.


Judge Turns Up Heat on Accused Spoofer Oystacher
Bloomberg Business
U.S. commodities regulators can seek to stop alleged spoofer Igor Oystacher from trading before a trial is held in their lawsuit pursuing a ban, a federal judge decided Thursday. Oystacher, accused of trying to manipulate the prices of futures by placing orders without any intention of executing them, lost his bid to put off the Commodity Futures Trading Commission’s request for an injunction before the trial.

SEC Suspends Public Accountants for Bad Auditing
According to the SEC’s orders instituting settled administrative proceedings, the accountants and firms at various times performed deficient audits of public companies, jeopardized the independence of other audits, and falsified and backdated audit documents among other misconduct.

Federal Court Orders California Resident Thomas Gillons to Pay More than $1.9 Million in Restitution and Penalties for Fraud and Misappropriation
The U.S. Commodity Futures Trading Commission (CFTC) today announced that the Honorable Harry D. Leinenweber of the U.S. District Court for the Northern District of Illinois entered a Consent Order for permanent injunction against Thomas Gillons, who resides in Napa County, California. The Order requires Gillons to pay a $1 million civil monetary penalty and $994,068 in restitution, imposes permanent trading and registration bans on Gillons, and prohibits him from further violations of the anti-fraud and registration provisions of the Commodity Exchange Act (CEA), as charged.

NFA bars Robert Hawkes Potter, a former associated person, from membership
National Futures Association (NFA) has permanently barred Robert Hawkes Potter from membership and from acting as a principal of an NFA Member. Potter was an associated person of Cambria Capital LLC, an NFA Member introducing broker in Salt Lake City, Utah.

Treasury Auction Investor Lawsuits Consolidated Before New York Judge
Suits allege dealers conspired to manipulate the pricing of U.S. Treasury securities and a derivative tied to those prices

Oil Giants Pledge Even Deeper Spending Cuts Amid Prolonged Slump
Joe Carroll – Bloomberg
Chevron, ConocoPhillips focus on quicker, lower-risk projects
Petrobras CEO sees asset sales as key to lowering debt
Some of the biggest oil explorers in the Western Hemisphere are cutting budgets yet again to conserve cash as a plunge in energy markets shows no signs of abating.

Environmental & Energy

Can Trading Pollution Like Stocks Help Fight Climate Change?
The gas produced by hog manure at farms across the U.S. punches holes in the ozone layer, overheats the planet, and angers neighbors with its peculiar odor, a mix of rotten egg and ammonia.

China’s Coastal Cities, Underwater
China produces more carbon dioxide emissions than any other country, and its coastal cities will be dramatically affected by rising seas as the atmosphere warms, according to a November report by Climate Central, a nonprofit organization.


China’s yuan falls to near 4-1/2 year low as central bank steps back
By Reuters
China’s yuan fell to its weakest in 4-1/2 years on Friday and posted its longest weekly losing streak in a decade, dragging emerging Asian currencies lower, on concerns about its slowing economy and expectations of a U.S. interest rate hike next week.

Exchange Publishes Guidance Letter on Trading Halts in Securities of Listed Issuers
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), today (Friday) issued a guidance letter on trading halts in securities of listed issuers. The letter sets out the criteria for and principles of trading halts under the current rules and provides guidance on good practices about trading halts pending disclosures of material information by listed issuers. It also facilitates investors’ understanding of the circumstances where trading halts are necessary.

Frontier Markets

Why RBI’s intervention in rupee futures market is prudent; Given the event risk behind a US rate hike, the RBI likely fears speculators will use it to short the rupee if the hike is more than expected
Shishir Asthana – Business Standard
Reserve Bank of India (RBI) added to nervousness in the markets by announcing that they would intervene in the Exchange Traded Currency Derivatives (ETCD) market, if required. Ironically, the reasoning behind such a move by the central bank is to curb nervousness and volatility.

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