Ticks & TAC
By John J. Lothian
I am back from the great north woods of Wisconsin. It is good to be back to a place where when someone gives you a tick it is not a life threatening experience.
For the week, the troop and its Scoutmaster ended the week with one blister, two ticks and two 1st degree burns. I had the blister and skillfully removed the ticks from two scouts without any hysterics.
While I was away, the numbers continued to grow for the Summer Intern Education Series, which kicks off at 3:30 pm tomorrow at IIT Stuart School of Business, 565 W. Adams in Chicago. We now have 229 interns and newer employees signed up with 170 expected at our first session Tuesday. That is up over 100 from last year’s total and 70 from those attending the first event. The good news is we still have room for more for tomorrow’s event and the four following sessions. Please sign up here for individuals or here for firms with multiple attendees.
In light of the increased numbers this year we are going to work the sign in process a little differently. We will be emailing reminders to the interns each day of the series. That email reminder will be their ticket for admission. We will also have a backup process with a list for those who forgot their emails. We believe this will streamline the process and still allow us to track who is showing up and who is not.
I was shocked to learn of Scott O’Malia‘s resignation from the CFTC and reassured when he was named to head ISDA. This is the perfect platform for Scott to continue his work, especially on extraterritorial regulatory issues.
As a member of the CFTC’s TAC Committee, I am sorry to see him go from the CFTC. I hope one of the new CFTC commissioners picks up the TAC committee portfolio and continues Scott’s good work.
On a personal note, Scott is one of my favorite all time CFTC Commissioners. If I had a Hall of Fame for CFTC Commissioners he would be in it. Thank you Scott for all of your hard work on behalf of the American people and those who use our markets.
Lastly, thank you to Jeremie Bacon for his editing of JLN and his sharing of his personal and market experiences. I was fascinated to learn he is an Eagle Scout and the influence of patch trading on his life. Jeremie, you did an excellent job. Thank you!!
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 Stuart School of Business, 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.
Remembering Ace Greenberg, Through Good Times and Bad
SYDNEY EMBER – Dealbook – NY Times
Alan C. Greenberg, who led Bear Stearns through its rise and fall, died on Friday at the age of 86. During his long career on Wall Street, he was known as a colorful character with a penchant for magic tricks and a generous heart.
****** Colorful does not do justice to describing Ace Greenberg.
10 things you should know about Ace Greenberg
Joshua M Brown – The Reformed Broker
I was down on the floor of the NYSE on Friday as news broke of the passing of Alan “Ace” Greenberg, the former Chairman of Bear Stearns and one of the most illustrious Wall Street personalities of all time. The legendary trader-turned-executive got his first gig at Bear as a clerk and rose through the ranks thanks to his trading prowess (big risks, quick losses), personality (the trademark bow tie, magic tricks, memorable memos) and counter-cultural style (an emphasis on hustle over heredity when hiring).
***** Joshua Brown is one heck of a reformed broker. I enjoy his work all around.
New York Federal Reserve steps up pressure on bank ethics
Gina Chon in Washington – Financial Times
The Federal Reserve Bank of New York is stepping up pressure on the biggest banks to improve their ethics and culture, after investigations into the alleged rigging of benchmark rates led officials to conclude bankers had not learnt lessons from the financial crisis.
***** A firing squad might be a good way to get their attention. Better than beheadings. See below in Regulatory News.
C. Hoare poaches clients from big banks with its ‘boring’ image
Daniel Schäfer in London – Financial Times
A small UK private bank that is “proud to be boring” has poached several hundred new clients from big rivals such as RBS and Barclays, increasing its customer deposits by 12 per cent in the process.
***** We get customers the old fashioned way, we bore them.
Lawsuit makes sensational claims against CME
Luke Jeffs – Futures & Options World
Three former traders claim the Merc’s management own stakes in HFT firms. Three defendants have filed a lawsuit against the CME Group, suggesting half of orders on the Merc are derived from illegal wash trades and CME senior management own stakes in high-frequency trading firms.
***** Sometimes there are good reasons why people don’t want their picture blasted around the world. They are just private people. Then again, sometimes such actions might be red flags. A red flag does not mean something wrong is going on, but it is something that should be checked out. And sometimes, some of those red flags are weaved into a story by conspiratorial minded traders disenfranchised by electronic trading.
Ep. 259: Bucky Isaacson Interview with Michael Covel on Trend Following Radio
Michael Covel speaks with Bucky Isaacson on today’s podcast. Isaacson is one of the early pioneers of managed futures. In 1969, he helped to develop one of the first computerized trading systems. He’s been involved in the managed futures industry ever since, particularly in Asia and the US. Covel and Isaacson talk about the fractured state of conferences these days; what it was like to be involved with a group developing a computerized trading system in 1969; being with one of the earliest incarnations of a managed futures firm; trading attitudes; and much more.
***** I would listen to Bucky any time.
Bridging the Week — Stress Test: Tasty But Unsatisfying; ICE Futures U.S. Report Card; Sit Don’t Stand at the LME
Gary DeWaal – Katten Muchin Rosenman
I finally finished reading Timothy Geithner‘s Stress Test this week. I have a few reactions to share. Meanwhile, the Commodity Futures Trading Commission issued a trade surveillance report card to ICE Futures U.S. and delayed the compliance date for its new large trader reporting rules. Not to be outdone, the Securities and Exchange Commission finally issued amended rules on money market funds. It crafted one type of money market fund for retail clients and another for institutions. It was a busy week!
MarketsWiki Page of the Day
London Metal Exchange
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51,434,451 pages viewed, 8,004 articles, 184,808 edits
CFTC Charges Lloyds Banking Group and Lloyds Bank with Manipulation, Attempted Manipulation, and False Reporting of LIBOR
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order against Lloyds Banking Group plc and Lloyds Bank plc, formerly known as Lloyds TSB Bank plc (Lloyds TSB), bringing and settling charges for acts of false reporting and attempted manipulation of the London Interbank Offered Rate (LIBOR) for Sterling, U.S. Dollar, and Yen committed by employees of Lloyds TSB and HBOS plc (HBOS), which was acquired by Lloyds Banking Group in January 2009.
Deutsche Boerse Says Not in ISE-Disposal Talks With Banks
Namitha Jagadeesh – Bloomberg
Deutsche Boerse AG said it hasn’t held talks for the sale of International Securities Exchange Holdings Inc., the U.S. options business it acquired in 2007. “All of this is just speculation and rumors,” Chief Financial Officer Gregor Pottmeyer said in an analyst call today, referring to reports that the exchange operator is considering selling ISE.
SGX says cross-margining key in battle for RMB futures market
Justin Lee – Risk.net
The ability to cross-margin contracts across asset classes will give SGX a competitive advantage with up to 30% margin savings, according to the exchange, although some market players are doubtful this can be achieved
Silver bullion banks accused of manipulation in U.S. lawsuit
Silver bullion banks Deutsche Bank, Bank of Nova Scotia and HSBC have been accused of manipulating prices in the multi-billion dollar market in a lawsuit filed on Friday.
***** More of the same.
New Study Pegs Dark Pool Volume At 43.6 Percent
Mark Melin – www.valuewalk.com
A new report reviewed by ValueWalk to be released on Monday shows dark pools account for 43.6 percent of overall stock trading volume while single dealer platforms comprise 17.6 percent of volume.
Ace Greenberg: Giant in Finance and Philanthropy
Emily Glazer – MoneyBeat – WSJ
Alan “Ace” Greenberg, put much of his money to work in philanthropy. The former head of Bear Stearns and the longtime Wall Street executive died of complications from cancer in New York on Friday at the age of 86. Over the years, Mr Greenberg made large contributions to charities and instilled in his employees the importance of donating. He died of complications from cancer in New York on Friday at the age of 86.
Many investors face Scotland exit risk unprotected
Less than two months before an independence vote that could ultimately tear apart a G7 country, investors in financial markets seem largely unmoved.
Argentine default looms as time runs out for debt deal
Argentina looks set to default on its debt for the second time in 12 years next Thursday as negotiations with “holdout” investors seemingly go nowhere and neither side shows signs of blinking first, though a last minute deal can’t be discounted.
Gold Bugs Meet Bitcoin Believers to Supplant the Dollar
Isaac Arnsdorf – Bloomberg
Call it bitgold. It’s what you get when you combine bitcoin, one of the world’s newest would-be currencies, and gold, one of the oldest.
New money market fund rules risk backfire
Stephen Foley – Financial Times
It is irritating enough here in the US to have to pay $2 or more to get money out of a cash machine, if there happens not to be a bank branch handy. Imagine if the machine also told you it will not give you the cash for 10 days. These aggravations – fees and withdrawal restrictions – will soon be threatened by money market mutual funds, which millions of American investors use as a kind of higher interest-bearing savings account.
Citi Wasn’t So Clear on What ‘Hidden Orders’ Meant
Matt Levine – Bloomberg
Coincidence or not, ever since “Flash Boys” came out four months ago, alleging that U.S. equity markets are rigged by high-frequency traders and crooked dark-pool operators, there’s been a whole lot of regulatory attention paid to high-frequency traders and crooked dark-pool operators in U.S. equity markets.
Redemption is, a mutual fund story
David Keohane – Financial Times
Last week the SEC finally got around to publishing new rules for money market funds which forces certain, arguably riskier, funds to switch to a floating share price instead of the current fixed $1-a-share cost. They have two years to comply.
Beheading bankers – and other ways to restore public trust
Margareta Pagano – Financial News
In medieval Catalonia the good behaviour of bankers was deemed so important that if they went bankrupt, they were publicly disgraced by town criers, and given nothing but bread and water to eat until creditors were paid off. If, after a year, the bankers had not paid the depositors, they would be beheaded and their property sold off locally to pay them off.
DFM Closed From Monday 28 July To Wednesday 30 July 2014 – Eid Al Fitr
Exchanges & Trading Facilities
The day world dominance ended
Ranald Michie – Financial News
Tourists who glance across the road as they leave the Bank of England Museum in Bartholomew Lane will find themselves looking into a loading bay behind the Old Broad Street branch of Royal Bank of Scotland. It is not London’s most dramatic scene. There is nothing to indicate that someone standing on that spot just after 10am, 100 years ago this Thursday, would have witnessed an event that changed forever London’s standing as a world financial centre.
Pawel Tamborski Elected WSE CEO
Pawel Tamborski is the President of the Management Board of the Warsaw Stock Exchange as of 25 July 2014
Channel Islands Securities Exchange Appoints New Chief Executive
The Channel Islands Securities Exchange (CISE) has appointed Fiona Le Poidevin as its new Chief Executive. Miss Le Poidevin will join at the start of next year following her time as Chief Executive at Guernsey Finance- the promotional agency for the Island’s finance industry.
NZX Half Year 2014 Shareholder And Regulation Metrics
Moscow Exchange Derivatives Market Access Protocol Operations
MIAX Options – Customer Cross Order Type Deployment Schedule
MIAX Options – MIAX Price Improvement Mechanism (PRIME) Deployment Schedule
TOM MTF Statistics Week 30, 2014
Hedge Funds & Managed Futures
Private Equity’s Free Pass
while private equity firms often operate like Goldman and Morgan Stanley, they are not uniformly subject to the same broker-dealer regulatory regime.
Ultrawealthy pile into private equity, hold line on stocks, cash
Lawrence Delevingne – CNBC
The rich are increasingly enamored with private equity investing, but their rising allocation to PE funds doesn’t mean they’re cutting back on stock or cash allocations, according to a new survey of ultrawealthy investors by Tiger 21, a peer-to-peer network of high net worth individuals.
Hedge Funds Bet Big on Overseas Tax Deals
Liz Hoffman and Rob Copeland – WSJ
Hedge funds are wagering billions of dollars on companies they believe will benefit from a wave of takeover deals designed to lower taxes for U.S. acquirers. The boom in “inversion” deals, in which a U.S. firm buys a foreign company and moves overseas, has raised the ire of President Barack Obama, who has said the practice is “wrong.”
KKR’s Quarterly Profit Surges
Mike Spector – WSJ
KKR & Co. said a flurry of investment sales is likely to continue for some time, yielding cash profits for the firm’s deal makers and fund investors.
Aberdeen falls on GBP4bn mandate withdrawal
Claer Barrett – Financial Times
Aberdeen Asset Management’s shares fell nearly 3 per cent on Monday morning after it revealed the loss of a single GBP4bn mandate from an Asian client despite the fund manager reporting a broader improvement in investor sentiment.
Advisers face super clean re-reg ‘nightmare’
Julia Rampen – www.investmentweek.co.uk
The use of super clean share classes by certain platforms is starting to cause ‘unintended restrictions’ for clients trying to re-register to alternative platforms.
Aite Group and SunGard Research Finds Global Asset Managers’ Operations Under Pressure from Diversification and Data Demands
According to a global study by strategic advisory and analyst firm Aite Group and SunGard, asset managers and asset servicers are struggling to manage new levels of pressure on their middle- and back-office operations
Buy and Hold’s Not Dead, and It’s Not Alive – It’s Impossible
Paul Vigna – MoneyBeat – WSJ
Buy and hold, one of the more popular and debated investment strategies, is neither dead nor alive, MarketWatch’s Chuck Jaffe said this morning on the MoneyBeat show. The more accurate adjective to describe it, he says, is impossible.
CFTC Commitments Of Traders Reports Update
Banks & Brokers
Sankaty to buy JPMorgan debt portfolio for $1bn
Henny Sender in New York – Financial Times
Sankaty Advisors, the credit arm of Bain Capital, is paying more than $1bn for the debt portfolio of JPMorgan’s principal investment group.
Bond heavyweight sets pace for rivals on agency trading
Tim Cave and Matt Turner – Financial News
The creation of a dedicated electronic agency trading unit by bond heavyweight JP Morgan looks set to accelerate similar plans by rivals, as tighter capital rules continue to make banks rethink their trading operations.
Deutsche Bank Sharpens Focus on Wealth Management, Investment Banking
Eyk Henning – WSJ
When senior executives at Deutsche Bank AG describe a blueprint for the bank’s future, they hark back to the 2012 sale of a Hawaiian island by U.S. billionaire David Murdock.
Head of prime fund services departs Credit Suisse
Philip Georgiadis – Financial News
Credit Suisse’s global head of prime fund services has left the bank two years after moving to London to take up the role.
Clearing & Settlement
Swaps Compression and Compaction on TrueEX and Tradeweb SEFs
Amir Khwaja – TABB Forum
The industry is seeing increasing volumes of cleared swap compression trades. But what are the mechanics of such trades?
Former Freshfields lawyer takes role at LCH.Clearnet
Anish Puaar – Financial News
The London Stock Exchange-owned clearing house LCH.Clearnet has hired a general counsel and head of compliance, as it prepares for a wave of incoming regulations that will affect Europe’s post-trade operators.
Indexes & Products
Banks lure fintech start-ups with venture funds
Anna Irrera – Financial News
Surrounded on all sides by a bewildering array of new financial technology companies springing up, the big banks have responded with differing tactics. Several have recently come up with the most emphatic response yet – setting up their own venture capital funds to invest in the sector.
Data Integrity: A Necessity, Not an Option
Jason Finley – Wall Street & Technology
Financial institutions that have taken on the data integrity task in the past now have to spend more money on hardware, software, and people just to keep up with the demand.
Neonet Algorithmic Trading Suite Now Available With Visual Trader Platform
Neonet, the independent agency broker and execution specialist has extended the functionality of its interface with Visual Trader, Spain’s leading trading platform, owned by Bolsas Y Mercados Españoles (BME).
360 TCS and Sunesys Partner to Provide End Users with Network Connectivity Solutions
360 TCS, LLC, a premier provider of colocation and data center services in the greater Chicago area, announced today the establishment of increased capacity for connectivity solutions within their Lombard, IL data center via an enhanced partnership with Sunesys, LLC.
Finextra: Atreaus Capital selects SunGard Hedge360 risk-reporting service
Atreaus Capital, LP, a global macro hedge fund manager based in New York is now live with SunGard’s Hedge360 Risk Reporting Service. Delivered as a managed service, the Hedge360 Risk Reporting Service provides highly customized daily risk reports, offering transparency to investors and integrated internal risk management to hedge funds.
S.E.C. Says Citigroup Unit Failed to Protect Customer Trading Data
WILLIAM ALDEN – Dealbook – NY Times
LavaFlow, a unit of Citigroup that operates an alternative stock trading venue, agreed to pay $5 million to settle charges that it failed to protect the confidential trading data of its customers, the Securities and Exchange Commission said on Friday.
REFILE-Former employee of Citigroup’s Banamex denies he took part in loan fraud
Elinor Comlay – Reuters
A former middle manager at Citigroup’s Banamex unit in Mexico denied he was involved in abetting a corporate loan fraud involving oil pipeline maintenance company Oceanografia.
AMF files 7 charges against Stéphane Corbeil and Ian Roy
Japan exchange makes double breakthrough
Luke Jeffs – Futures & Options World
The Japan Exchange has made a double breakthrough by selecting Nasdaq OMX to build its next generation derivatives platform and moving ahead with its pledge to reform the over-the-counter markets under G20. The Japan Exchange, formed by the merger of the Tokyo and Osaka exchanges last year, said it had chosen Nasdaq after an open bidding process which started in February.
Shanghai stock market unlikely to follow Hong Kong trading hours
Daniel Ren in Shanghai – South China Morning Post
Shanghai is unlikely to stretch stock exchange trading hours to match Hong Kong’s, despite growing calls for combined action when the through train trading scheme takes off in October.
Hong Kong doesn’t need sequels to the GEM flop
Enoch Yiu – South China Morning Post
A top government think tank has suggested that Hong Kong’s stock exchange follow London’s in introducing new boards for companies with different shareholding structures. However, a similar idea has not worked in the past. The experience with the 15-year-old Growth Enterprise Market (GEM) should warn us not to make the same mistake twice.
Thai Bourse Encourages ‘Social Investment’ For Sustainability
The Stock Exchange of Thailand (SET) has continued to enhance ‘social investment’ concept among business sector and investors, encouraging them to focus on building financial returns while creating goodness for society, as well as propelling social enterprise to prosper in Thailand.
Top Asia manager: Do not ignore decade-low valuations in Korea
Jonathan Pines – www.investmentweek.co.uk
Jonathan Pines, manager of the top performing Hermes Asia ex-Japan Equity fund, explains why unloved Korea is his fund’s biggest overweight.
Tokyo Stock Exchange: Implementation Of Legal Entity Identifier (LEI)
What Colombia’s New IT Campaign Means for Latin American Tech Investment
Maria Claudia Lacouture – Wall Street & Technology
Colombia’s campaign is the latest example of how Latin America is trying to edge into the global technology space.
DFM Closed From Monday 28 July To Wednesday 30 July 2014 – Eid Al Fitr
Nigerian Stock Exchange Weekly Report For The Week Ended 25 July 2014
Casablanca Stock Exchange – Ramadan Hours
A fly on the wall at a fund on the move
Edward Luce – Financial Times
‘Money and Tough Love’, by Liaquat Ahamed, paints an enjoyable portrait of the IMF