First Read

CFTC to Adopt Client-Funds Rule After MF Global, Peregrine Cases
Dave Michaels – Bloomberg
The top U.S. derivatives regulator will vote today to adopt rules to improve protections for customer funds two years after MF Global Holdings Inc. collapsed amid claims the brokerage illegally financed investments by borrowing from client accounts.

***DA: Watch for fireworks when they discuss the residual interest proposal. The regulators still seem to be underestimating just how crippling this will be to smaller independent FCMs.


CFTC Will Hold an Open Meeting to Consider Enhancing Protections for Futures Customers and Other Business


WFE to switch headquarters to London
Philip Stafford in Mexico City –
The World Federation of Exchanges is to relocate its main headquarters from Paris to London in an attempt to strengthen its relationships with its main users, investment banks and institutional investors.

***DA: Does this have to do with the pending financial transaction tax? France said it was just kidding! Please don’t go!


Invest for Kids Chicago: Peltz, Gundlach, Zell Among Speakers Today
David Benoit – MoneyBeat – WSJ
Ron Levin and Ben Kovler had been to several Ira Sohn conferences in New York when they decided their hometown of Chicago needed something similar. So Mr. Levin, a managing director in private wealth management at Goldman Sachs, and Mr. Kovler, who co-runs his family’s investment firm, launched Invest for Kids in Chicago, which Tuesday hosts its fifth conference to raise money for underprivileged kids in Chicago.


Deutsche Bourse IT reshuffle continues as Keller named CIO
The ongoing restructuring of IT responsibilities at Deutsche Börse continues as the German exchange names Swiss-born IT engineer Rene Keller from Information Mosaic as its new Chief Information Officer.

**JK: I someday would like the title of Information Mosaic. No idea what that is, but it sounds cool.


Ed Tilly

Two-part Ed Tilly Interview
It has been half a year since Ed Tilly took over as CEO of the CBOE from Bill Brodsky, who moved to the newly created role of executive chairman. With six months under his belt, John Lothian News Publisher John Lothian sat down with him to talk about his new job, new initiatives from the CBOE and the challenges facing the industry.

WATCH: Getting Shorter: CBOE’s Ed Tilly Introduces Short-term VIX and Industry Taxes

WATCH: Taking the Reins: CBOE’s Ed Tilly Makes The Transition to CEO


CBOE To Introduce Mini-SPX Options With PM Settlement On November 5
Chicago Board Options Exchange, Incorporated announced today that the Exchange will list a Mini-SPX Index option contract with a new PM-settlement feature beginning on Tuesday, November 5.

++++ Introduces Strategic Alerts for Stocks, Futures, Forex and Indices, Inc., a leading provider of market data and information, today announced the introduction of its Strategic Alerts service on Barchart’s financial website ( This premium product allows users of to create custom alerts on stocks, futures, currencies and indices based on over 500 technical and fundamental filters. Criteria are checked every five minutes, and delivered by email or text message.


Tradeweb Applies With CFTC to Offer First Credit-Swap Trading
Matthew Leising – Bloomberg
Tradeweb Markets LLC asked U.S. regulators to make it mandatory to trade credit-default swaps on its new government-mandated platform.

***DA: Tradeweb fires first in making CDS available to trade. The next step in the SEF transition.


OTC trade reporting begins in Singapore
Jeremy Grant in Singapore –
Banks and swaps dealers in Singapore will for the first time be able to report their over-the-counter derivatives trades to a central data registry to meet part of sweeping G20 regulatory rules.

**JK: Another day, another data repository. What’s for breakfast?


Exchange ‘Glitches’ Are a Feature of the System, Not a Bug
Paul Vigna – MoneyBeat – WSJ
Last spring, when Nasdaq‘s trading system imploded on the morning that Facebook went public, the high-profile gaff was seen by-and-large as a one-off. Since then, a series of “glitches” – including another one this morning – have interrupted trading, but markets have hardly reacted. The one-off has become a normal, if annoying, fact of life.


AlphaMetrix records reviewed by firm whose founder owned stake
The founder of an accounting firm that reviewed internal controls at fund manager AlphaMetrix owned a small slice of the company until recently, when he sold it to avoid a perceived conflict of interest, a spokeswoman for the accountant said on Tuesday.

***DA: The Arthur Bell brand is synonymous with managed futures accounting – the people you want in there to sort out this mess and get the money returned to investors and managers. Art sold his stake to avoid any conflict of interest. There is no story here, in my opinion. To read the full press release, click here:


What Is the Exactly Perfect Time to Drink Your Coffee?
Most people drink coffee first thing in the morning. But is that the right way to do it? If you’ve ever had coffee and felt like it didn’t work, you’ve run into the field of chronopharmacology—the study of how medications and drugs interact with your biology.

***JM: Thanks, but I’m all set. I drink my morning coffee precisely during the period between 7:30 am and pm.



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Lead Stories

CFTC Votes to Drop Court Appeal of Position Limits Rule
Andrew Ackerman –
The Commodity Futures Trading Commission voted to abandon a court challenge of a rule designed to limit speculation in commodity markets, agreeing to drop the agency’s appeal as it works to advance a revised version of the rule.

Nasdaq mulls greater anonymity for HFTs
Tim Cave – Financial News
Nasdaq OMX is considering giving high-speed and other proprietary traders greater anonymity when transacting on its European exchanges, as part of changes to its rulebook in the region.

CFTC Approves Limited Purpose Swap Dealer Designations for Cargill and an Affiliate
The Commodity Futures Trading Commission (CFTC) today approved an Order granting limited purpose swap dealer (SD) designations to Cargill, Incorporated and an affiliate, Cargill Financial Services International, Inc., marking the first time that limited purpose SD designations have been granted.

Nasdaq Promotes Executive Hired Following Facebook IPO Error
By Nandini Sukumar – Bloomberg
Nasdaq OMX Group Inc., which just lost Twitter Inc.’s listing after mishandling Facebook Inc.’s initial public offering last year, said its global chief information officer will now report to Chief Executive Officer Bob Greifeld.

Nasdaq Glitch Prompts Trading Halt in Some Markets
Kaitlyn Kiernan and Jacob Bunge –
The widely tracked Nasdaq Composite Index froze for nearly an hour Tuesday after Nasdaq OMX Group Inc. NDAQ +0.81% experienced problems transmitting data for stock-market indexes, the latest in a series of technical problems besetting Nasdaq.

Barclays Reviews Foreign-Exchange Trading
Margot Patrick –
Barclays PLC on Wednesday said it is trawling through records in its foreign exchange trading business as part of a widening global probe into potential manipulation of currency rates.

Troubles for J.P. Morgan in Its Effort to Settle
A multibillion-dollar settlement between J.P. Morgan Chase & Co. and the U.S. over soured mortgage bonds is at risk of collapsing because of disagreements related to a criminal probe of the bank and its effort to get penalties reimbursed by a government-controlled fund, according to people familiar with the discussions.

Bank regulators scent blood
James Shotter and Alice Ross –
Europe’s big banks have spent much of the last five years trying to escape the ghosts of their often chequered pasts. On Tuesday’s evidence, it is clear that they will be haunted for a while yet.

Derivatives trade given a tech makeover
Michael Mackenzie and Tracy Alloway in New York –
In 2005, some of Wall Street’s largest banks faced a stark choice: embrace the electronic stock trading revolution which had already knocked a hefty portion off their commissions from equities trading, or risk losing out on more money as investors rush to embrace new technologies sweeping the market.


CFTC Seeks Public Comment on Certification from TW SEF LLC to Implement Available-to-Trade Determinations for Certain Interest Rate and Credit Default Swaps
The Commodity Futures Trading Commission is requesting public comment on a certification from TW SEF LLC to implement available-to-trade determinations for certain interest rate and credit default swap contracts.

Trepidation and Restrictions Leave Crowdfunding Rules Weak
Crowdfunding is becoming a reality, but the question is whether it will thrive or become largely a vehicle for fraud. If it does turn out to be a disaster, don’t blame the Securities and Exchange Commission. The agency was merely following orders when it was told to adopt rules for crowdfunding.

Treasury Gives Guidance for Foreign Financial Firms Under Tax Act
The Treasury Department released guidelines Tuesday for foreign financial institutions to comply with parts of a global regulatory system that aims to make it harder for Americans to hide money offshore.

Martin Wheatley Calls For Greater Transparency In The Asset Management Sector At The 2013 UK’s Financial Conduct Authority Asset Management Conference
Martin Wheatley, chief executive of the Financial Conduct Authority (FCA), today calls for greater transparency to boost the reputation of the asset management sector and a frank and open discussion on how and where dealing commission is spent.

Remarks Of CFTC Chairman Gary Gensler At The 2013 Annual Glauber Lecture At Harvard University

Remarks Of CFTC Chairman Gary Gensler Before The Maret Business Club

Statement Of CFTC Commissioner Scott D. O’Malia On The CFTC’s Voluntary Dismissal Of Its Appeal Of The 2011 Position Limits Rule

New Zealand’s Financial Markets Authority: Disclosure Documents Need To Improve

ASIC 2012–13 Annual Report Tabled

Exchanges & Trading Facilities

Hong Kong Bourse Considers Change in IPO Shareholding Rules
Hong Kong’s stock exchange, grappling with the potential loss of Alibaba Group Ltd.’s prized listing to New York, is considering changing its hard-line stance on what kinds of shareholding and control structures initial public offering candidates can have.

NYSE Technologies connects SuperFeed to the new HKEx Orion Market Data Platform
NYSE Technologies, the commercial technology division of NYSE Euronext, today announced that it is offering consolidated market data from the HKEx Orion Market Data Platform via SuperFeed.

NZX Joins World Federation Of Exchanges
Following a vote at the World Federation of Exchanges (WFE) 53rd General Assembly and Annual Meeting in Mexico City, NZX has today been confirmed as a member of the WFE.

Deutsche Börse AG Publishes Results For The Third Quarter Of 2013
Net Revenue Of E458 Million – Operating Costs Of E236 Million Excluding Exceptional Items – Option To Settle With OFAC Results In A Provision – Adjusted EPS Of E0.83 – Interest Burden Significantly Reduced Due To Refinancing

Moscow Exchange to sell more shares next year – sources
The Moscow Exchange plans a secondary share offering in the first half of next year in which the country’s central bank will sell a stake, three banking sources said on Tuesday.

PKP CARGO’s Public Offering: This Year’s Biggest IPO On Warsaw Stock Exchange

NASDAQ OMX – Update – Statement On Global Index Data Service

Hedge Funds & Managed Futures

Ackman Sees Expansion of Activist Investing to Europe
The investor William A. Ackman said on Tuesday that he believed activist investing by shareholders would be an increasing trend in Europe in the coming years.

Markit Offers Granular Analysis of Trades and Venues
Ivy Schmerken – Wall Street & Technology

ADM adjusted Q3 earnings fall; revenues top estimates
Agribusiness group Archer Daniels Midland Co. said on Tuesday that adjusted third-quarter earnings fell as crop supplies remained tight following last year’s historic U.S. drought.

Banks & Brokers

Goldman loses co-head of commodity trade Shenouda: memo
Goldman Sachs Group Inc global commodities trading co-head Magid Shenouda is leaving after 14 years at the bank, according to an internal memo seen by Reuters, the Wall Street firm’s second senior-level departure in as many weeks.

Deutsche Bank’s Trading Pain
Deutsche Bank’s third-quarter hit in fixed-income trading could presage a painful loss in market share. The German bank suffered a 48 percent fall in third-quarter debt sales and trading revenue — as bad as any peer. And things could get tougher still.

The Things Traders Say, Dutch Bank Edition
Rabobank, which began life as an agriculture cooperative in the Netherlands in the late 19th century, has become the largest Dutch lender and a modest player on the stage of world finance.

Lower client activity weighs on UBS Americas wealth business
UBS AG’s Americas wealth management unit said on Tuesday that third-quarter pretax profit rose 32 percent, but retreated from a record high last quarter, pressured by lower client activity, trading losses and credit loss expenses.

Cantor Gives Sports Betting New Twist, but Old Issues Still Dog It
When Cantor Fitzgerald LP opened a sports-betting operation in Las Vegas, it promised to use technology and financial savvy to reinvent a fusty, minimally profitable corner of Nevada’s gambling industry. As it pursues this modern strategy, though, the bond-brokerage powerhouse finds itself facing some of the oldest problems in the gambling business: suspicions of handling bets from illegal bookies and accepting bags of cash.

Clearing & Settlement

SEFs Arrive: A New Market Structure Is Born
Ivy Schmerken – Wall Street & Technology
Swap execution facilities officially started on October 2, 2013, but 2014 is the year when they will really hit their stride.

TriOptima Collaborates with Industry to Reduce 25% of iTraxx and 56% of CDX Index Tranche Legacy Notionals
TriOptima announces that it has worked with industry participants to implement an advanced triReduce compression methodology for Index Tranche trades with non-standard coupons, known as “legacy” trades as well as the more recent Index Tranche trades with standard coupons.

CME Group Clearing: NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (9T, 9U, 9V, CSZ, F, JCL, JO, N9P, OE, OT, OU, OY, PEP, PJD, PJN, PML, PSG, Z) Effective Wednesday, October 30, 2013


Misys Appoints Martin Häring As Its Chief Marketing Officer
New CMO Joins Misys To Reinforce Marketing To Underpin The Future Growth Of The Business

CGD Securities Chooses SunGard’s Hosted Valdi Solution to Help Grow Brazilian Trading Business
CGD Securities, a Brazilian division of Caixa Geral de Depósitos, one of the largest banks in Portugal, has selected SunGard’s hosted Valdi solution to help grow the firm’s business by improving trading efficiency and access to Brazil’s financial markets.


Federal Court Orders Louis J. Giddens, Jr., Anthony W. Dutton, and Michael Gomez to Pay Combined Restitution and Penalties of over $400,000 for Foreign Exchange Currency Scheme
The U.S. Commodity Futures Trading Commission obtained a consent Order from the U.S. District Court for the Northern District of Georgia against Defendants Louis J. Giddens, Jr. of Fayetteville, Georgia, Anthony W. Dutton of Peachtree City, Georgia, and Michael Gomez of Valrico, Florida, requiring them to pay restitution to investors, respectively, of $29,759.49, $56,604.35, and $68,000 and to pay a civil monetary penalty of $100,000, $100,000, and $75,000, respectively.

Federal Court Orders California Man Jeffrey Gustaveson to Pay over $1.6 Million for Fraud Misappropriation, and False Account Statements in Commodity Pool Scheme
The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Order awarding restitution for defrauded commodity customers and a civil monetary penalty against Defendant Jeffrey Gustaveson of Morgan Hill, California, in connection with a commodity pool investment scheme.

SEC sues investor over alleged Carter’s insider-trading scheme
The Securities Exchange Commission filed a civil complaint Tuesday against a retired hedge-fund investment consultant and market analyst who allegedly participated in an insider trading scheme involving Atlanta-based clothing marketer Carter’s Inc.

SAC Capital plea deal may come early next week: WSJ
The settlement U.S. prosecutors are hammering out with SAC Capital Advisors, Steven A. Cohen’s multibillion-dollar hedge fund, over criminal charges related to insider trading could be announced early next week, the Wall Street Journal reported on Tuesday.

ASIC: ABN AMRO Clearing Sydney Pty Ltd Pays $130,000 Infringement Notice Penalty

NASDAQ OMX Stockholm Orders HCS Holding AB To Pay A Fine

NASDAQ OMX Stockholm Orders Forestlight Entertainment AB To Pay A Fine

BCSC panel finds that B.C. man committed fraud

Environmental & Energy

Western U.S. States, British Columbia Agree on Carbon
The governors of Oregon and Washington agreed to put a price on emissions and adopt fuel standards, bringing their efforts to cut greenhouse-gas pollution closer to those of California and British Columbia.

**RKB — Gov. Brown said the group will “soon be joined by provinces on the coast of China,” noting that a meeting has been scheduled with leaders from that country in January.

Pacific Coast states and British Columbia vow to put price on carbon, adopt cleaner fuels
The governors of Pacific coastal U.S. states and a Canadian province official on Monday vowed to collectively combat climate change by coordinating policies that place a price on greenhouse gas pollution and mandating the use of cleaner-burning fuels.

U.S. lays out strict limits on coal funding abroad
The United States said Tuesday it plans to use its leverage within global development banks to limit financing for coal-fired power plants abroad, part of Washington’s international strategy to combat climate change.


Cities compete to be global centre of renminbi trading
Simon Rabinovitch in Shanghai and Josh Noble in Hong Kong –
For a currency that is still largely controlled by the state and grants its holders few investment options, the renminbi has attracted a remarkably large band of suitors around the world.

S Korea’s IPO spate attracts rush of buyers
Song Jung-a in Seoul –
South Korea’s initial public offering market is showing signs of a revival from its two-year slump, as the country’s stock market recovery has led to a spate of listings being heavily oversubscribed.

China Financial Futures Exchange and NASDAQ OMX Sign MOU
China Financial Futures Exchange and the NASDAQ OMX Group, Inc, signed a memorandum of understanding at the World Federation of Exchanges’ annual meeting to strengthen cooperation and promote mutual development. CFFEX Chairman Zhang Shenfeng and NASDAQ OMX Vice Chairman Sandy Frucher signed the MOU.

Why SGX Suspends, Designates And Investigates
SGX has been asked about the differences in regulatory actions taken in the case of Sky One Holdings Limited and in the case of Asiasons Capital Limited, Blumont Group Ltd and LionGold Corp Ltd. Our explanation is given below.

SGX welcomes ValueMax Group to Mainboard

Financial Stability Board RCG Asia Fifth Meeting In Tokyo On 30 Oct 2013

SGX Welcomes ValueMax Group To Mainboard

Dalian Commodity Exchange Official Details Quality Standards Of Egg Futures Contracts
Standards Designing Closely Connected With Spots, Sufficient Supply For Delivery

Frontier Markets

How a digital currency could transform Africa
Jonathan Ledgard and John Clippinger –
Here is a proposition: provide a secure and authentic digital identity for every person in Africa who wants one. India has shown it is possible to achieve something similar at scale.

Global Board of Trade Ltd. (GBOT), the first international multi-asset class exchange from Mauritius will now be known as BOURSE AFRICA LIMITED (BOURSE AFRICA).


Pearson Warns on Profit
Simon Zekaria –
Pearson PLC Wednesday warned that its full-year operating profit is expected to be lower than last year, even as sales grew for the U.K. publisher and education specialist as it pushes harder into the world’s high-growth markets.

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