Focused: What The Industry Knows About Transparency
Back in November, the industry gathered for the annual FIA Expo event in Chicago. There, John Lothian News used an exhibitor booth (Thanks Cinnober!) as its studio to ask industry participants key questions about transparency issues in today’s markets.
- Where do we need to improve transparency in the markets today?
- What is the solution to achieve that?
- How will futures and options markets look in the future, in terms of transparency?
The final product is these three short videos featuring 15 participants from across the industry – trading platforms, FinTech firms, exchange executives, traders and more. Watch the video »
A Daughter’s Scouting Journey
By John J. Lothian
My daughter Katherine has joined the Boy Scouts of America. Yes, that is right, the Boy Scouts of America. She is a 17-year-old girl and joined a Venture Crew, a shooting focused unit. She now has a FOID (Firearms Owner Identification) card, is (somewhat) trained to shoot and has an attitude.
Read the rest of the story on JohnLothianNews.com
***** Who is going to put the scouts over the top? They just need $1000 more to reach the $15K goal to pay for their trip to Japan to the World Jamboree.
FIA PTG Position – Simplifying US Equity Market Structure.pdf
***** A must read.
Russians, Argentines, Cows Are Squeezing U.S. Wheat Price
by Jeff Wilson, Lydia Mulvany, Bloomberg
Wheat farmers in the U.S. can’t catch a break. Even after they harvested the smallest crop in three years, prices are plunging because output has surged almost everywhere else in the world.
***** A headline writer who does not know what a squeeze is.
Commodity prices collapse to lowest in 12 years
The Bloomberg Commodity index, which tracks the global prices of 22 different commodities such as gold and oil, collapses to lowest level since August 2002
***** I paid $1.89 for gas at Costco last night. Unfortunately, I had to buy it in a double jumbo pack. Is it wrong to put gas in your windshield wiper reservoir?
Jose Scheinkman to receive CME Group-MSRI Prize in Innovative Quantitative Applications; Distinguished Panel to Discuss Economic Bubbles Following Award Ceremony
CME Group, the world’s leading and most diverse derivatives marketplace, and the Mathematical Sciences Research Institute (MSRI) announced Jose Scheinkman, Professor of Economics at both Columbia and Princeton Universities, as the 2014 recipient of the CME Group-MSRI Prize in Innovative Quantitative Applications. A ceremony honoring Scheinkman will take place at CME Group Headquarters on Monday, Feb. 9, at 10:00 a.m. CT and will feature a dynamic discussion on the topic of economic bubbles.
***** You are hereby appraised of the prize winner.
The Economy Is Making You Fat; New research has connected food costs and the retail mix to the surge in U.S. obesity rates
by Jeanna Smialek
And you thought it was mom’s chocolate-chip cookies. A new National Bureau of Economic Research working paper posits that economic factors—such as the cost of food and the type of jobs in your state—can affect weight gain. These variables, controlled for demographics, explain 37 percent of the increase in Body Mass Index in the U.S. from 1990 to 2010, as well as 59 percent of the rise in severe obesity, the paper finds.
***** I am not fat, I am just under-tall. Or is that uber-tall?
Carlsberg to close two Russian breweries
Richard Milne, Nordic Correspondent, FT
Carlsberg is closing two of its 10 Russian breweries as the Danish brewer responds to the deepening economic woes in its biggest market.
***** How bad are things in Russia? When you start to shut down the breweries, that is the end of civilization as I know it.
Amazon launch lands in rivals’ mailbox
Sarah Mishkin in San Francisco, FT
Amazon is launching a new corporate email and calendar service for office workers in the latest expansion of its online empire, as it challenges enterprise services offered by the likes of Google and Microsoft.
***** Amazon will deliver your email by drone.
AgriCharts Launches OnDemand API Service for Commodity Market Data and Information
AgriCharts, the agricultural commodity division of Barchart, which provides market data and technology solutions to the agricultural industry, announces the launch of AgriCharts OnDemand (www.agricharts.com/ondemand).
***** Can I get this on my Comcast account?
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Sudhanshu Agarwal; Dorothy Ferlanti; G. Kurt Von Uffel; Neda Nabavi; Yuriy Shterk; Steve Grob; Robert Thompson; Phill Jeffrey; Mike Wilkins; Michael Hughes; Megan McKeever Costello; Justin Llewellyn-Jones; John Hamer; Jean Pierre Baron; Emily Thomas
Companies, Organizations and Groups
57,830,686 pages viewed, 8,140 articles, 189,038edits
CFTC’s Giancarlo Calls U.S. Swap Rules ‘Fundamentally Flawed’
by Silla Brush, Bloomberg
Wall Street has been hurt by U.S. Commodity Futures Trading Commission regulation of the $700 trillion swap market, and the agency should re-write policies adopted after the financial crisis, the panel’s Republican member said.
***DA: Head over to MarketsReformWiki for a summary of the paper and its list of recommendations, links to related topics and, if you have some time on your hands, the entire paper is embedded on the site.
Epic Battle for Control of GFI Comes to a Head Thursday at Midnight; GFI pushes ‘bird in hand’ theory; BGC pushes ‘we’ll pay more’ theory
By Kevin B. Sanders, Observer News
Anyone who’s read Barbarians at the Gate (or seen the underrated HBO movie version) knows that the most exciting thing that can happen in business is a bidding war for control of a company. And as with that book’s subject, RJR Nabisco, it’s double exciting when it’s an insider team vs an outsider team.
Exclusive – LSE to put Russell Investments up for sale for 923 million pounds
By Jessica Toonkel, Reuters
The London Stock Exchange Group Plc (LSE.L) plans to put Russell Investments up for sale in mid-February and hopes to fetch around $1.4 billion (923 million pounds) for the unit, two sources told Reuters Wednesday.
EU & U.S. near deal on derivatives rules
The two sides are introducing rules to make derivatives such as credit default swaps more transparent. The European Commission is now signalizing that the two parties are close to completing an agreement. By accepting each other’s rules on financial derivatives trading, the European Union and the United States aim to prevent a global market that supports economic growth from fragmenting.
Thomson Reuters rethinks FX speed bump
By Joel Clark, Financial News
Thomson Reuters may delay the introduction of a speed bump on its flagship foreign exchange matching platform, a concept employed by rivals such as IEX to curtail the advantage of high-frequency traders.
BGC Re-affirms Offer To Acquire GFI For $6.10 Per Share In Cash
BGC Sends Executed Agreement Which Includes Terms Obligating BGC to Complete $6.10 per Share Tender Offer if CME Merger Vote Fails and GFI Countersigns
ISS Issues an Additional Note on the Proposed GFI Management-CME Merger Further Highlighting What ISS has Deemed “Significant Conflicts of Interest”
ISS and Glass Lewis Recommend that GFI Shareholders Vote AGAINST the Inferior CME/GFI Management Transaction; ISS Further Recommends Tendering Shares to BGC
CFTC’s Giancarlo Proposes Swap Personnel Exams; Move Is Latest Effort to Overhaul Opaque Derivatives Markets
By Katy Burne, WSJ
A top U.S. regulator is urging the introduction of examinations for swaps traders and brokers, in the latest effort to overhaul opaque derivatives markets that have drawn criticism since the financial crisis.
BATS buys Hotspot as it pushes into forex market
Philip Stafford, FT
BATS Global Markets is to expand into the foreign exchange market with the purchase of Hotspot, a currency trading network, from KCG Holdings in a deal worth up to $435m.
FXCM to write off losses for 90 percent of customers
By Kevin Dugan, NY Post
FXCM, the bailed-out currency broker, is willing to forgive and forget.
Commodities, Geneva and the Swiss franc
Emiko Terazono, FT
Bunge, the international agricultural trader, is closing its sugar and ethanol operations in London and moving them to Geneva, the home of its grain trading hub.
Carney warns austerity is ‘dangerous’ for eurozone after panic selling plunges Greek financial markets into chaos
By Hugo Duncan for the Daily Mail
Mark Carney sent out a warning on austerity policies imposed on the eurozone last night after panic selling plunged Greek financial markets into chaos.
The Bank of England governor warned the single-currency bloc faced ‘another lost decade’ unless the region eases its hard-line policies, as the Greece’s membership of the eurozone hung in the balance.
Central Bankers Ramp Up Currency Wars; Moves Are in Response to Stronger U.S. Dollar, Threat of Deflation
By Anjani Trivedi, Josie Cox and Carolyn Cui, WSJ
Global central banks are weakening their currencies to counter waning economic growth.
GFI founder’s ex wife shuns $10m to back CME bid
by Michael Bow, City A.M.
THE EX-WIFE of GFI Group founder Michael Gooch has waded into a bitter takeover battle for the interdealer by indicating she will accept $9.6m less for her stake in the firm to see off a rival suitor hoping to buy the business.
TRADERS ON THE MOVE: Eagle Names CEO, Rosenblatt Hires Pair, DB Loses Equity Pros
Eagle Investment Systems LLC, a BNY Mellon company, appointed Mal Cullen as its new chief executive officer. He succeeded John Lehner, who will now serve as the firm?s chairman. Cullen, a professional with over 25 years of experience, joined Eagle in 2001 as head of Canadian operations and has most recently served as head of the Americas with responsibility for the operations of Eagle?s North American business for sales, marketing, professional services, support, and product management. Prior to joining Eagle, Mal spent 12 years at Financial Models Company.
ICD Calls for Enhanced Board Renewal Efforts at Canada’s Boards
The Institute of Corporate Directors
The Institute of Corporate Directors (ICD), Canada’s national association representing directors and boards, calls on boards of directors to institute regular and substantive evaluations of board composition and board member performance, and commit to following through when necessary by having “tough conversations” with underperforming members or directors whose skills do not align with the organization’s strategy. In doing so, directors can foster high performing boards in a way that is not possible by relying solely on term limits, which the ICD believes are blunt tools that may limit flexibility and eliminate effective as well as non-effective directors.
Don’t Give up Your FINRA License
Lately, registered representatives at FINRA registered broker dealer firms seem to be quickly heading for the doors to join RIA firms.
Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
BATS: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend Rules 2.5(c)(4) and 11.5 to Harmonize with EDGA and EDGX Rules, its Membership Requirements Applicable to Clearing Agencies that Clear Transactions for Members (Release No. 34-74152; File No. SR-BATS-2015-07; January 27, 2015); see also Exhibit 5
BYX: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend Rules 2.5(c)(4) and 11.5 to Harmonize with EDGA and EDGX Rules, its Membership Requirements Applicable to Clearing Agencies that Clear Transactions for Members (Release No. 34-74151; File No. SR-BYX-2015-06; January 27, 2015); see also Exhibit 5
CBOE: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the Fees Schedule (Release No. 34-74143; File No. SR-CBOE-2015-006; January 27, 2015); see also Exhibit 5
FICC: Notice of No Objection to Advance Notices, as Amended, to Amend and Restate the Third Amended and Restated Shareholders Agreement, Dated as of December 7, 2005 (Release No. 34-74142; File Nos. SR-FICC-2014-810, SR-NSCC-2014-811, SR-DTC-2014-812; January 27, 2015)
MIAX: Notice of Designation of a Longer Period for Commission Action on Proceedings to Determine Whether to Approve or Disapprove a Proposed Rule Change to List and Trade Options on Shares of the Market Vectors ETFs (Release No. 34-74150; File No. SR-MIAX-2014-39; January 27, 2015)
Phlx: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Regarding the Short Term Option Series Program (Release No. 34-74145; File No. SR-Phlx-2015-09; January 27, 2015); see also Exhibit 5
SEC Names Erin Schneider as Associate Regional Director in San Francisco Office
The Securities and Exchange Commission today announced that Erin E. Schneider has been named the Associate Regional Director for enforcement in the San Francisco office.
CFTC’s Bowen demands action on position limits
Exchanges & Trading Facilities
Nasdaq Posts Lower Profit, Revenue; Exchange Operator Has Used Expense Controls to Help Combat Currency Fluctuations
By Michael Calia
Nasdaq OMX Group Inc. said its profit and revenue fell, while operating expenses grew in the most recent period.
CME Group Notices
CME Clearing Notice- Week of Monday, January 26, 2015
SMART Click Claim Process Deadline
Amendments to Last Trading Day and Expiration Day Rules for Seven (7) International Coal Futures and Options Contracts
Intern – Beijing
CME Group Jobs
Intern Job Scope Project Support 1. Data acquisition and extraction, data analysis (quantitative and qualitative) 2. Provide analytical support for line management in implementing the strategy for one project 3. Prepare background information and materials for upcoming meetings Policy Tracking 1. Maintain up-to-date understanding of relevant policy changes specific to one or more of our China key initiatives 2. Facilitate Chicago and Singapore colleagues better understanding China futures market and regulatory mapping Requirements Organized and capable of multi-tasking Comfortable working in groups or individually with minimal supervision Fluent in English and mandarin with strong written and spoken communication skills Have basic understanding of futures market Can work in office at least 4 days per week
Director, Greater China Marketing
CME Group Jobs
The Director, Greater China Marketing will be based in Hong Kong and is responsible for developing and implementing marketing strategy for China, Hong Kong, and Taiwan.
Hedge Funds & Managed Futures
Apple’s Currency Hedges Ease Pain, But Will Lose Potency
By Maxwell Murphy, WSJ
Heavier currency hedging over the summer helped mitigate the strong dollar’s drag on results, but Apple Inc.’s finance chief warned they will become less powerful over time.
Falling Ruble Tears 20% from International Paper’s 2014 EPS
By Vipal Monga, WSJ
Russia’s crumbling ruble took a 63-cent bite out of International Paper Co.’s per-share earnings in 2014.
CTA, global macro strategies to benefit from ECB’s quantitative easing
By Christine Williamson, Pensions & Investments
Hedge fund managers in aggregate suffered little damage in the previous two weeks from the removal of the euro cap on the Swiss franc by the Swiss National Bank, and some strategies “stand to win” from the European Central Bank’s monetary expansion program, Lyxor Asset Management research showed.
An Investing Frankenstein
by Joshua M Brown
Patrick O’Shaughnessy attempts to combine all the key attributes in order to create a “Perfect Investor” in a new post at his site, Millennial Invest.
Tricks of the mind turned oil into gold
Mikhail Fridman, FT
Price remained high because people perceived there was a shortage, writes Mikhail Fridman
A pump jack is seen at sunrise near Bakersfield, California©Reuters
In 2007 I made a bet with a fellow Russian businessman. The price of oil, he told me, would never drop below $80 again. This was the consensus among oilmen at the time. And that, I thought, was the surest sign that the oil price would soon start falling.
Banks & Brokers
Bondcube becomes FINRA broker/dealer member
Bondcube has become a FINRA broker/dealer member. This comes on the heels of the approval of Bondcube Limited as a crossing network in October 2014 by the UK regulator FCA and in December 2014 by the thirty-one other EU regulators. Bondcube Inc. will now apply to the SEC to become an ATS.
Deutsche Bank Has ‘Stronger’ Start to Year in Trading
by Shane Strowmatt, Nicholas Comfort, Bloomberg
Deutsche Bank AG’s trading businesses got off to a better start in January as market swings picked up, Co-Chief Executive Officer Anshu Jain said.
Deutsche Bank swings back with EUR441m profit in fourth quarter
James Shotter in Frankfurt and Martin Arnold in London, FT
Deutsche Bank was hit by a EUR330m charge to cover claims arising from consumer-loan contracts but reported better than expected results for the fourth quarter.
Fines, reforms force Deutsche Bank to face tough strategy choices
Deutsche Bank will remember Thursday, January 8 as the start of “Duesselgate”, a nickname born not of wrongdoing, but from the shockwaves sent by a speech given in Germany’s former industrial heart. Co-Chief Executive Juergen Fitschen stood before some 450 staff and clients in Duesseldorf and wondered aloud whether the bank’s claim to a universal strategy would survive.
Nomura Profit Unexpectedly Surges on Investment Banking
by Takahiko Hyuga, Bloomberg
Nomura Holdings Inc.’s profit unexpectedly surged to the highest in almost two years, upending analysts’ estimates for a decline as fees from investment banking and asset management rose.
Bondcube Has Become A FINRA Broker/Dealer Member
Effective 01/21/15, Bondcube has become a FINRA broker/dealer member. This comes on the heels of the approval of Bondcube Limited as a crossing network in October 2014 by the UK regulator FCA and in December 2014 by the thirty-one other EU regulators. Bondcube Inc. will now apply to the SEC to become an ATS.
RBS Seen Disposing of Most Bad Bank Assets Ahead of Plan
by Richard Partington and Stephen Morris, Bloomberg
Royal Bank of Scotland Group Plc plans to dispose of most of the toxic assets in its bad bank by the end of this year, 12 months earlier than projected, one person with knowledge of the matter said.
Clearing & Settlement
Pravettoni leaves LCH.Clearnet
Philip Stafford, FT
Alberto Pravettoni, one of the most high-profile clearing industry executives in Europe, has left his role at LCH.Clearnet, the world’s largest risk manager of interest rate swaps.
BNY Mellon And State Street Collaborate With Eurex Clearing On Securities Lending CCP Solution
Eurex Clearing, Europe’s leading clearing house and part of Deutsche Börse Group, today announced a collaboration with BNY Mellon and State Street, two of the world’s leading providers of financial services to institutional investors and two of the largest securities lending agents. The parties intend to work together strategically to further enhance the Eurex Clearing service to meet the specific needs of beneficial owners, as well as to explore expanding the geographic reach into the US. Additionally BNY Mellon and State Street will aim to provide access for their clients to the Eurex Clearing’s Lending CCP service.
Calypso Platform Supports BCBS/IOSCO Requirements For Margin On Non-Cleared Derivatives
Calypso Technology, a leader in Capital Markets software, today announces it will be releasing a new solution for calculating the Initial Margin required on non-cleared derivatives trades. The solution meets the requirements of the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) for margin requirements on non-centrally cleared derivatives.
Indexes & Products
S&P May Complete $1.38 Billion U.S. Deal as Early as Monday
Christian Dolmetsch and Edvard Pettersson – Bloomberg
Standard & Poor’s may complete as early as Monday a $1.38 billion accord with the U.S. and 19 states over claims it inflated subprime mortgage-bond ratings before the financial crisis, a person familiar with the talks said.
The ratings company deepened the 2008 economic collapse by giving top ratings to bad mortgage debt to win business from Wall Street banks, the government said. The U.S. said it might seek as much as $5 billion when it sued S&P in 2013. The states and the District of Columbia also sued the McGraw Hill Financial Inc. unit.
Bourses aim to enlarge index business pie; This and data business to emerge as key areas of development, say officials, as bull market takes wing
Sneha Padiyath, Business Standard
The country’s two major bourses, BSE and the National Stock Exchange (NSE), are betting big on the index development business, currently only a small portion of their overall revenue.
S&P DJI reveals ambition in fixed income space
Asia Asset Management
S&P Dow Jones Indices (S&P DJI) has unveiled plans to expand its fixed income index business, as the firm believes the London Interbank Offered Rate (LIBOR) rigging scandal has prompted demand for indices that are not controlled by dealers.
First Derivatives Delta Factory solution now available on MongoDB
First Derivatives, the provider of software and consulting services to the capital markets industry, has announced that its Market Data and Reference Data solution, Delta Data Factory (DDF) is now available on MongoDB. DDF is the first commercial reference data management to offer a dynamic NoSQL-based option. Historically, the industry relied on relational database platforms.
Ex-Goldman Sachs Trader Plans to Open New Bitcoin Derivatives Exchange LedgerX
George Krash, News BTC
Federally regulated bitcoin exchanges seem to be becoming a trend. Paul Chou, a consultant and former Goldman Sachs trader is readying LedgerX Bitcoin derivatives exchange and clearing house.
Silk Road suspect used multiple aliases
Kara Scannell in New York, FT
Ross Ulbricht ordered nine counterfeit drivers’ licences under multiple aliases months before he was arrested on charges he operated Silk Road, the online marketplace for illegal drugs, a federal agent testified on Wednesday.
S&P Near $1.37 Billion Settlement of Crisis-Era Suits; Deal Is Expected to be Announced as Early as Thursday
By Timothy W. Martin, WSJ
More than a dozen states will share half of a $1.37 billion government settlement resolving allegations that Standard & Poor’s Ratings Services knowingly issued rosy grades of mortgage bonds before the 2008 financial crisis, people familiar with the situation said.
Environmental & Energy
Low oil prices won’t hurt renewable energy, says US EIA
By Suzanne Goldenberg – The Guardian
Cheap oil is not about to kill off wind and solar power as some experts have claimed, the US government’s chief energy analyst said on Wednesday.
House panel agrees to prioritize climate change
By Timothy Cama – The Hill
The Republican-led House Natural Resources Committee agreed to put climate change on its agenda over the next two years.
California Engages in Mature Debate Over Spending of Cap-and-Trade Funds
By Josh Stephens – California Planning and Development Report
As the inane “debate” over climate change drags on in the more benighted corners of our republic (Washington, D.C., included), it’s becoming abundantly clear that California is no longer the place where America’s fruits, nuts, and loose ends come to rest.
Derivatives are now a new option for equity investors
By XIE YU(China Daily)
Brokerages in the Chinese mainland began taking applications to open equity options trading accounts on Monday, with investors looking for a new way to hedge risk, analysts said.
China’s yuan marches toward major global currency status
China’s efforts to raise the global status of its currency are paying dividends, with the yuan breaking into the top five world payment currencies for the first time and offshore trading volumes catching up with those onshore.
Peru central bank further tightens limits on currency derivatives
Peru’s central bank put a new limit on currency derivative operations in a bid to curb volatility and foreign speculation in the local spot market as the sol currency slips to new lows.
Securities and Exchange Board of India
Interim Order passed in the matter of Krutibibha Corporation Ltd
Interim Order in the matter of Chakra Infrastructure Limited
Chicago Tribune names new senior editors
The Chicago Tribune on Wednesday announced significant moves that realign top editorial management.
Institute Hires Raj Malhotra as Senior Trading Mentor
The Institute of Trading and Portfolio Management
The Institute of Trading and Portfolio Management (ITPM) has today announced a significant addition to their global trading operation by hiring former Bank of America and Nomura Index Options Trader Raj Malhotra as a Senior Trading Mentor.