Futures regulator dogged by questions on conflicts, governance
By Lynne Marek, Crain’s Chicago Business
Speaking to the Commodity Futures Trading Commission in April 2013, he said “friends” at a small Chicago-based company called AlphaMetrix had built a software system that would flag potential fraud before it endangered customers. The Chicago-based futures association, an industry regulator, had hired AlphaMetrix for the job, with the blessing of co-regulator and futures exchange operator CME Group. “Amongst all of the challenges and dead ends that the industry faces these days, this is a story that’s a good one,” Hehmeyer said at the time (see a PDF of the transcript).
***** I see someone’s fingerprints all over this story.
Losses From SNB Shock Set To Be In ‘Billions’
By Elena Logutenkova, FINalternatives
The $400 million of cumulative losses that Citigroup Inc., Deutsche Bank AG and Barclays Plc are said to have suffered from the Swiss central bank’s decision to end the cap on the franc may be followed by others in coming days.
***** I am glad I am no longer a broker. One client with the wrong position could have cost me more than I even want to think about.
How insecurity and preening kill corporate common sense
Lucy Kellaway, FT
Last week I had lunch with a man who used to be one of the most senior bankers in the UK. The trouble with business today, he complained over coffee, was that there was no common sense any more. Such sense, he insisted, had always been uncommon — but now was extinct.
***** Interesting piece from the FT.
Focused: What The Industry Knows About Transparency (Part 1)
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.
Part 1: Where do we need to improve transparency in the markets today?
Watch the video »
Oxfam presses Davos forum with wealth inequality claim
Chris Giles in London, FT
Campaigners sought to pile pressure on the rich and powerful travelling to the World Economic Forum in Davos this week, with a prediction that the wealthiest 1 per cent would soon own more than the rest of the world’s population put together.
***** Get ready to hear a lot more about wealth inequality. Pitchfork production is set to zoom.
Richest 1% Likely to Control Half of Global Wealth by 2016, Study Finds
By PATRICIA COHEN, NY Times
The richest 1 percent are likely to control more than half of the globe’s total wealth by next year, the charity Oxfam reported in a study released on Monday. The warning about deepening global inequality comes just as the world’s business elite prepare to meet this week at the annual World Economic Forum in Davos, Switzerland.
***** Like I said.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
57,422,130 pages viewed, 8,133 articles, 188,816 edits
China stocks hit by margin lending curbs
Gabriel Wildau in Shanghai, FT
Shanghai’s stock market suffered its worst fall in more than six years on Monday with China’s biggest securities brokerages hit by a crackdown on margin lending, an engine of the frenzied rise in mainland shares in recent months.
China Shares Fall Most in Six Years on Regulatory Crackdown; Chinese Regulators Target Margin Trading and Shadow Banking
By Daniel Inman and Jacky Wong, WSJ
A mountain of debt built up by Chinese investors eager to cash in on the soaring stock market crumbled on Monday, sending the stock market down 7.7%, its worst day in six years.
China Brokers Face Double-Whammy as Margin Finance Curbed
By Bloomberg News
China’s biggest brokerages are getting squeezed on two fronts as regulators curb loans to equity traders.
Nasdaq to Provide Trading Platform for Japan’s Biggest Derivatives Exchange; Exchange Operators in Japan Seek More Foreign Investors
By Eleanor Warnock, WSJ
TOKYO—Nasdaq, the world’s largest exchange company, will provide a new trading platform for Japan’s largest derivatives bourse, in a significant deal for a foreign financial technology operator and a step toward internationalizing Japan’s financial markets.
Swiss franc turmoil hits retail currency traders
Phillip Stafford, Michael Mackenzie and Judith Evans in London and Alice Ross in Washington, FT
Tafadzwa, 39, a computer programmer in Harlow, near London, put his entire savings of £22,000 on Alpari, the foreign exchange trading platform that went bust on Friday in the market turmoil triggered by this week’s huge appreciation of the Swiss franc.
Leucadia to give FXCM $300 mln to continue operations
Leucadia National Corp will give $300 million to retail foreign exchange broker FXCM Inc to meet regulatory capital requirements, the two companies said on Friday.
Swiss Franc Remains at Sky-High Levels; Swiss Stocks Regain Some Stability; Swiss Currency Hovers Around Parity With Euro
By Josie Cox
The Swiss franc remained pinned at sky-high levels on Monday, hovering around one-to-one against the euro after last week’s shock decision by the Swiss National Bank to allow its currency to climb.
ECB May Deliver $635 Billion to Steer Euro Away From Deflation
By Alessandro Speciale and Andre Tartar, Bloomberg
Mario Draghi is likely to announce a 550 billion-euro ($635 billion) bond-purchase program this week and won’t skimp too much on the details, economists say.
Banks and Congress blast Obama plan to tax Wall St and wealthy
Barney Jopson in Washington, FT
The banking industry and Republicans have criticised a White House proposal to increase taxes on Wall Street and the wealthy as President Barack Obama steps up efforts to seize the initiative on economic policy.
Broker Alpari says exploring all options including sale after Swiss shock
Retail currency broker Alpari UK, which last week said it had entered into insolvency after suffering losses stemming from the scrapping of the Swiss franc’s cap, announced it was considering all options including a sale.
Goldman Sachs touts commodities muscle as rivals shrink
By Lauren Tara LaCapra, Reuters
Goldman Sachs Group Inc stuck with commodities trading while rivals have pulled back, and on Friday the bank felt vindicated.
Ex-S&P exec sues U.S. SEC ahead of administrative charges
By Nate Raymond, Reuters
A former official at Standard & Poor’s sued the U.S. Securities and Exchange Commission on Friday to block the regulator from bringing administrative charges against her over credit ratings for commercial mortgage-backed securities.
Swiss franc shock shuts some FX brokers; regulators move in
By Anirban Nag and Steve Slater, Reuters
The Swiss franc shock reverberated through currency trading firms around the world on Friday, wiping out many small-scale investors and the brokerages that cater to them and forcing regulators to take a closer look at the sector.
Massad looks to streamline cross-border rules
Futures & Options World
Timothy Massad, chair of the Commodities Futures Trading Commission (CFTC), has said the US regulator is committed to continued ..
Remarks of Chairman Timothy G. Massad before the Asian Financial Forum, Hong Kong
But because the swap market was already global, many participants expect harmonization in regulation from the start. That is a good goal, though it may take time. To me, however, the glass is half full, not half empty. We are making good progress.
I can assure you that we in the United States want to continue to work with Asia to build that framework. We are aware that there are limits to the reach of any one country’s laws. We recognize the importance of harmonizing our rules with those of other nations where possible.
**No Link Available
Here’s What the Swiss Central Bank Just Did and Why It’s Such a Shocker
By Joe Weisenthal, Bloomberg
The Swiss National Bank shocked the world when it announced it would remove the cap it had in place to prevent the Swiss franc from rising too high against the euro.
Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
Recovery and Resolution Directive, including feedback on CP14/15 and final rules
This Policy Statement reports on the main issues arising from Consultation Paper CP14/15 on the [Bank] Recovery and Resolution Directive (RRD). It also publishes final rules to transpose the RRD into the UK regulatory regime for the investment firms and certain group entities that we regulate prudentially and that fall within the scope of the RRD.
GoConnect Limited: half-year results 31 December 2014
ASIC has welcomed the announcement of a $4.3 million impairment charge to goodwill assets by ASX-listed, GoConnect Limited, to be reflected in its results for the half-year ended 31 December 2014.
Member obligations under NFA Bylaw 1101 and Compliance Rule 2-36(d) with respect to CPOs/CTAs exempt from registration
CFTC rules require any person that currently claims an exemption from CPO registration under CFTC 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), or 4.13(a)(5), an exclusion from CPO registration under Regulation 4.5, or an exemption from CTA registration under 4.14(a)(8) to annually affirm the applicable notice of exemption within 60 days of each calendar year end. Pursuant to the CFTC’s rules, persons that fail to file the affirmation notice by March 2, 2015 will be deemed to have requested a withdrawal of the exemption and, therefore, may be required to be registered.
Exchanges & Trading Facilities
Swiss exchange eyes corporate bond market
Philip Stafford, FT
SIX Swiss Exchange is to join the growing battle in Europe to trade large blocks of corporate bonds and help unblock a growing liquidity drought in the market.
Hedge Funds & Managed Futures
Swiss Franc Trade Is Said to Wipe Out Everest’s Main Fund
By Katherine Burton, Bloomberg
Marko Dimitrijevic made a smart bet in December. The hedge fund manager, wagering the Swiss franc would fall, profited after voters there rejected a plan to have the central bank hold a fifth of its assets in gold.
It’s Time to End Financial Advisers’ 1% Fees; Low-Cost Online Advisers Are Challenging Traditional Advisers
By Jonathan Clements
Will the other shoe drop? For the past decade, fund investors have eschewed actively managed funds, those that aim to beat the market. Instead, they have poured money into passively managed index funds, which seek to replicate the performance of a market average.
TPG raises initial $5bn for latest buyout fund
Henny Sender, FT
TPG Capital is poised to announce it has raised an initial $5bn for its latest buyout fund, securing backing from long-time investors including the pension schemes of the State of Oregon and the State of Washington.
Traders With 5 Billion Euros in Put Options Hit Jackpot on Franc
By Anchalee Worrachate and Vassilis Karamanis, Bloomberg
When the Swiss National Bank decided to remove its cap on the franc today, it handed a winning lottery ticket to some traders of currency options.
Banks & Brokers
Société Générale splitting chairman and chief’s roles
Martin Arnold in London, FT
Société Générale has split the roles of chairman and chief executive as required by European law, appointing the Italian economist Lorenzo Bini Smaghi to chair the French bank’s board of directors while Frédéric Oudéa continues as chief.
Goldman Traders Are Making Way Less Than They Used To
By Akane Otani and Joe Weisenthal, Bloomberg
The glory days may be over for Wall Street traders. Goldman Sachs just reported its lowest annual trading revenue since 2005. The bank made $1.16 billion from trading the fixed-income, currency, and commodity (FICC) markets in 2014—a 31 percent decline from a year earlier.
One Financial Markets Unaffected by Events in Switzerland
One Financial Markets is pleased to confirm that it was not adversely affected by the impact of the shock SNB announcement last Thursday which resulted in unprecedented volatility in all markets linked to CHF. “The statements from Alpari and others about insolvency and significant losses will enhance our position in the industry as one of the most secure FCA regulated brokers.” The award winning London-based online broker was able to inform its clients that, despite last week’s extreme volatility, prudent management of its trading book has resulted in no significant losses.
JP Morgan swoops for Goldman MD of 24 years
JP Morgan has swooped to hire a Goldman Sachs stalwart to become its new global head of equities technology. Lakith Leelasena joined JP Morgan at the end of last year as global head of equities technology (GIM) after nearly a quarter of a century with Goldman, most recently as a managing director.
Julius Baer shares regain lost ground with 6% advance
James Shotter in Zürich, FT
Shares in Julius Baer rose 6 per cent on Monday morning after the Swiss private bank said it had not made losses last week after the Swiss National Bank’s decision to scrap its currency ceiling against the euro.
Scott Carter, Top Deutsche Bank Prime Brokerage Exec, to Step Down; Carter Will Be Replaced By Marcelo Pizzimbono
By Rob Copeland And Eyk Henning
Scott Carter, a top executive in the Deutsche Bank AG unit that lends to hedge funds, is stepping down from his post, according to a memo and people familiar with the matter.
Clearing & Settlement
Derivatives watchdogs expected to agree swaps rules reprieve
By Michelle Price, Reuters
Derivatives watchdogs are expected to agree a new timeline for the introduction of margin requirements for swaps transactions after strong resistance from the international banking industry, Europe’s top securities regulator said.
Indexes & Products
MSCI Paves Way for Overseas Listings to Enter Indexes
MSCI will allow shares of companies trading outside their home markets to enter their native country indexes, a move which is likely to funnel billions of dollars in capital flows toward companies that lack a domestic listing, such as Alibaba. But the index provider declined to include Russian companies among those which would be assessed for entry, citing investor concerns. Stocks that will be included in MSCI’s indexes will be announced in November.
S&P 500 earnings face dollar headwind
Sliding metals and crude oil prices are not the only headwind for US corporate profits as the quarterly earnings season heats up this week. A sharp increase in the US dollar against both the euro and Japanese yen is expected to crimp profits for some of the country’s largest companies, with some strategists on Wall Street warning the currency’s gain and low energy prices could constrain quarterly S&P 500 earnings growth to just 3 per cent.
A College Degree Alone Won’t Save You From Being Replaced by a Machine
By Akane Otani, Bloomberg
Going to college pays off in many ways—but going to graduate school pays off even more. Advanced degree holders reap bigger financial rewards than peers with four-year degrees—a trend that has become more pronounced over the past 15 years.
CFTC Orders Summit Energy Services, Inc. to Pay $140,000 Civil Monetary Penalty and Cease and Desist from Acting as an Unregistered Commodity Trading Advisor
The U.S. Commodity Futures Trading Commission (CFTC) today entered an Order requiring Summit Energy Services, Inc. (Summit Energy), a Delaware corporation with its principal place of business in Louisville, Kentucky, to pay a $140,000 civil monetary penalty for acting as an unregistered Commodity Trading Advisor (CTA).
Former Swiss banker found guilty in WikiLeaks trial, avoids jail
A former Julius Baer banker was found guilty on Monday of breaching Swiss banking secrecy laws by handing over data about offshore clients to WikiLeaks, but will avoid jail time.
Environmental & Energy
The Price of Fines — Energy Journal
By Christopher Harder, WSJ
Plunging oil prices have generally been seen as bad for oil companies like BP PLC, but the oil major may try to take advantage of them when it goes on trial tomorrow over how much it must pay the U.S. for the 2010 explosion of the Deepwater Horizon rig, which led to the largest offshore oil spill in U.S. history.
World just had hottest year on record
Pilita Clark, Environment Correspondent, FT
Last year was the hottest on record, two US government agencies confirmed on Friday, in what scientists said was yet more clear evidence of global warming.
Swiss action turns up heat on the Chinese yuan
By Craig Stephen, MarketWatch
The surprise move by Switzerland to scrap its currency ceiling against the euro EURCHF, +1.46% last week is a reminder there can be unexpected collateral damage from central banks waging currency wars. As markets digest last week’s turmoil, expect focus to turn to other fault lines on the global currency map.
China’s forex sales point to capital outflows
China’s banks recorded net sales of 118.4 billion yuan ($19.07 billion) of foreign exchange in December despite another big trade surplus during the month, suggesting renewed capital outflows amid concerns over the economy and the yuan.
Hong Kong Regulator Alleges Misleading Research; SFC Pursues Actions Against Moody’s, Citron
By Enda Curran And Rick Carew
Hong Kong’s securities regulator is turning up the heat on what it considers to be misleading stock research.
Two-Day Asian Financial Forum 2015 Opens
The Asian Financial Forum (AFF), one of the leading annual events in the global financial calendar, opened today at the Hong Kong Convention and Exhibition Centre (HKCEC). Organised by the Hong Kong SAR Government and the Hong Kong Trade Development Council (HKTDC), the two-day forum will examine the theme of “Asia: Sustainable Development in a World of Change” with over 100 distinguished speakers from around the world, including Xiao Gang, Chairman of China Securities Regulatory Commission; Professor Paul Krugman, Nobel prize-winning economist; and Jiang Jianqing, Chairman of Industrial and Commercial Bank of China Limited.
To Calm Its Markets, China Helps Guide a Sell-Off
By Neil Gough, NY Times
Stocks in China plunged 7.7 percent on Monday, the largest one-day sell-off since the 2008 financial crisis. But China’s top securities regulator, Xiao Gang, showed no sign of concern as he addressed a financial forum here.
India poised to mandate rupee interest rate swap clearing
Banks stage quiet retreat from Moscow
Banks are cutting back on investment bankers or giving those in Russia new responsibilities abroad as part of a discreet retreat from the country, where investment banking revenues dropped by three quarters last year.
DGCX Gold Volumes Grow 14% In December
Gold trading volumes on the Dubai Gold and Commodities Exchange (DGCX) reached 41,945 contracts in December, registering a significant growth of 14% year-on – year. In December 2014, DGCX volumes witnessed a growth of 25% from the same period last year, recording total monthly volume of 962,438 contracts valued at $ 27.84 billion. The Exchange’s average daily volume (ADV) grew 19% year-on-year reaching 45,830 contracts in December 2014.
The Price of Privilege
By LANDON THOMAS Jr., NY Times
They were alike in many ways, Thomas Strong Gilbert Sr. and the son to whom he gave his name and who, prosecutors say, would eventually kill him. Graduates of elite boarding schools and Princeton University, the two men were handsome, gifted athletes who — on the surface at least — seemed to be navigating the exclusive glide path of wealth, social position and success that has long defined life inside America’s upper crust.
Body found at California desert resort is missing AIG exec -police
A body found on the grounds of a California desert resort hotel has been identified as that of a missing AIG executive who failed to turn up for meetings last week, the sheriff’s office said on Friday.