First Read

Bits & Pieces
John Lothian
Yesterday several leaders in the financial industry took the ALS ICE Bucket Challenge, among them was BATS’ Joe Ratterman, ISE’s Gary Katz (video here), CQG’s Pat Kenny and Firm58’s Sam Mele.

David Setters, who suffers from ALS, or MND as they call it in the UK, offered a plea for support of MND in the UK, noting the overwhelming success of the US ALS fundraising. Here is a link to David’s post on Facebook

Here are videos from yesterday:

Pat Kenny

Sam Mele

Joe Ratterman

Send me your video. When we get to 20, we will make a compilation video.


‘Ice Bucket Challenge’ Donations for A.L.S. Research Top $41 Million
With everyone from former President George W. Bush to Justin Bieber and Shakira posting online videos of themselves dumping buckets of ice over their heads in the name of charity, the viral “Ice Bucket Challenge” continues to dominate social media and has now raised more than $40 million for amyotrophic lateral sclerosis, commonly known as Lou Gehrig’s disease.

***** See David Setters plea above about the MND fundraising in the UK.


High-Speed Traders Enlist Chilton to Improve Image in Washington
Silla Brush – Bloomberg
Former U.S. Commodity Futures Trading Commission member Bart Chilton, an outspoken critic of some high-speed trading practices while at the agency, has been enlisted in a Washington-based effort to improve the image of an industry beset by regulatory and legislative scrutiny.

***** If HFT traders are cheetahs, then Mr. Chilton must be a lion.


Managed Futures: The Next Five Years
Campbell & Co.
The past five years have proven phenomenal for investors in equity indices. Will the next five years offer the same opportunities?

Even with the turmoil of the last few weeks, many believe that equity returns will continue to climb. If you believe that the S&P, with an annualized return exceeding 18% (through May 2014), is likely to continue to deliver this level of performance, there is little need for portfolio diversification.

A look in the rearview mirror, however, suggests that the results of the past few years may not be sustainable. A new commentary by Campbell & Company, entitled Managed Futures: The Next Five Years, examines the cyclical nature of investment returns and the value of portfolio diversification. Campbell considers the impact of the environment on the Managed Futures industry, noting that while there have been significant headwinds during the most recent 5-year period, there is evidence that the environment for the strategy has started to improve.

***** The longer equity returns continue, the harder it gets for diversification strategies like managed futures. Of course, nothing goes on forever.


Upstarts prepare to ambush the lords of finance
Gillian Tett – Financial Times
When central bankers and economists gather on Friday for their annual convention in Jackson Hole, there will be plenty of solemn debate about the state of the world’s banks. But as policy makers and economists ponder where the industry is headed, a certain irony hangs in the air.

***** One word: Crowdfunding.


HFT provider Perseus connects to Eris Exchange
Joe Parsons – Futures & Options World
High frequency trading (HFT) firms will now be able to gain access to the Eris Exchange, a US interest rates swap futures platform, through Perseus Telecom, a provider of high-speed global connectivity.

***DA: Hmm. Not sure how I feel about this tie-up. If my memory of Greek mythology serves me, Perseus made his mark slaying demons and monsters. Eris was the goddess representing chaos and disharmony. This could turn nasty.


Matthew Rees, R.J. O’Brien – Three Old Words For New Generations of Futures Trading
Matthew Rees, chief relationship officer of R.J. O’Brien & Associates, discusses a different perspective of technology, and the importance of keeping the human element when building and maintaining relationships with customers. Rees mentions how there is a “sweet spot” when utilizing new communication tools and staying connected to the “traditional world”. He also gives a warning about how new technology could inadvertently isolate customers.

Watch the video »



MarketsWiki Page of the Day
Bartholomew H. “Bart” Chilton

MarketsWiki Recent Updates


William Harts; Bart Chilton; Steven Crutchfield; Daniel R. Carrigan; Andrew Wilkinson

Companies, Organizations and Groups

Advantage Futures; Standard Chartered Bank; Intermarket Communications


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Lead Stories

Citigroup Faces Curbs on Hedge-Fund Sales
Gregory Zuckerman and Scott Patterson – WSJ
Citigroup Inc. faces restrictions that will prevent it from selling investments in hedge funds and private-equity funds to wealthy clients, following a recent deal with U.S. regulators. The curbs, which haven’t previously been reported, result from the Aug. 5 approval of a settlement between Citigroup and the Securities and Exchange Commission of claims related to the bank’s earlier sale of certain debt products.

Isda wants delay for uncleared derivatives
Joe Parsons – Futures & Options World
The international banking industry has called for a two-year delay to upcoming margin rules for uncleared derivatives, arguing they will not meet the December 2015 implementation date. The International Swaps and Derivatives Association (Isda), which represents the OTC derivatives market, said in a letter to the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO), that participants will not be ready to apply the rules because they are yet to be finalised.

Settlement brightens outlook for Bank of America, fund managers say
David Randall and Peter Rudegeair – Reuters
Bank of America’s decision to pay $16.7 billion to settle charges stemming from the sale of mortgage-backed securities may finally allow the company to put last decade’s housing bubble behind it, fund managers and analysts say.

Och-Ziff Platinum Deal Aided Despot’s Government in Time of Need
Cam Simpson and Jesse Westbrook – Bloomberg
At 6 feet 2, James McGee announces his military background through his bearing. His hair is now platinum, his shoulders often thrust back. Raised during the 1950s and ’60s in the shadow of the steel mills of Gary, Indiana, McGee served in Vietnam, often sitting in the back of a World War II-era cargo plane stuffed with electronics. As a member of a U.S. Air Force intelligence unit, he listened through headphones for enemy signals or friendly distress calls so he could triangulate their positions. Almost four decades later, as the U.S. ambassador to Zimbabwe, he again found himself trying to make sense of signals in hostile territory.

Bank of America Papers Show Conflict and Trickery in Mortgages
A founder of Countrywide Financial warned three years before the housing market collapsed that his company could face “financial and reputational catastrophe” if it continued holding certain risky mortgages on its balance sheet. Still, Countrywide continued to sell these loans to investors.

StanChart’s NY anti-money laundering settlement draws UAE ire
Martin Arnold in London and Simeon Kerr in Dubai – Financial Times
Standard Chartered’s anti-money laundering settlement with New York’s leading financial watchdog is raising hackles with other regulators around the world.

SEF report: The state of the global market
Catherine Snowdon – Euromoney Magazine
Euromoney Research Group presents a detailed report into the swap execution facilities (SEFs) sector. The bespoke content offers insight into the confusion over the adoption of these rules and looks at the future opportunities for all market participants.

Wall Street Banks Dig Deeper to Keep Best and Brightest
Working on Wall Street once conferred a certain prestige, a path to riches and an oh-so-important swagger. The big-name investment banks had top candidates lining up at their recruiting tables and thousands of applicants for the few coveted spots. But that image has been clouded in recent years by horror stories of weekends spent at the office, frequent all-nighters and seemingly unsympathetic bosses.

Wall Street Isn’t the Political Baddie It Used to Be
Patrick O’Connor – WSJ
As political villains go, Wall Street seems to be enjoying something of a reprieve. No industry was more battered on the airwaves in 2012 than the financial-services sector. That’s not the case this year.


Former CFTC commissioner Chilton talks about revolving door
Bart Chilton, DLA Piper senior policy advisor and CFTC former commissioner, talks about the “revolving door” between the public and private sector.

***JM: “Cross-fertilization”, he said. There’s definitely some kind of fertilizer involved here, yeah.

CFTC quietly amassing data on natural gas swaps
Alexander Osipovich –
Numerous energy companies have received special calls from the CFTC in the past year, say lawyers, but the reasons for the agency’s interest remain murky

Put out fewer flags for US’s world bank regulator role
Jonathan Guthrie – Financial Times
There is a bald eagle rather than an elephant in the room during rows over US banking regulation. Americans typically believe their watchdogs, such as New York’s Department for Financial Services, punish wrongdoing with dispassionate disregard for nationality. Many non-Americans suspect fines on foreign banks are a weapon in an economic war.

SEC Vote Is Drama for the Masses, With No Happily Ever After
Paul Soltis – Wall Street & Technology
After a long year of waiting, the much anticipated SEC vote on changes to the money market fund rules finally happened last month. The proposal garnered a lot of attention over the past year, and rightfully so, as it was chock full of high-profile, contentious issues like floating net asset values and redemption gates, and caused much speculation around the future of institutional prime money market funds, tax complications, and who will be suing whom. The final rule kept the drama going by enacting all of the things that made the proposal so controversial.

ESMA Publishes An Opinion On The Application Of Guidelines On Money Market Funds

Exchanges & Trading Facilities

LSE to Raise $1.6 Billion in Rights for Frank Russell
Srinivasan Sivabalan – Bloomberg
The London Stock Exchange Group Plc (LSE) said it will raise 938 million pounds ($1.56 billion) in a rights issue of shares to fund part of the purchase of Frank Russell Co.

ASX keeps up infrastructure investment run rate
Simon Osborne – The Trade
The Australian Securities Exchange (ASX) announced in its annual results that its capital expenditure for 2014 was A$43.2 million, maintaining the exchange’s investment in its market infrastructure since 2012. ASX expects capital expenditure in the next financial year to be between A$40 and A$45 million.

Japan Exchange Group CEO says to decide on extending trading hours this year
The head of Japan Exchange Group Inc (JPX) said on Friday that he favours longer trading hours for the exchange and a decision on the long-debated issue will be made this year.

Shenzhen Stock Exchange Doubles Quotation Rates
Giulia Lasagni – WatersTechnology
Chinese stock exchange, the Shenzhen Stock Exchange has announced that it has increased quotation rates from the Shenzhen market from 114,000 quotes per second up to 228,000 per second.

LSEG secondary market revenues lifted by Turquoise
Chris Hall – The Trade
A 40% increase in equity trading volumes on pan-European platform Turquoise over the 12 months to June helped boost overall secondary market revenues at the London Stock Exchange Group (LSEG), according to the firm’s Q1 2014 results.

London Stock Exchange Group: Announcement Of Interim Results For The Three Months Ended 30 June 2014

July 2014 FIF Market Share Report – Executive Summary

Hedge Funds & Managed Futures

Hedge Funds and the problem of structure
Dan McCrum – Financial Times
Not the hedge fund structure, a fee schedule masquerading as an asset class, that is old hat. What we mean is the problem that arises once your pension fund has hired staff to invest in alternative assets.

Blackstone Said to Be in Talks to Back New Distressed Fund
Bei Hu – Bloomberg
Blackstone Group LP is in talks to back a Hong Kong-based distressed fund started by Jason Brown, a former global head of Goldman Sachs Group Inc. (GS)’s Special Situations Group, said two people with knowledge of the matter.

Investors Pour Into Vanguard, Eschewing Stock Pickers
Kirsten Grind – WSJ
Investors are pouring money into Vanguard Group, the epitome of the hands-off approach to investing, flocking to funds that track market indexes and aren’t run by stock pickers or star managers. The inflow has pushed the mutual-fund giant to almost $3 trillion in assets under management for the first time.

Smith invests just 15% of Fundsmith EM trust in first five weeks
Dan Jones – Investment Week
Terry Smith’s Fundsmith Emerging Equities trust invested just 15% of its portfolio in the five weeks since listing, as the manager takes a cautious approach to his first foray into emerging market investment.

Fidelity to merge Akbar’s global funds
Investment Week
Fidelity is planning to merge its International fund into a fund focused on global assets later this year.

Hedge Funds and the problem of structure
Dan McCrum – Financial Times
Not the hedge fund structure, a fee schedule masquerading as an asset class, that is old hat. What we mean is the problem that arises once your pension fund has hired staff to invest in alternative assets.

CalPERS To Recover Millions In Bank Of America Settlement
The California Public Employees’ Retirement System (CalPERS) is poised to get back up to $250 million in damages from Bank of America in a federal investigation settlement announced today by California Attorney General Kamala Harris.

Barclay CTA Index Inches Up 0.01% in July; Interest Rate Concerns Spur Sale of Risk Assets
Managed futures inched up 0.01% in July according to the Barclay CTA Index compiled by BarclayHedge. Year to date, the Index has gained 0.69%.

Research on Hedge Funds, Fund of Funds, and Managed Futures
Alternative Investments

Barclay Hedge Fund Index Down 0.44% in July; European and US Equities Burden Fund Managers
Hedge funds lost 0.44% in July, according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index remains up 3.26% in 2014. “European equity prices dropped due to weakening economic data, and US equity prices dropped based on a strengthening recovery,” says Sol Waksman, founder and president of BarclayHedge. “It was a difficult month for equity funds hoping to turn a profit.”

Banks & Brokers

JP Morgan gives away massive $850 billion mandate to Citi
Luke Clancy –
In a blow to incumbent JP Morgan, Citi emerged as the major winner over the past quarter by replacing its fellow New York-headquartered bank as global custodian for Norges Bank Investment Management’s (NBIM’s) $850 billion investment portfolio globally. The loss wipes, at a stroke, almost 5% off JP Morgan’s global assets under custody.

Homeowner help remains elusive in $16.5bn Bank of America fine
David Dayen – Guardian
The Justice Department has inked yet another cash settlement for misconduct in the production of mortgage-backed securities, this time with Bank of America for $16.65bn. Don’t expect a lot of that to be of any help to people who lost their homes.

Brian Moynihan’s challenge to lift BofA’s revenues after $16.5bn fine
Camilla Hall in New York –
When Brian Moynihan took over as Bank of America chief executive nearly five years ago, he had to focus on the past. A lawyer by training, he threw himself into the bank’s mortgage problems, cleaning up the mess of subprime home loans that helped spark the global financial crisis.

Sell-side target tech to boost competitiveness – TABB
The Trade
Sell-side firms are looking to upgrade their order management systems (OMSs) and execution management systems (EMSs) to prove their worth to investment managers who are reducing their number of brokerage counterparties and minimising trading costs, according to a new report from TABB Group, commissioned by SunGard.

Europe Fears Banks Lack Cash Cushion to Cover Bad Loans
LANDON THOMAS JR. – Dealbook – NY Times
As Europe slogs through its latest round of bank stress tests, a growing number of analysts have already reached their own conclusion: Eurozone banks need additional cash.

Clearing & Settlement

SEF Consolidation Likely as Volumes Slowly Increase
Ivy Schmerken – Wall Street & Technology
It’s been a quiet summer for swap trading venues. SEF trading has been mandatory for many over-the-counter derivatives, mainly credit indexes and interest rates, since mid – February. Yet the transition from opaque voice trading to SEFs (swap execution facilities) has been evolving slowly.

Euronext names new head of post-trade business
European exchange operator Euronext said on Thursday it has appointed Andrew Simpson as head of its post-trade business.

Carney urged to help end masking of swap counterparties
Fiona Maxwell –
“Ambitious but realistic” deadline could be set for banks to stop hiding counterparty details – the industry’s response to a conflict between privacy and reporting rules

CME Group – Margins: Performance Bond Requirements – Copper Outrights and Intra-Commodity Spread Charges – Effective Monday, August 25, 2014

Indexes & Products

‘Fear gauge’ loses its punching power
Michael Mackenzie – Financial Times
The CBOE’s Vix, an index of implied volatility from one-month options written on the S&P 500 has made a nice round trip over the past month. After rising to peak at 17 in early August, the Vix now slumbers below 12, unchanged from late July. In turn the S&P 500 has rallied smartly from this month’s low and is pushing into record territory with a test of the 2,000 point threshold looming.

ETF shoppers become more selective
Peter Davy – Financial News
Price wars continue in the exchange-traded fund market as providers seek to gain market share in Europe. However, investors say costs are just part of the puzzle when it comes to choosing an ETF.


Liquid Holdings launches separately managed account risk management offering
Rob Daly – The Trade
New York-based Liquid Holdings has released its new LiquidFIRM cloud-based pre-and post-trade risk management platform for the hedge-fund service community.

Nasdaq OMX Introduces New IP Addresses for New York Area
Giulia Lasagni – WatersTechnology
Nasdaq OMX has introduced new IP addresses for the New York Metro Area datacenter for its PHLX depth of darket, PHLX orders, and top of PHLX Options (TOPO) datafeeds.

Fix and FpML: a friendly war
Peter Madigan –
Messaging standards Fix and FpML have different strengths and used to do separate things, but swap market reforms have raised questions as to whether one could usurp the other. The outcome has been collaboration as well as competition.


CFTC Orders S.J. Woods, Inc., Peter Blanco, and Paul Proscia to Pay over $2.9 Million in Restitution and Permanently Bars Them from the Commodities Industry
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against S.J. Woods, Inc. (SJW) and its owners, Peter Blanco and Paul Proscia (together Respondents), involving their participation in illegal, off-exchange financed transactions in precious metals with retail customers.

CFTC Charges Colorado Company R2 Capital Group, LLC, and its owners, Ryan Tomazin, Ryan Madigan, Randell A.Vest, RAST Investor Group, LLC, Madigan Enterprises, Inc., and Bulletproof Vest, Inc. with Fraud and Misappropriation
The U.S. Commodity Futures Trading Commission (CFTC) today announced that on August 15, 2014, Chief Judge Marcia S. Krieger, of the U.S. District Court for the District of Colorado, issued a restraining Order freezing the assets of Defendants Ryan Tomazin of Stamford, Connecticut, Ryan Madigan of Raleigh, North Carolina, and Randell A. Vest of Fort Myers, Florida.

Bank of America Admits Disclosure Failures to Settle SEC Charges
Press Release

Environmental & Energy

EU regulators seek to close car emissions testing loopholes
Barbara Lewis, Reuters
EU regulators are preparing draft legislation that will require vehicle fuel use to be tested on roads rather than in laboratories, looking to close loopholes that allow car makers to exaggerate fuel-saving and emissions credentials.

Survey: Saving money is number one reason to go green
A drive to cut costs and cope with increasing demand from customers for greener goods is encouraging businesses to adopt sustainability practices such as energy-efficiency building upgrades and donate to charity.

Ioxus, Maxwell, Win Inertia bet on ultracapacitors to store energy
Heather Clancy,
While batteries still generate more headlines, the role of ultracapacitors in energy storage and efficiency applications moved toward center stage this summer with high-profile transportation projects for two notable players, Ioxus and Maxwell Technologies.

***LB: Also in this story “Although they look a lot like batteries, ultracapacitors can be charged and discharged far more quickly, making them attractive for applications that require rapid bursts or occasional boosts of power.”


Poorly Paid Chinese Savers Skirt Deposits for Structured Notes
Regina Tan – Bloomberg
Chinese investors looking for a better return than what they’re getting on bank deposits have boosted structured product offerings in the nation to the most in more than 18 months.

Effective spreads comparison is not TCA, says industry
Simon Osborne – The Trade
Using effective spreads as a proxy to assess transaction costs is an inappropriate way to analyse and differentiate equity markets in the Asia-Pacific region, according to industry experts.

Foresight wins Goldman big role in China’s preferred shares deals
Elzio Barreto – Reuters
As Chinese banks prepare to raise $55 billion in the country’s first preferred share offers, foreign investment banks with experience in structuring such deals are ready to pounce on a potential $275 million in underwriting fees. And some are more ready than others.

ASEAN Exchanges On Track To Create An ASEAN Asset Class
The ASEAN Exchanges CEOs convened today at the 21st ASEAN Exchanges CEOs meeting to discuss the next collaborative action steps to market and promote ASEAN as one asset class.

SGX Announces Delisting Of Five GDRs

Frontier Markets

Saudi Arabia Drafts Foreign Limits for $580 Billion Bourse
Sarmad Khan, Nikolaj Gammeltoft and Arif Sharif – Bloomberg
Saudi Arabia set out draft proposals on foreign-shareholder limits as one of the world’s most restricted stock markets prepares to open its doors for the first time to investors outside the region.

Dubai’s International Financial Centre in Bid to Lure Hedge Funds
Nicolas Parasie – WSJ
Dubai’s financial hub is growing up. Since it was established a decade ago, the Dubai International Financial Centre has become the number one choice in the Middle East for many of the world’s leading banks, law firms, asset managers and insurers from where to conduct their regional businesses.

Gold Refiner Predicts Curbs by India May Be Permanent
Prabhudatta Mishra – Bloomberg
Controls on gold imports by India will probably be permanent as the world’s largest consumer after China seeks to sustain a reduction in the current account deficit, according to the country’s biggest refiner.

Taking mobile banking in Africa to the next level
Kimberley Long – Euromoney Magazine
The use of mobile-banking services in Africa has rocketed in recent years, but the rapid advance of this type of payment technology is throwing up challenges over how to manage this growth while protecting the end-user.

Haifa Mulls Second Israeli Bourse
James Rundle – WatersTechnology
Israel’s third-largest city is planning to open a second stock exchange in the nation, placing it in direct competition with Tel Aviv, media reports claim.

MCX Weekly Market Report August 14, 2014 To August 21, 2014

MSE Weekly Trading Report-22 August, 2014

Egyptian Exchange Indices Performance

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