Bits & Pieces
“My Problems Are All Behind Me” – George Brett
By John Lothian
On Tuesday I will be having back surgery, which will begin a 4-week absence from this newsletter. In my place we will have several guest editors again, as we did last year when I had double knee replacement surgery.
Yes, the surgeries and guest editors are getting to be a regular thing. I hope this is the last of the former for awhile.
Next week our own managing editor Sarah Rudolph will be editing this newsletter. Jim Kharouf will be in Austin, TX at at the OIC Conference and Doug Ashburn will be in New York for the CTA Expo and the NIBA New York conference. Hopefully Sarah can convey some good news about a successful operation for yours truly.
Following Sarah will be Martin Mosbacher the week of May 5th. Martin is chairman and managing partner of Intermarket Communications in New York. Additionally, he is a member of the advisory committee of John J. Lothian & Company, Inc.
During the week of May 12th, we will have Nils-Robert Persson, executive chairman of Cinnober Financial Technology, a Stockholm-based provider of electronic trading platforms. Last year Veronica Augustsson, the CEO of Cinnober, graced us as a guest editor.
For the week of May 19th, we will have Alun Green of Sungard as guest editor. Alun is a longtime friend of the newsletter and technology professional with interesting views on the financial services arena.
We are still finalizing the guest editor for the last week of May and will announce that soon.
When Does Execution Occur? The Latest Dilemma Facing Voice Brokers
Jim Falvey – Green Key Markets
It is indisputable that the Dodd-Frank Act of 2010 signi?cantly impacted ?nancial markets.
While much has happened in the regulatory world to turn the markets upside down over the past four years, there are still many unanswered questions that, once answered, will a?ect the markets and market participants for years to come. One such area that is still under consideration by the CFTC relates to pre-trade risk controls in the over-the-counter markets and who is responsible to enforce these requirements.
***DA: In other words, who is on the hook for pre-trade certainty of clearing? If the answer is “brokers” a fresh can of worms has just been opened.
**** When does execution occur? About 3 times a week in Texas.
Mom and Pop Step Up Their Trading; TD Ameritrade, E*Trade Report Large Jumps in Volume in First Quarter
By Julie Steinberg
Discount brokers TD Ameritrade Holding Corp. and E*Trade Financial Corp. on Wednesday reported big jumps in daily trading volume in the first quarter from the same period a year ago. TD Ameritrade posted a 30% jump to a record 492,000 revenue-generating trades a day, while E*Trade said average daily volume rose 33% to 198,000.
***** Is this a silver lining or the start of bright sun shining days ahead.
Keep it Simple: Peter Nabicht on Liquidity and Simplicity of Market Structure
Today’s financial markets can be summed up in three words – global, fast, and complex. But as the market structure evolves, so must the regulatory structure that oversees it. John Lothian News has spoken with several industry experts to create this series on the evolution of financial market structure.
High-speed trading makes market unfair: Survey
Seventy percent of 357 industry professionals—mostly from “buy-side” firms such as hedge and mutual funds—do not believe U.S. equity markets are fair for all participants, according to the U.S. Equity Market Structure Survey by broker ConvergEx. Some 18 percent said yes and 11 percent didn’t know.
***DA: “All animals are equal, but some are more equal than others.” – Number 7 on the revised list of commandments in George Orwell’s “Animal Farm”
Sunken Gold Untouched for 157 Years Off U.S. Lures Hunter
By Liezel Hil
Treasure-hunter Bob Evans has spent half his life dreaming about the SS Central America, a pre-Civil War steamship decaying in the lightless depths off South Carolina. Now he’s returning to the shipwreck after 23 years.
***** I sometimes think there is more gold at the bottom of the oceans than there is in vaults.
Maine baby lobster decline could end high catches
By PATRICK WHITTLE, AP
YARMOUTH, Maine — The number of baby lobsters settling off the rocky coast of Maine continues to steadily decline — possibly foreshadowing an end to the recent record catches that have boosted New England’s lobster fishery, scientists say.
***** We need to end this one child policy for lobsters ASAP.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
Page Views: 48479,245; Pages 20,522; Articles: 7937
CME Europe set for launch
FTSE Global Markets
Chicago Mercantile Exchange Group (CME) will officially launch its London-based European derivatives exchange CME Europe this Sunday. The new venture, which will be supervised by the FCA, is the first trading platform launched by CME outside the US and will initially offer 30 FX futures products and a suite of commodities contracts.
KKR and Nasdaq Plan Market to Trade Shares in Private-Equity Funds; Venture Would Lower the Limit for Investors Participating in Buyout Shop’s Funds
By Rob Copeland, WSJ
KKR & Co. plans to allow its investors to sell portions of their stakes in buyout funds through a private market run by Nasdaq OMX Group Inc., thought to be the first time pieces of these exclusive vehicles have been traded this way in the U.S., said people familiar with the matter.
Nasdaq seeks upside from markets debate as profits rise
By John McCrank, Reuters
Author Michael Lewis’ claim that the U.S. stock market is rigged was “irresponsible,” but the debate it has sparked could lead to positive change, said Bob Greifeld, chief executive of Nasdaq OMX Group , which reported higher earnings on Thursday.
CME plans to launch physically settled Asia gold futures-sources
CME Group Inc plans to launch a physically deliverable gold futures contract in Asia, three sources familiar with the matter said, as the world’s No.1 futures exchange targets rising hedging and investor demand in the top gold-consuming region.
EU court to rule on UK challenge to transaction tax
Britain may lose its challenge to stop plans by 11 euro zone countries to tax financial transactions when the European Union’s top court rules next week, lawyers said on Thursday.
MiFID II – A bigger bang
THE name may be unfamiliar—and comical—to most, but the first Markets in Financial Instruments Directive (MiFID) revolutionised share-trading in the European Union, by allowing new competitors to take on dear and dozy national stock exchanges. Earlier this month the European Parliament approved MiFID 2, an even more ambitious law, which aims to change how trillions of euros-worth of stocks and bonds, derivatives and commodities are traded, cleared and reported. The consequences are likely to be as sweeping and unpredictable as those of its predecessor.
DERIVATIVES: Recordkeeping woes approach buyside
Mike Kentz – International Finance Review
A set of onerous recordkeeping requirements connected to over-the-counter swap transactions are set to hit asset managers on May 1 unless the CFTC extends relief or modifies the rule as industry participants have requested.
Backbone of U.S. Equities Trading Said Poised for Upgrade
Following malfunctions that froze U.S. stock and options markets in the last year, the systems that serve as the backbone for trading are getting closer to an upgrade, according to two people with direct knowledge of the matter.
DealBook: New Evidence May Reopen Broker Fraud Case
By SUSAN ANTILLA, New York Times
A Long Island couple is seeking an appeal in an arbitration hearing involving their stockbroker and his employer, Oppenheimer & Company, because critical evidence was not submitted in the case.
FCA Said to Observe Banks’ London Gold-Fixing Calls
By Suzi Ring and Nicholas Larkin, Bloomberg
Regulators are stepping up their scrutiny of how gold prices are set, with officials from Britain’s Financial Conduct Authority visiting Societe Generale SA (GLE) to observe the so-called London fixing process, two people with knowledge of the matter said.
Interpretive Notice Entitled Compliance Rule 2-30(b): Risk Disclosure Statement for Securities Futures Contracts
An explanation of the adoption of the Interpretive Notice can be found in the December 5, 2013 rule submission letter
FINRA Names Leslie F. Seidman As New Public Governor
WASHINGTON — The Financial Industry Regulatory Authority (FINRA) has named Leslie F. Seidman as a new Public Governor. Ms. Seidman previously served as Chairman of the Financial Accounting Standards Board (FASB) from 2010 to 2013, having been appointed to the FASB as a Board member in 2003.
FINRA Board Approves Amendment to Supervision Rule Requiring Firms to Conduct Background Checks on Registration Applicants
WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that its Board of Governors approved amendments to FINRA’s supervision rule that would expand the obligations of firms to check the background of applicants for registration, including first-time applications as well as transfers, to verify the accuracy and completeness of the information contained in an applicant’s Form U4. Firms would also be required to adopt written procedures in this area that include searching public records.
Illegal practice and illegal distributions – Penal proceedings relating to two schemes
The Autorité des marchés financiers (the ?AMF?) has launched penal proceedings against ten individuals whom the AMF claims have engaged in illegal practice and made illegal distributions related to Fondation Internationale CDS as well as Fondation Agroterre and Foncière Agroterre.
2014/31 Canadian securities regulators publish for comment guidance for proxy advisory firms [CSA]
Montreal – The Canadian Securities Administrators (CSA) today published for commentÿproposed National Policy 25-201ÿGuidance for Proxy Advisory Firms (Proposed Policy). “The CSA recognize that proxy advisory firms play an important role in advancing good corporate governance by facilitating institutional investors’ ability to exercise their voting …
Canadian securities regulators publish for comment guidance for proxy advisory firms
The Canadian Securities Administrators (CSA) today published for comment draft Notice 25-201 relating to Guidance for Proxy Advisory Firms (Draft Notice).
Board Decision Finds Charles Schwab & Co. Violated FINRA Rules by Adding Waiver Provisions in Customer Agreements Prohibiting Customers From Participating in Class Actions; Reverses FINRA Hearing Panel Decision
Schwab Enters into Settlement; $500,000 Fine and Waiver Removal Resolves Matter
WASHINGTON — The Board of Governors of the Financial Industry Regulatory Authority (FINRA) issued a decision today finding Charles Schwab & Co., Inc. violated FINRA rules when the firm attempted to keep investors from participating in judicial class actions by adding waiver language to customer account agreements.
Antony Townsend to be new Complaints Commissioner
The Bank of England and the Financial Conduct Authority (FCA) have today announced the appointment of Antony Townsend as Complaints Commissioner.
Exchanges & Trading Facilities
LME to Start Clearing Collateral in Yuan as Asia Ascends
The London Metal Exchange will start accepting collateral denominated in Chinese yuan after setting up a clearing house in September as Asia increases its hold over the bourse. The clearing house will become the “heartbeat” of the LME, the world’s biggest market place for industrial metals, said Chief Executive Officer Garry Jones.
BRIEF-CME raises margin for NYMEX Coffee
CME raises NYMEX coffee (KT) initial margins for specs by 20 percent to $6,600 per contract from $5,500
Hedge Funds & Managed Futures
U.K. Gold Demand Seen Rising as Regulator Reviews Pensions
By Morgane Lapeyre, Bloomberg
U.K. gold demand will get a boost from investors saving up for retirement if the U.K.’s Financial Conduct Authority adds bullion to its list of “standard assets,” brokerage GoldCore Ltd. said.
Banks & Brokers
RBS plan for 200% bonuses blocked by Treasury body
UKFI, the body that manages the Treasury’s 81% stake in the bank, told RBS it would veto plans for a 2:1 bonus ratio at the next shareholder meeting. “There will be no rise” while RBS is “still in recovery”, the Treasury said.
Banks counter Fed worries on physical commodities
By Alexander Osipovich, Risk.net
Goldman Sachs and Morgan Stanley stress public benefits of allowing banks to trade physical commodities, while downplaying fears of catastrophic risk
How Risky is Fidelity’s Brokerage?
By Ryan Tracy and Andrew Ackerman
In Thursday’s paper, we report that senior U.S. regulators analyzing the risks posed by large asset managers started peeking under the hood of Fidelity Investments in part because it owns a large brokerage.
Bank Cutting Commodities Trade Severs Link With Equities
Banks’ pullback from commodities trading is weakening the link between raw materials and equities and helping to re-establish supply and demand as the main factor in setting prices, United Nations researchers say.
Barclays Shareholders Vent Frustration Over Bonuses
By CHAD BRAY, New York Times
For nearly three hours on Thursday, shareholders of Barclays aired their grievances with the British bank’s top management, ranging from complaints about the security of debit cards to the length of the lines to get into its annual meeting.
ICAP Wins GlobalCapital’s “Americas Interdealer Broker Of The Year” Award
ICAP plc (IAP.L), a leading markets operator and provider of post trade risk mitigation and information services, announces that it has been awarded the “Americas Interdealer Broker of the Year” award from GlobalCapital Derivatives. ICAP received the award at the GlobalCapital Derivatives’ America’s Derivatives Awards event in lower Manhattan on the evening of April 22.
Merrill to Advisers: Find Your ‘Noble Purpose’; Some advisers question the purpose of John Thiel’s mission
By Corrie Driebusch, WSJ
Directing Merrill Lynch’s traditionally hard-charging corps of thousands of financial advisers are its regional and branch managers, who gather yearly to discuss the latest plans for the firm.
DealBook: R.B.S. to Drop Bonus Plan After British Agency Balks
by By CHAD BRAY, New York Times
The bank, based in Edinburgh, had sought to pay its bankers bonuses of up to two times their annual salaries, but an agency that manages the British government’s stake in the lender refused to back the proposal.
BofA ex-CFO agrees to settle NY lawsuit over Merrill – WSJ
Bank of America Corp’s former finance chief, Joe Price, has agreed to pay $7.5 million to settle a lawsuit that accused the bank and its former executives of misleading investors during the lender’s acquisition of Merrill Lynch, the Wall Street Journal reported.
London Stock Exchange Welcomes The Abolition Of Stamp Duty On AIM-Quoted Shares
London Stock Exchange today welcomes the abolition of stamp duty on growth market shares, including AIM-quoted stocks, which will come into effect from Monday 28 April.
Clearing & Settlement
Asia clearing mandates to go live before European and US regulators approve CCPs
By Keith Noyes, Risk.net
Several Asia markets are set to mandate central clearing but European and US banks face the dilemma of whether to join onshore CCPs before they receive approval from their domestic regulators – potentially leaving them exposed to onerous capital charges
Indexes & Products
Dalian bourse plans to launch commodity index futures contract
China’s Dalian Commodity Exchange plans to launch a commodity index futures contract as soon as this year, its chairman said on Thursday. “We hope this year we will have a breakthrough,” Xingqiang Liu said at an industry conference in Hong Kong.
RTS Provides Connectivity To CME Europe From Day One
RTS Realtime Systems Group (RTS), a leading global trading solutions provider, today announced that the firm will offer immediate access to CME Europe Ltd. upon the exchange’s launch this Sunday. CME Europe is a wholly owned subsidiary of CME Group, which last month received UK regulatory approval to launch the new London-based derivatives exchange.
U.S. Said to Ask BofA for More Than $13 Billion Over RMBS
By Tom Schoenberg and Hugh Son, Bloomberg
U.S. prosecutors are seeking more than $13 billion from Bank of America Corp. to resolve federal and state investigations of the lender’s sale of bonds backed by home loans in the run-up to the 2008 financial crisis, according to people familiar with the matter.
Former KPMG Partner Scott London Gets 14 Months for Insider Trading; London Pleaded Guilty in July to Passing Along Information on Clients Including Herbalife, Skechers
By Tamara Audi
A Los Angeles federal judge Thursday sentenced former KPMG LLP partner Scott London to 14 months in prison for insider trading.
Scott London’s Fall From Grace
by Julie Steinberg, WSJ MoneyBeat
Scott London once had one of the more enviable spots in finance: overseeing audits of high-profile companies for a Big Four accounting firm. Then his world changed. Mr. London’s sentencing on Thursday to 14 months in prison caps a yearlong saga that hit the headlines last April, when KPMG LLP fired the former partner and resigned as auditor for Herbalife Ltd and Skechers USA Inc. Mr. London admitted to The Wall Street Journal at the time that he had passed on stock tips about clients to a friend who gave him cash and gifts.
Money manager Vilar gets 10 years prison in resentencing
Money manager and arts patron Alberto Vilar was resentenced on Thursday to 10 years in prison, a year longer than previously, in connection with his 2008 conviction for fraud and money laundering.
Barclays to pay $280 million to settle mortgage bond claims
Barclays Bank PLC will pay $280 million to Fannie Mae and Freddie Mac to settle claims that it sold them faulty mortgage-backed securities during the housing bubble, a U.S. regulator said on Thursday.
Environmental & Energy
China Finds 60% of Groundwater to Be Poor or Worse
By Bloomberg News
Almost 60 percent of the groundwater at 4,778 sites monitored across China has been found to be of poor or extremely poor quality, contaminated with pollutants that exceed acceptable standards.
China Takes On Pollution With Biggest Changes in 25 Years
By Bloomberg News
China passed the biggest changes to its environmental protection laws in 25 years, outlining plans to punish polluters more severely as leaders work to limit contaminated water, air and soil linked to economic growth.
Hedge Fund Billionaire Tom Steyer Comes Under Republican Attack
By Nathan Vardi, Forbes
When liberal billionaire Tom Steyer ran his hedge fund firm, he worked so hard to stay under the radar that his Farallon Capital Management was known as a secretive operation in the investment community. He avoided publicly and guarded his privacy even as Farallon became one of the largest hedge funds in the nation.
Hong Kong-Shanghai equity link could act as commodity blueprint -HKEx CEO
A model that allows Hong Kong and Shanghai investors to trade equities on each other’s bourses could eventually extend to commodity futures, the chief executive of Hong Kong’s exchange said on Thursday.
Dalian Commodity Exchange: Notice On Adjusting Minimum Trading Margin Standards And Trading Limits Of All Products During 2014 Labor Day Holiday
According to Article 9 of the “Measures of Dalian Commodity Exchange for Risk Management”, it has been decided upon discussion that Dalian Commodity Exchange will adjust the minimum trading margin standards and the trading limits of all the products before and after the market closing during 2014 Labor Day as follows:
HKEx: Re-Appointment Of Chairman Approved
Reference is made to the announcement of Hong Kong Exchanges and Clearing Limited (“HKEx”) dated 17 April 2014 in relation to the re-appointment of Mr Chow Chung Kong (“Mr Chow”) as the Chairman of the board of directors of HKEx (“Chairman”).
HKFE Announces Revised Margins For China Telecom Futures
Hong Kong Futures Exchange Limited (HKFE), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), has announced that with effect from the commencement of trading on Tuesday, 29 April 2014, the minimum margins to be collected by an Exchange Participant from its clients in respect of their dealings in the following futures contract will be as outlined in the table below. The adjustments are based on the clearing company’s normal procedures and standard margining methodology.
Alteration of Trading Unit of ETF
iShares Nikkei225 ETF
SGX welcomes PACC Offshore Services Holdings Limited to Mainboard
Singapore Exchange (SGX) is pleased to welcome PACC Offshore Services Holdings Ltd. (POSH) to Mainboard under the stock code “U6C”.
Moscow Exchange, NSD, Liniya Prava Hold Roundtable On Taxation Of Financial Instruments And Derivatives
Moscow Exchange hosted a roundtable on taxation of financial instruments and derivatives on 23 April, where urgent amendments to tax legislation and its application on the financial market were discussed. The event was organised by Moscow Exchange, the National Settlement Depository (NSD), and law firm Liniya Prava.
Russian Stocks, Bonds, Ruble Dive on S&P Rate Cut; Rating Now One Notch Above Junk
By Tommy Stubbington, WSJ
Standard & Poor’s Ratings Services cut Russia’s credit rating to one notch above junk, sending Russian stocks, bonds and the ruble lower.
Bunge in Process of Selling Brazil Sugar Business; Outgoing CEO of Brazil Unit Says the Business Isn’t Producing the Desired Returns
By Jeffrey T. Lewis, WSJ
BARCARENA, Brazil— Bunge Ltd. BG 0.00% is in the middle of the process of selling its Brazilian sugar business, the outgoing chief executive of Bunge Brazil, Pedro Parente, said late Thursday.
Record ‘Cat Bond’ Grows Again, Cuts Insurer’s Costs
by Al Yoon, WSJ MoneyBeat
The record-sized catastrophe bond got even bigger on Thursday in the latest display of demand in the market that helps insurers offset natural disaster risk. Citizens Property Insurance Corp., the state-run insurer in hurricane-prone Florida, on Thursday boosted its “cat bond” issue from $1.25 billion to $1.5 billion, with the deal still oversubscribed after being increased, according to John Modin, managing director in insurance banking at Citigroup Inc., which managed the sale. The deal was initially marketed at $400 million.
Clash of the Financial Pundits: Countdown Begins Now!
The Reformed Broker by Joshua M Brown
I’ve been working on my newest book, co-written with my friend Jeff Macke, for the last 12 months. I’m pleased to announce that Clash of the Financial Pundits is available for pre-order starting now! The book comes out thirty days from now on May 23rd.