Matthew Scharpf, Vice President Sell Side Business Development, Eurex – Trading with a Creative Mind
“You’re filling your toolbox…You’re not going to need it today or tomorrow, but one day it’s good to have.”
Matthew Scharpf, vice president of sell side business development for Eurex, gives a unique look at systems in the financial industry and how we can connect new pieces together to create innovation. Using his guitar and knowledge of music, Scharpf explains how individual notes can be combined into chords and used in a variety of instances to create different songs. And even when it may seem like there are some limitations in songwriting, different tools and methods can help facilitate the creation of something new. Scharpf compares this system to the financial industry and tells his audience how this type of thinking also applies to their careers. There may be times when different parts of a system utilized with other tools can create something new and innovative. It’s just a matter of thinking outside the box.
Bits & Pieces
By John J. Lothian
Today’s MarketsWiki World of Opportunity Summer Intern Education Series video of Matthew Scharpf is one not to miss. Matt deployed his musical skills and experience to tell a fascinating story of systems, complexity, innovation and opportunity, in music and the markets.
Speaking of missing things, we miss Doug Ashburn who has been away with his wife Nancy at the Burgenstock Conference in Geneva, Switzerland. His absence has proved to us what an important part of the glue of our organization he is. He is a staple of the office where his running commentary is like one gag after another. We hope he sticks around his desk in the office for a while when he gets back.
Euronext is in Chicago next week for a derivatives event where Lee Hodgkinson, CEO of Euronext London & Head of Market and Global Sales, and his Derivatives Team will provide an update on the development of Euronext’s range of futures products, including how they are bringing major innovations to our financials and commodities futures space.
And the winner is…
Seems there were a lot of award winners yesterday, including a lot of friends and sponsors. We don’t want to leave anybody out, but we don’t have room up top here either, so we made a special section today just below Lead Stories with all the announcements. Scroll down and see who got a thumbs-up, and congratulations to all!
How CME Group is investing its startup-focused fund
Kate MacArthur, Special to Blue Sky – Chicago Tribune
With financial markets increasingly dependent upon technology, CME Group Inc. is investing in tech startups. In May, the company, which owns the Chicago Board of Trade and the Chicago Mercantile Exchange, launched a startup-focused fund called Liquidity Ventures 1 LLC. Mark G. Fields, CME’s managing director-strategic investment group, leads it. He’s a 13-year company veteran who has worked in corporate strategy and development to mergers and acquisitions. He shares how the fund focuses its $500,000 to $5 million investments.
***** I think I will start a new tech startup. It is a camera that you wear on your head while you trade. I will call it GoTradeALot.
Profiles: Lee Stern
Lee Stern has seen it all in his career – the highs of great markets and the lows of market scandal. After completing his military service in 1947, Stern found his way to the Chicago Board of Trade after answering an ad for a runner on the floor. Stern recalls the thrill of making his first spread trade and the low point in 1992, when a customer schemed to manipulate the bond market and lost $9 million. That event led to a brief suspension and its eventual exit as a clearing member firm.
And if trading was his first love, his second is certainly professional sports – as the founder and owner of the Chicago Sting soccer team and then as a part owner of the Chicago White Sox. John Lothian News presents the story of a career that has spanned more than six decades – and counting.
Canada prepares for derivatives transparency overhaul
Marisol Collazo, DTCC – John Lothian News
Following the September 2009 commitment by G20 leaders to improve the integrity of the markets, reporting of derivatives trades to trade repositories has become critical to regulatory efforts to monitor and detect the build-up of risk in the financial system.
Commodity Outliers Attract Investors
Leslie Josephs – WSJ
Hedge funds and other money managers are flocking to small markets ranging from cocoa to coffee to cattle that have defied a broader plunge in raw-materials prices. These investors are betting on goods that are seeing demand soar as emerging-market countries become wealthier and their middle classes expand, increasing demand for products such as chocolate and hamburgers.
***** I have found a lot of outright liars in commodities.
You’ll never guess what this ATM sells
Katie Holliday – CNBC
Vending machines usually conjure thoughts of food and drinks, but one firm is tapping consumers’ love for something much more expensive: gold. Two Smart Gold ATMs – vending machines that dispense a range of 24 karat gold items – were launched in Singapore this week at the Marina Bay Sands Hotel and Resorts World Sentosa, luxury venues that attract wealthy Singaporeans and a plethora of tourists.
***JM: I can’t tell you the number of times when I’ve been caught a little short, and there’s no time to find a reputable goldsmith.
OIC Announces Investor Education Day In The Chicagoland Area October 11
The Options Industry Council (OIC) today announced that its third Investor Education Day (IED) for 2014 is taking place in Rosemont, IL on October 11. The event begins at 9:00 a.m. with registration opening one hour prior at 8:00 a.m. Coffee breaks and lunch are included.
The Investor Education Day offers two different tracks for attendees based on their investment experience and skill level – Options Basics or Advanced Strategies. Options Basics examines fundamentals, such as basic strategies and the risks and rewards of using options, while Advanced Strategies will focus on more complicated concepts such as position management and the Greeks.
Interested parties can obtain schedule and location details and also register through OIC’s website,http://www.optionseducation.org/ied, or by calling 1-888-OPTIONS (1-888-678-4667).
Julie Winkler, Senior Managing Director of Research and Product Development at CME Group – Innovation in the Futures Industry
“You can’t keep doing the same thing. You need to figure out different ways to innovate, different ways to collaborate…and by doing so, that’s how you come up with some breakthrough innovations.”
Einstein’s definition of insanity was repeating the same task over and over and expecting a different result each time. Julie Winkler of CME Group explains how innovation in the financial industry must also avoid repeating the same process over and over again in order to create change. Winkler defines innovation and gives examples of how companies like CME Group have been pioneers in their field. She also discusses designing successful new products and how innovation can start at the internship level.
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CME loses Asia head following reshuffle
Jeremy Grant in Singapore – Financial Times
CME Group, one of the world’s largest exchange operators, has lost its Asia head in a surprise departure that comes as industry rivals are ramping up in the region in a bid to capture growing demand for futures trading. The exchange said that Julien Le Noble, Singapore-based head of CME for the past three years, had submitted his resignation this week. He gave no reason.
Quick View: FX industry gets organised
Philip Stafford – Financial Times
It’s the world’s biggest, most liquid and most accessible market and is closely watched by governments and central banks alike. Yet now the foreign exchange market also feels the need for a lobby group to look out for its interests.
William H. Gross Joins Janus Capital
Janus Capital Group Inc. today announced that William H. Gross, world-renowned fixed income investor, will be joining Janus Capital Group. He will manage a recently launched Janus Global Unconstrained Bond Fund and related strategies, and will join Myron Scholes, Ph.D., and other members of the Janus team focused on global asset allocation.
Pimco ETF Probe Spotlights $270 Billion Market Vexing Regulators
Nabila Ahmed, Sridhar Natarajan and Sam Mamudi – Bloomberg
The U.S. regulatory probe into Bill Gross’s Pimco Total Return ETF (BOND) is highlighting an industry that supervisors say may pose an increasing risk to the stability of the bond market.
U.S., Europe Hit Impasse Over Rules on Derivatives
Andrew Ackerman, Katy Burne and Viktoria Dendrinou – WSJ
U.S. and European policy makers have hit a snag in their postcrisis efforts to coordinate on international rules for derivatives, which played a central role in the 2008 meltdown. The two sides are at loggerheads over the regulation of clearinghouses—entities that are supposed to help prevent a market-wide collapse by ensuring either party in a derivatives transaction would get paid if the other side falters.
How key London benchmarks are calculated
Sam Fleming – Financial Times
The UK government is giving regulators the power to police seven key financial market benchmarks, as part of an effort to prove that Britain is clamping down on London’s scandal-tainted financial markets. These are the benchmarks that will come under formal oversight.
A Murky Process Yields Cleaner Professional Records for Stockbrokers
Susan Antilla – Dealbook – NY Times
As a former stockbroker whose regulatory file included 41 customer complaints and a job termination, Kathleen J. Tarr was concerned that her reputation had been hurt by accusations that she had disputed. So, like an increasing number of brokers, she sought to have some negative information expunged from her record.
And The Winner Is…
CME Group Named ‘International Exchange of the Year for Asia’ by Futures & Options World for the third year running
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the company was named ‘International Exchange of the Year for Asia’ by Futures & Options World (FOW) at the 3rd FOW Awards for Asia 2014. The awards ceremony held on 25th September 2014 in Singapore recognized CME Group’s excellence in the launch of products and services for the Asian market in the past year.
Trading Technologies Named “Trading System of the Year, Buy-Side” at FOW Asia Awards
Trading Technologies International, Inc. (TT), a provider of high-performance professional trading software, was awarded “Trading System of the Year, Buy-Side” by FOW magazine at the FOW Asia Awards today in Singapore. This marks the third consecutive FOW Asia Award for TT, after winning “Best New Product, Connectivity” last year and “Professional Traders ISV of the Year” in 2012.
Fidessa’s Derivatives Platform Wins Trading System Of The Year
Fidessa group plc has won Best Sell-side Trading System of the Year for the second year running at the Futures and Options World (FOW) Asia Awards. These awards recognise the best performers and suppliers in the Asian derivatives industry and the winners were announced at a gala dinner in Singapore last night. Fidessa also received the same accolade at FOW’s International Awards in London in 2013.
Orc Wins FOW Award For Asia For Best New Risk Management Product
Orc, a global leader in derivatives trading technology, today announced that its pre-trade risk system, Orc Flow Control, has been selected “Best New Product for Risk Management of the year” at the 2014 FOW Awards last night in Singapore. Using Orc Flow Control, firms can efficiently manage order flow and ensure regulatory compliance, allowing them to capture new customer business.
SGX, Asia Pacific Exchange of the Year
SGX was named “Asia Pacific Exchange of the Year”, “Asia Central Counterparty (CCP) of the Year”, and “Clearing House of the Year”. SGX was also won the “Best Innovation by an Exchange” for its SGX Iron Ore Futures and “Best New Contract in Currency” for its INR/USD Futures contract. These awards were presented respectively in London and Singapore.
KRX Won The Asia-Pacific Structured Products And Derivatives Award
The Korea Exchange (KRX) was awarded the 2nd for the Best Exchange and the 3rd for the Best Index Provider at the Asia-Pacific Structured Products & Derivatives Award held in Hong Kong on the 17th September.
OSE Wins FOW Exchange of the Year Award for Asia
Osaka Exchange, Inc. (OSE), Japan’s Largest Derivatives Exchange and mother market of Nikkei 225 Futures and Options, has been Voted as Best Asian Derivatives Venue, At FOW Awards for Asia 2014.
KVH Co., Ltd. Receives FOW Asia Data Centre Of The Year Award
KVH Co. Ltd., Asia’s leading information delivery platform headquartered in Tokyo, Japan, announced today that the company has won the 2014 Futures and Options World (“FOW”) Data Centre of the Year Award for Asia.
NZX Celebrates Win At Futures & Options World
NZX’s Dairy Futures Market won Best New Agricultural Contract at the Futures & Options World (FOW) Awards for Asia, announced at a dinner in Singapore last night.
FD Wins Market Surveillance System Of The Year – FOW Asia
First Derivatives, a leading provider of software and consulting services to the capital markets industry, has won Market Surveillance System of the Year at the Futures and Options World (FOW) Asia awards.
UK considers broader scope for benchmark rules
John Bakie – The Trade
The UK government has launched a consultation on whether it should extend its regulation of Libor to other key financial benchmarks.
US private equity firms wake up to EU compliance risks
Laura Kreutzer – Financial News
When new European Union rules on alternative investments came into force in July, most US private equity firms yawned. They believed there was no urgent need to take out a licence under the Alternative Investment Fund Managers Directive – there were other ways to comply with it, cheaper and much less laborious.
FCA creates 15-strong supervision team to scrutinise retail funds
Dan Jones – Investment Week
The Financial Conduct Authority has created a dedicated fund supervision unit to regulate and monitor individual retail funds for the first time, in a bid to better safeguard investors and consumers.
FCA about-turns on IFA referrals to specialists
Nick Paler – Investment Week
A financial advisory business can permit its advisers to refer clients to specialist colleagues within the company and remain independent, following an about-turn by the Financial Conduct Authority (FCA).
FDIC’s Hoenig Keeps Wall Street on Edge
Ryan Tracy – WSJ
One month before he assumed the No. 2 post at the Federal Deposit Insurance Corp., Thomas Hoenig sat before a group of global bankers in Tokyo and told them he believed their firms ought to be broken apart.
CFTC’s Global Markets Advisory Committee to Meet October 9, 2014
The meeting will focus on issues related to clearing Non-Deliverable Forwards (NDFs) and the digital currency bitcoin. The meeting will consist of two panels. The first panel will discuss whether a clearing mandate is appropriate for NDFs, with a particular focus on how such a mandate would impact foreign exchange contracts. The second panel will discuss CFTC’s jurisdiction with respect to derivatives contracts that reference the digital currency bitcoin.
Remarks by Richard Ketchum From the Financial Policy Joint Conference on Market Fragmentation, Fragility and Fees
JWG Research “G20 Fin Serv Reform: Will You Survive Or Thrive?”
JWG, the independent think tank for the financial services industry, is today publishing their much anticipated analysis report, ‘G20 FS reform: will you survive or thrive?’
Exchanges & Trading Facilities
Polish bourse plans big push in derivatives and debt markets
Clare Hutchison – Reuters
The Warsaw Stock Exchange (WSE), central Europe’s largest bourse, will prioritise developing its derivatives, commodities and debt capital markets to complement its existing cash equities market in a new strategy to be unveiled next month.
BM&FBOVESPA And China Financial Futures Exchange Sign Memorandum Of Understanding
BM&FBOVESPA (BVMF) and China Financial Futures Exchange (CFFEX) announce they have agreed a memorandum of understanding (MOU) to enhance mutual understanding, promote bilateral support and facilitate development for both exchanges. The main scope of exchanges agreement covers information sharing, high level dialogue, training and staff exchange and business cooperation.
KCG Launches New FX Dark Pool
Profit & Loss
KCG Holdings has announced the launch of Hotspot QT, a new dark pool designed for firms needing to trade large spot FX orders
Moscow Exchange: Changes To Equity Market Liquidity Support Program
Hedge Funds & Managed Futures
Woodford: Fund managers have overcharged customers
Nick Paler – Investment Week
Neil Woodford has criticised his own industry for charging customers too much and paying managers too high a price for tracker-style performance, in an interview with the BBC.
Smith & Williamson multi-manager exits after fund review
Julia Rampen – Investment Week
Nick Marshall has left Smith & Williamson Investment Management after the firm overhauled its portfolio strategy recently.
Listed single-manager hedge fund performance offers solace
Luke Clancy – Risk.net
Calpers may have ditched a $4 billion hedge fund portfolio due to its poor performance but listed single managers continue to beat returns from the S&P 500
Banks & Brokers
Post-crisis push for more women on bank boards succeeding
Paige Long – Risk.net
Female representation on bank boards has increased in the aftermath of the financial crisis – a trend that could mean better business performance and risk management, research suggests
MOVES-Deutsche expands U.S. exchange-traded products team on East Coast
Ashley Lau – Reuters
Deutsche Bank AG, which has been building out its exchange-traded products business in the United States, said on Thursday it hired four new regional vice presidents on the East Coast.
BAML cuts hit London staff
Lucy Burton – Financial News
Bank of America Merrill Lynch has made a round of job cuts to its investment banking business in London, according to people familiar with matter, with its sales and trading operation being one area hit.
Guggenheim Securities Agrees To Acquire Lazard Capital Markets’ London Operations, Hires Staff Of 10 Professionals
Guggenheim Securities, the investment banking and capital markets division of Guggenheim Partners, today announced the execution of a definitive purchase agreement to acquire the London operations of Lazard Capital Markets (LCM), expanding the firm’s international presence. Consummation of the transaction is subject to approval by the Financial Conduct Authority.
Clearing & Settlement
CDS rules conjure more cross-border disparity
Jon Watkins – The Trade
The derivatives market has taken its chance to challenge European regulation on central clearing of credit default swaps (CDS), highlighting once again the inconsistency between Brussels proposals and US rules.
Guide breaks down rules and operations of CCPs
The Futures Industry Association (FIA Global) has launched an insight into the operations and rules of central counterparties (CCPs), which have been placed at the centre of global derivatives reforms.
Newedge recruits clearing expert from Morgan Stanley
Jon Watkins – The Trade
Newedge has bolstered its clearing operations with the addition of former Morgan Stanley executive director Jamie Gavin.
CME Group – Margins: Performance Bond Requirements: Coal, Crude Oil, Electricity, Natural Gas, NGLs, Petroleum Spread Outrights; Agriculture, Crude Oil, Electricity, Environmental, Ethanol, Interest Rates & ERIS Inter-Commodity Spread Credits; Interest Rates Short Option Minimum Charges- Effective Friday, September 26, 2014
Indexes & Products
China A-shares close to joining global benchmarks, FTSE says
Chris Vellacott – Reuters
Index provider FTSE is moving closer towards accepting China A-shares in its benchmarks after the country failed on only two of nine criteria in a qualification test, a senior analyst at the firm said.
S&P Dow Jones Indices And Toronto Stock Exchange Launch Two New Factor Based Indices – S&P/TSX Composite Shareholder Yield Index Licensed To Horizons ETFs
Sara Jean Goodman And Paul Dimtsis Join Born Technology Global Team
To handle its continued growth of international clientele and product development, Born Technology announced today that Sara Jean Goodman and Paul Dimtsis have joined the firm’s sales and marketing teams. Goodman joins as Director of Sales and Marketing and is based in Chicago. Dimtsis comes on board as Managing Director of Sales and is based in Toronto.
The Future of Trading: It’s in the Cloud
Trade Talk – The Future of Trading
Recently I was interviewed by FOW magazine about the growing adoption of cloud computing in finance and trading. As we are both a provider and consumer of cloud services, we have an interesting, credible perspective.
UTP to Decide SIP Processor in Oct., After Renewing Nasdaq as SIP Administrator
Faye Kilburn – WatersTechnology
The UTP Operating Committee, the industry body that oversees the operation of the US consolidated feed of quote and trade data on Tape C Nasdaq-listed stocks, will appoint a new tape processor next month, after selecting Nasdaq OMX as administrator of the tape this week, responsible for overseeing functions such as licensing, billing, contract administration and client relationship management, and record keeping.
Windy Apple Tech Says Low-Latency Transatlantic Wireless Net Possible in 18 Months
Max Bowie – WatersTechnology
Jersey City, NJ-based Windy Apple Technologies, which operates a low-latency microwave network between New York and Chicago for high-frequency traders, is claiming that it can construct a similar wireless network over the Atlantic Ocean, drastically reducing latency between financial market centers in New York and London.
Born Taps NYSE’s Dimtsis for Canada Sales
Max Bowie – WatersTechnology
Born Technology, a Chicago-based exchange connectivity and co-location technology provider, has hired Paul Dimtsis as managing director of sales, based in Toronto.
U.S. SEC wins hundreds of millions in Wyly fraud case
Texas tycoon Sam Wyly and his late brother Charles’ estate must pay hundreds of millions of dollars to the U.S. Securities and Exchange Commission for a fraudulent offshore scheme, a U.S. judge said on Thursday, one of the largest awards ever imposed on individual defendants.
SEC Charges Arizona-Based Software Company for Inadequate Internal Accounting Controls Over Its Financial Reporting
The Securities and Exchange Commission today sanctioned a Scottsdale, Ariz.-based software company for having inadequate internal accounting controls over its financial reporting, which resulted in misstated revenues in public filings.
SEC Suspends Trading in Nine Penny Stocks in Ongoing Initiative to Combat Microcap Fraud
The Securities and Exchange Commission today announced suspensions in trading for nine different penny stocks as part of an ongoing enforcement initiative to combat microcap fraud.
CFTC Orders Absa Bank, Ltd. to Pay $150,000 Civil Monetary Penalty for Unlawfully Executing Prearranged, Noncompetitive Trades on the CBOT
CFTC Orders Florida Resident Louis J. Ferone to Pay Restitution and a Civil Monetary Penalty Totaling More than $155,000 for Engaging in Illegal, Off-Exchange Precious Metals Transactions
CFTC Charges Gregory Christopher Evans with Unauthorized Trading and Concealing Trading Losses
Esma: swap reporting rule-breakers shouldn’t ‘sleep calmly’
Tom Osborn – Risk.net
“Nobody is talking about millions in fines yet. But we need to ensure… we aren’t talking about millions in fines seven years from now,” Esma official tells conference
US Bank to pay $57 million over add-on products-regulators
The U.S. Office of the Comptroller of the Currency on Thursday said US Bancorp agreed to pay about $57 million because of problems related to identity theft protection products it sold consumers.
S&P wins right to Geithner documents in $5 billion U.S. fraud lawsuit
Jonathan Stempel – Reuters
A federal judge said former U.S. Treasury Secretary Timothy Geithner must give Standard & Poor’s documents he used when writing his best-selling memoir, a ruling that could help S&P defend against the government’s $5 billion fraud lawsuit over its credit ratings.
Carlyle investors to share in collusion suit settlement costs
Sam Sutton – Reuters
The Carlyle Group’s $115 million settlement of a lawsuit alleging that it colluded with other buyout shops to depress deal prices will be paid through a combination of Carlyle Partners IV fund capital, insurance, balance sheet capital, and contributions from some employees of the firm, according to a source.
Environmental & Energy
7 important outcomes from the U.N. Climate Summit
Jennifer Morgan, GreenBiz.com
Yesterday’s U.N. Climate Summit brought together more than 125 heads of state and government officials—the largest-ever climate meeting of world leaders.
Brazil refuses to join pledge to end deforestation
Brazil has refused to sign up to a pact setting a deadline for ending deforestation entirely by 2030.
***LB: Also in this story “The US, Canada and European Union nations were among 30 states that agreed to halve forest loss by 2020 and work towards a 2030 goal.”
Tim Cook: Transparency is key to Apple’s climate change strategy
Jessica Shankleman, BusinessGreen
It is unusual to hear one of the world’s most secretive companies tout the need for transparency. But Apple’s Tim Cook did exactly that this week when he underlined the need for greater corporate action to tackle climate change.
SGX’s Bocker wants board lots phased out
Kenneth Lim – Business Times
Singapore Exchange (SGX) chief executive Magnus Bocker has pledged his commitment to eventually do away with board lots, and has spoken up for retail participation and sustainability as he outlined strategies to address lacklustre markets.
Thai Bourse Appoints New Senior Vice President For Product Development
The Stock Exchange of Thailand (SET) has appointed Rinjai Chakornpipat as Senior Vice President and Head of Product Business Development, to further enhance SET’s investment instruments and diversify to new businesses in order to meet investors demand efficiently and effectively.
Hermes launches China fund offering direct access to A-share market
Julia Rampen – Investment Week
Hermes has partnered with Hong Kong based fund manager CSOP Asset Management to launch a China A Shares fund run by some of the country’s own up and coming stockpickers.
KRX swaps approval held up by HanMag loss – Isda’s Noyes
Catherine Contiguglia – Risk.net
European authorities wary of Korean swaps clearer following futures losses, says Asia-Pacific regional director for Isda
HKFE Announces Revised Margins For Futures Contracts
Shenzhen Stock Exchange Medium-And-high Credit And Medium-And-low Credit Indices Issued
Malawi Stock Exchange Weekly Trading Report – 26 September, 2014
MCX Weekly Market Report September 19, 2014 – September 25, 2014
Egyptian Exchange Issued Its First Follow-Up Report On Its Strategic Plan
Dubai Financial Market Welcomes The Listing Of Marka – The First IPO-Listing Since 2009 Heralds A New Era Of Thriving Activity