First Read

Flash Boys Stories


Comment: High frequency is the wrong debate
By Niki Beattie, FT
The rate at which supposedly intelligent people on both sides of the Atlantic are piling into the high-frequency trading debate with misinformation is somewhat alarming

***** I prefer a holistic debate.


Opinion: Exchanges are like casinos where certain players can see your cards
By Lex van Dam, Hedge fund manager, Special to CNN
(CNN) — When a fake Twitter message from the Associated Press issued reports of two explosions at the White House last April, the Dow lost 140 points and S&P futures dropped 20 points. Over $10 billion traded before recovering within a few minutes, when it became clear that the report was not genuine. It later turned out that the AP Twitter account had been hacked. The previous day Google had experienced a flash crash, dropping $20 in split of a second, before making it back within the next second.

***** No one can see your cards, but some traders certainly can guess them at a high probability. Of course, in the trading pit, it was a lot easier to see an order coming in. Let’s see, Joe is the buy broker and and there is a line of runners trying to get to him. I wonder what that means?


The Front-Runners of Wall Street
By NANCY FOLBRE, New York Times
Nancy Folbre is professor emerita of economics at the University of Massachusetts, Amherst. In the world of financial trading, a front-runner is someone who gains an unfair advantage with inside information, including access to a high-speed transaction network revealing specific trades other people are trying to make.

***** This distinguished professor defines front-running, then does not use the definition in her analysis.


Intrade’s New Gamble Is Sports Betting
By Joshua Brustein, Bloomberg
Intrade was riding high in November 2012, as its user base correctly predicted the presidential vote in every state but Florida. Less than three weeks later, it fell off a cliff. The U.S. Commodity Futures Trading Commission sued the company, claiming that its exchange illegally enabled speculation on the value of gold and currencies and on the probabilities of acts of war. Intrade’s legal problems quickly drove away users fearful of being dragged into the proceedings; within months, the company could no longer cover its remaining customers’ deposits. It shut down in March 2013.

***** Let’s try this again shall we, without the untimely mountain climbing.


ETrade replaces baby with actor Spacey
By Zeke Faux / Bloomberg News
ETrade Financial Corp., represented for the past six years by an arrogant talking baby, has hired actor Kevin Spacey as a pitchman to appeal to investors who want help planning for retirement.

***** ETrade now has House of Cards pitchman?


Gary DeWaal and Associates: Regulatory Update
The financial services industry seemingly took a pause last week either to read or watch debates about Michael Lewis’ new book, Flash Boys. I would be derelict not to add my views to the fire.

***** Gary DeWaal is probably working harder now than when he was at Newedge, not that he did not work hard then.


Actor Mickey Rooney, brash star of 1930s and ’40s, dies at 93
By Bill Trott
Actor Mickey Rooney, who became the United States’ biggest movie star while still a brash teenager in the 1930s and later a versatile character actor in a career that spanned 10 decades, died on Sunday.

***** I have an idea, let’s put on a show!


CME Group Jobs
Here are some jobs the CME is looking to fill:

Energy/Metals Research and Product Development Internship – Summer Perform statistical analyses and data support in support of model building, commercial analyses and competitive analyses in the Energy/Metals industry. Additionally, will be required to prepare regulatory reports and submissions. . Requirements: Masters level degree or equivalent experience, in finance, economics, or related field. Familiarity with stochastic calculus, financial engineering applications.

OTC Solutions Internship – Summer Student Intern, CME Direct and CME SEF is a role supporting the CME Swap Execution Facility and CME Direct product & sales teams in expanding, diversifying and globalizing our customer base. Primary responsibilities for the position include conducting analysis and developing business models in support of of the OTC strategy and day-to-day execution of this strategy including, market sizing, pr

Client Development & Sales Reports/Information Summer Internship CD&S Reports/ Information intern you will contribute to the continued development and expansion of reporting and metrics to provide greater transparency and demonstrate the progress of the CD&S Global Sales Team. Tasks including but not limited to research and development of information relating to SFDC data management, target clients and some additional administrative projects in support

Market Risk Management Summer Internship: Assist the Market Risk department with customer inquiries regarding risk management topics, data analysis, report generation, testing efforts, and ad-hoc projects.

Strategy and Planning Internship The Product & Services, Strategy and Planning (PSSP) group at CME Group is responsible for developing strategies and business goals, providing cross-asset-class competitive perspective to strategies and plans, and coordinating and prioritizing the execution of those activities across multiple divisions. The group also works with the product groups and divisions to optimize our business policie

Sr. Security Engineer Sr. Engineer Job description: In general, the successful candidate will be responsible for architecting, documenting and managing CME Group network and agent-based security infrastructure. The candidate will also act as tier II support for security operations center and serve as key member of the Computer Incident Response Team. Help develop standard operating procedures for use and consumption of

Commodity Sales Director The Commodity Sales Director will work with the ED, Head of Sales and the Energy, Metals and Agriculturals team to identify and engage clients. The candidate must have in depth product knowledge in


JLN/MarketsWiki 2014 Annual Survey – Please Give us 30 Seconds of Your Time
John Lothian News
You still have time to fill out our quick demographic survey and get in the running for your choice of an iPad Mini or a pair of Bose Quiet Comfort Noise-Canceling Headphones. The cost is a mere 30 seconds of your time. Answers will be kept confidential.


Exchange CEO Series – Big Crowd: ISE’s Gary Katz says crowded options field to get larger
In the derivatives space, there has been a consolidation or a proliferation of exchanges, depending on how you see it.

While the number of futures exchanges in the US has shrunk to two major players, International Securities Exchange president and CEO Gary Katz has seen the opposite happen in the US options marketplace. And there is good reason for it.

Watch the video »



Lead Stories

Dark markets may be more harmful than high-frequency trading
By John McCrank, Reuters
Fears that high-speed traders have been rigging the U.S. stock market went mainstream last week thanks to allegations in a book by financial author Michael Lewis, but there may be a more serious threat to investors: the increasing amount of trading that happens outside of exchanges.

Fallout From Speedy-Trading Flap Hits Brokers
By Bradley Hope, WSJ
Shares of E*Trade, Charles Schwab and T.D. Ameritrade fell last week amid concerns sparked by Michael Lewis’s book on high-speed trading. Brokerages that cater to mom-and-pop investors are emerging as an early victim of the intensifying scrutiny of high-speed trading.

Nasdaq setbacks test shareholder patience
By Arash Massoudi and Philip Stafford, FT
Seven months after an embarrassing outage on Nasdaq ground US stock markets to an unprecedented three-hour halt, Robert Greifeld and his executive team stood confidently in front of shareholders at the company’s annual investor day.

Beneath the Greifeld shell
By Arash Massoudi, FT
For a man on the front lines of speedy global trading markets, Robert Greifeld takes it a bit slower in his free time. At his New Jersey mansion, the chief executive of …

How NYSE, Nasdaq profit off ‘Flash Boys’
By Jonathon M. Trugman, NY Post
Michael Lewis’ “revelation” that the stock market is rigged by high-frequency traders who jump in front of other bidders to drive up the price of stocks dominated the discussion last week as his p.r. tour for “Flash Boys” rolled out.

Fears over Nasdaq hit from HFT problems seem overdone -Barron’s
(Reuters) – Concern over fallout from Michael Lewis’ new book “Flash Boys: A Wall Street Revolt” led investors to slam shares in exchange-related companies last week, but fears about Nasdaq OMX Group look overdone, according to an article in the April 7 edition of Barron’s.

New rules help stock exchanges fight back against ‘dark pools’
By Alistair Smout and Clare Hutchison, Reuters
The European Union’s plan to cap the number of shares that can be traded anonymously could give traditional stock exchanges such as Deutsche Boerse and the London Stock Exchange the chance to win back some of the ground they have lost to new rivals.

‘Asian century’ to dominate global markets
By Paul J Davies, FT Currencies
A financial revolution will be needed to drive Asian growth, which will mean China’s bond markets, for example, will become ten times bigger by 2030
Imagine you are a currencies or commodities trader in London in the year 2050. What do you think would be happening at around 10am?

Justice investigating high-speed trading
By Peter Schroeder, The Hill
The Justice Department is investigating whether high-frequency traders are violating insider trading laws.

Holder Vows High-Speed Trading Probe to Protect Markets
By Del Quentin Wilber, Keri Geiger and Patricia Hurtado, Bloomberg
U.S. Attorney General Eric Holder promised Congress a thorough investigation into whether high-frequency trading violates laws against insider trading.

SEC Charges Owner of N.J.-Based Brokerage Firm With Manipulative Trading
Firm and Co-Owners Charged With Registration Violations
Washington D.C., April 4, 2014 —The Securities and Exchange Commission today charged the owner of a Holmdel, N.J.-based brokerage firm with manipulative trading of publicly traded stocks through an illegal practice known as “layering” or “spoofing.”

BlackRock shakes up management amid succession planning
By Ashley Lau and John McCrank
(Reuters) – BlackRock Inc (BLK.N) is reorganizing its senior management ranks as the world’s largest money manager works towards an eventual succession plan for Larry Fink, its chief executive officer and co-founder.

Interdealers try on the exchange business for size
Sarah Spikes, Financial News
If imitation is the sincerest form of flattery, stock exchanges should feel flattered. As part of the G20’s agenda to prevent another financial crisis, over-the-counter derivatives, which are currently traded over the phone by interdealer brokers, are to be forced onto electronic trading platforms where regulators think they can keep a better eye on what’s going on.

Can Ice quench its thirst for Liffe?
Anish Puaar, Financial News
After sealing its position as one of the world’s largest stock exchange operators with the acquisition of NYSE Euronext last November, the IntercontinentalExchange’s next challenge will be to position the new entity to capitalise on the revolution facing global derivatives markets.

Ex-ABN Banker Schmittmann, Wife, Daughter Found Dead at Home
By Martijn van der Starre, Bloomberg
Former ABN Amro Group NV Netherlands Chief Executive Officer Jan Peter Schmittmann, his wife and a daughter were found dead at their home yesterday after a possible “family tragedy,” Dutch police said.


SEC forms squad to examine private funds
Greg Roumeliotis and Sarah N. Lynch, Reuters
The U.S. Securities and Exchange Commission has put together a dedicated group to examine private equity and hedge funds, after the 2010 Dodd-Frank law required the funds to be regulated, according to people familiar with the matter.

Commodity Futures Trading Commission (CFTC) Issues Interpretation Regarding Auditor Independence Standards
By:Kevin M. Foley, Blake J. Brockway, Katten Muchin Rosenman LLP

Exchanges & Trading Facilities

ICE Announces Successful First Week for Liffe Ultra Long Gilt Futures
IntercontinentalExchange Group the leading global network of exchanges and clearing houses, today provided an update on the first week of trading for 30 Year Ultra Long Gilt futures listed on Liffe. The contract launched on March 31, 2014 with strong first week volumes of 9,214 contracts traded and open interest of 2,634 as at April 4, 2014.

Deutsche Börse chief bets on growth in Asia
Michelle Price, Financial News
The global exchange sector has experienced a flurry of mergers and acquisitions over the past year, but one exchange operator continues to be unlucky in love: Deutsche Börse Group.

Genomic Vision celebrates successful listing on Euronext Paris
EnterNext, the Euronext subsidiary designed to promote and grow its market for SMEs,today congratulated Genomic Vision,a biotechnology company specialising in molecular diagnostics for genetic diseases, on its successful listing in compartment C of Euronext’s regulated market in Paris.

Charles Li Direct
Are we asking the right questions about weighted voting rights?
Now that Alibaba has gradually faded from media attention, maybe our market can finally have a more rational and open discussion about weighted voting rights and our future competitiveness. Some in the market have lamented Hong Kong’s “loss” of Alibaba’s IPO, but most are busy congratulating the city for “standing its ground” and not abandoning its core values.

U.S. exchanges may show LME a way out of its warehouse dilemma
By Susan Thomas and Veronica Brown, Reuters
The way U.S. commodities exchanges are dealing with warehouses could offer a template for the London Metal Exchange (LME) to reform its chronically logjammed storage system, the backbone of the world’s biggest metals marketplace.

Sucessful start of EurexOTC Clear roadshow 2014
In total 270 guests joined for the second annual EurexOTC Clear roadshow by now. The first conferences took place at the Jumeirah in Frankfurt and the Berkley Hotel in London. Representatives from the buy and sell side heard remarkable speeches and discussed the latest developments in the OTC clearing arena, ranging from cross margining, client clearing documentation to the EMIR requirements for disclosure of levels of protection and pricing. Best networking opportunities were appreciated at the cocktail reception afterwards.

Aquis Exchange Appoints Richard Bennett As An Independent Non-Executive Director
Aquis Exchange, the subscriptions-based European equities exchange*, today announced that Richard E T Bennett has joined its board as an independent non-executive director.

SGX Launches Clearing Of Non-Deliverable Interest Rate Swaps
Singapore Exchange (SGX) is pleased to launch the clearing of Non-Deliverable Interest Rate Swaps (NDIRS) in Malaysian Ringgit and Thai Baht on 7 April 2014. This new asset class, which will be settled in US dollars, further augments SGX’s current suite of Over-the-Counter (OTC) Financials clearing which includes Interest Rate Swaps (“IRS”) in Singapore Dollar and US Dollar and Non-Deliverable Forwards (“NDF”) in seven Asian currencies.

HKFE Announces Revised Margins for HKEx Futures

MarketAxess Announces Monthly Volume Statistics for March 2014
MarketAxess Holdings Inc. the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, announced total monthly trading volume for March 2014 of $65.0 billion, consisting of $41.0 billion in U.S. high-grade volume, $18.2 billion in other credit volume, and $5.8 billion in liquid products volume. This data can be accessed on MarketAxess’ website at

Hedge Funds & Managed Futures

Fortress to Tudor Lose in First Quarter as Macro Misfires
By Katherine Burton and Saijel Kishan, Bloomberg
Paul Tudor Jones, Michael Novogratz and Louis Bacon, hedge-fund managers that profited last year from bets on macroeconomic trends, posted losses in the first quarter as some of those trades turned against them.

Funds industry hits back over size concerns
Sarah Krouse in New York
Financial News
Leverage poses a greater risk to the financial system than the size of fund managers, say industry representatives
Leverage, not size, should be the key metric in looking for non-bank, non-insurer financial firms that could rattle the financial system if they failed, according to senior representatives from the $53 trillion investment industry.

The Oracle of Omaha, Lately Looking a Bit Ordinary
Warren Buffett is probably the most famous investor of his generation, and for good reason: His track record over the long term is a thing of beauty. He has beaten the market by a wide margin over 49 years, a record so impressive that it’s used in finance classes as a textbook example of “alpha.”

The Richest Rich Are in a Class by Themselves
By Peter Coy, Bloomberg
The rallying cry of the Occupy Movement was that the richest 1 percent of Americans is getting richer while the rest of us struggle to get by. That’s not quite right, though. The bottom nine-tenths of the 1 Percent club have about the same slice of the national wealth pie that they had a generation ago. The gains have accrued almost exclusively to the top tenth of 1 Percenters.

Closed-End Funds Look Appealing, but Weigh the Risks Bond Funds Are Offering Enticing Payouts, but There Are Big Differences From Standard Funds
By Liz Moyer, WSJ
In many ways, closed-end funds are just like their larger and higher-profile cousins, conventional mutual funds and exchange-traded funds: They all sell shares to investors and use the money to buy securities.

BlackRock’s Asia Chief Heading to New York
by Mia Lamar, WSJ MoneyBeat
The world’s largest asset manager on Monday said Mr. McCombe has been named head of its institutional client business and chairman of its alternatives unit, based out of the company’s New York headquarters.

Banks & Brokers

GAIN Capital Acquires Galvan Research, UK’s Leading CFD Advisory Service
LONDON, NEW YORK and SYDNEY, April 7, 2014 /PRNewswire/ –GAIN Capital Holdings, Inc. (GCAP), a global provider of online trading services, today announced the acquisition of Galvan Research, the UK’s leading Contract For Difference (CFD) advisory business.

Retail Brokers Add IEX as Venue After Media Frenzy over HFT
Ivy Schmerken, WallStreetAndTech
TradeStation and Interactive Brokers said they will offer Brad Katsuyama’s IEX as an execution venue to investors, while Charles Schwab spoke out against HFT this week.
Michael Lewis’s new book “Flash Boys” about high frequency trading whipped up emotions across Wall Street this week, but it has led retail brokers and regulators to take action.

Goldman Trumped JPMorgan Last Year, So Why’s Dimon’s Pay Higher Than Blankfein’s?
Halah Touryalai, Forbes
Wall Street compensation packages are always going to baffle the general public, but JPMorgan Chase’s JPM -1.4% pay package for its CEO is particularly notable this year.

Clearing & Settlement

Nasdaq Integrates NOS Clearing
James Rundle, WatersTechnology
Nasdaq OMX has completed the integration of NOS Clearing ASA into Nasdaq OMX Clearing AB, the exchange group announced today.
NOS Clearing, based in Norway, is a leading commodities clearer for tanker and dry cargo freight, iron ore, seafood derivatives, fuel oil and electricity certificates. Nasdaq has also introduced its Block Trade Facility for additional commodities instruments as part of the integration.

SIX Swiss Exchange upgrades trading platform
With SWXess Maintenance Release 5 (SMR5), the Swiss exchange focuses on the needs of its participants and improves the trading conditions.

Indexes & Products

Index Options Contracts whose Last Trading Day Approaches


GH Financials Selects Orc
Waters Technology
Order routing, clearing and settlement provider GH Financials has selected derivatives technology vendor Orc to support its execution processes.
GH Financials will take Orc’s Electronic Execution product as a managed service, which will also assist the firm’s expansion into options trading and allow it to provide market access for clients in a low-latency, high-frequency environment.

About One Third of Phishing Attacks Aimed at Stealing Money
ABINGDON, England, April 7, 2014 /PRNewswire/ — According to data collected as part of Kaspersky Lab’s ‘Financial cyber threats in 2013’ study, cybercriminals are trying harder than ever to acquire confidential user information and steal money from bank accounts by creating fake sites mimicking financial organisations. In 2013, 31.45 per cent of phishing attacks were trading on the names of leading banks, online stores and online payment systems – an increase of 8.5 percentage points from the previous year.

Kevin Green Joins Contango From Santander – Leading Derivatives Consultancy Also Strengthens Project Management Capability
Contango, the specialist derivatives consultancy, is delighted to announce a key addition to its burgeoning team of industry specialists with the arrival of Kevin Green, most recently, executive director at Santander as Director, Sales and Account Management.


IRS paid out $53M to whistleblowers in 2013
Associated Press
The IRS says it paid whistleblowers a total of $53 million last year for turning in tax cheats.

SEC Announces Additional $150,000 Payment To Recipient Of First Whistleblower Award
The Securities and Exchange Commission today announced that the whistleblower who received the first award under the agency’s new whistleblower program will receive an additional $150,000 payout after the SEC collected additional funds in the case.
The whistleblower, who the SEC did not identify in order to protect confidentiality, has now been awarded a total of nearly $200,000 since the award was announced on Aug. 21, 2012. The award recipient helped the SEC stop a multi-million dollar fraud by providing documents and other significant information that allowed its investigation to move at an accelerated pace and prevent the fraud from ensnaring additional victims.


Singapore Stock Probe Highlights Firms’ Ties
By Chun Han Wong and P.R. Venkat, WSJ
Months after a multibillion-dollar plunge of three stocks spooked investors in Singapore’s small-capitalization firms, a criminal probe into the crash has put a spotlight on extensive connections among companies, investors and executives.

Deutsche Bank Chairman Paul Achleitner backs Anshu Jain
Business Standard
Deutsche Bank has backed India-born co-CEO Anshu Jain, whose name figured in an ongoing probe into currency manipulation, saying he is doing an “excellent job”.

Tokyo Stock Exchange ETF/ETN Monthly Report For March 2014

MCX board to meet on Wednesday
Business Standard
The board meeting that took place last Thursday could not discuss preferential share issue which was on agenda
The Multi Commodity Exchange (MCX) has informed the BSE that a meeting of its board of directors would be held on Wednesday. The meeting will consider issues on which the last board meeting on Thursday failed to take a decision. The Thursday’s meeting could not discuss preferential share issue.

Frontier Markets

Rwanda bourse aims to boost listings, debt market in 2014
By Edmund Blair
KIGALI (Reuters) – Celestin Rwabukumba is this year scrambling to add a new financial listing on the Rwanda Stock Exchange, automate the bourse, launch a market for smaller firms and encourage more companies to use the debt market to raise capital.


Ask A Banker: Derivatives, Gambling And Getting Around Regulation
by Matt Levine, NPR
Hi! I am still here. I was once a banker and now I write for and answer your questions about banking and whatnot. You can send questions to with “ask a banker” in the subject line, or ask on Twitter (@planetmoney).

‘Reverse Auctions’ Draw Scrutiny
It is like an eBay of Washington, a well-appointed and well-connected online marketplace for lucrative government contracts.
Deals for everything from pens to pesticides, from painting offices to performing autopsies — all that and more is up for grabs on FedBid, a fast-growing private company that has positioned itself at the profitable nexus of government and business.

Bitcoin Under Fire
by Paul Vigna, WSJ MoneyBeat
After a charmed 2013, bitcoin is having a rougher go of it this year, which has thrust the Bitcoin Foundation into the spotlight as it tries to tone down the currency’s Wild West reputation and build a less volatile future for it.

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