First Read

“Money isn’t everything, Mortimer”
Carl Gilmore – KCG
So said the late Ralph Bellamy in his role as Randolph Duke in the memorable, and arguably best trading movie of all time – 1983’s “Trading Places”. While I wouldn’t put Randolph Duke (or his brother Mortimer for that matter) at the top of my list of role models, this quote (without the irony of course) has lots of relevance lately.

With some recent big-profile fines in the billions, it would appear that some executives will have some explaining to do to their boards and shareholders. Whether these astronomical fines will deter future wrong-doing remains to be seen. I suspect not much will change until “bad actors” do actual time in prison. What is obvious however, is that the authorities are taking a much tougher position in some cases. Not to worry if you conduct your business properly.

Since it is a holiday week, these fines started me thinking about what people have said about money over the years. Here are some of my favorites:

1. “I am not worried about the deficit. It is big enough to take care of itself.” – Ronald Reagan

2. “They usually have two tellers in my local bank, except when it’s very busy, then they have one.” – Rita Rudner

3.“What’s the use of happiness? It can’t buy you money.” – Henny Youngman

4. “If you lend someone $20 and never see that person again, it is probably worth it.” – Unknown

And lastly, best of luck to Team USA today as they take on Belgium in the round of 16 at the World Cup. London friends, if you are looking for a bandwagon to hop on, we’ve got plenty of room!


Man saved from Nazis by ‘Japan’s Schindler’ returns on journey of homage
Elaine Lies – Reuters
In 1940, a small Jewish boy fleeing the Nazis put in to a remote Japanese port, saved by a Japanese consul who issued exit visas from Lithuania against his government’s orders, rescuing thousands of desperate European Jews from certain death. Leo Melamed arrived in Japan with little more than the clothes on his back but went on to the United States, becoming a lawyer and head of the Chicago Mercantile Exchange (CME), where he introduced the idea of financial futures trading.


Speed Reader: FIA Europe’s Simon Puleston Jones making his way through MiFID II
EU regulation continues to wind its way through the system. That’s keeping Simon Puleston Jones a busy man.

As chief executive of FIA Europe, he’s busy making his way through the EU’s 845-page consultation document that contains 860-plus questions, as part of a 10-week consultation process that ends on August 1 for the Markets in Financial Instruments Directive, or MiFID II.

John Lothian News spoke with him about what’s in it and what it means for the industry.

“That’s a hell of a lot of reading for the industry to do,” he said. “Part of the challenge for us is working out how we can get the feedback from the industry, package that up and put a nice bow around it and give it to regulators in a way that they are going to be able to understand in the time that is available.”

Watch the video »


Deutsche Boerse Launches Open Innovation Forum
Open Innovation ( will for the first time establish a group-wide and systematic approach to attract external partners for innovation projects and build a community to incubate, develop and accelerate new business ideas coming from outside the group.


BATS to Launch BATS One Data Feed
Ivy Schmerken – Wall Street & Technology
Reflecting its merger with Direct Edge, BATS Global Markets will offer a new direct data feed product with a unified view of aggregate quotes, trades, and optional depth information for all four equity exchanges it operates.


Morgan Stanley gives tweeting brokers some leeway
Jed Horowitz – Reuters
Morgan Stanley is further opening the social media door for its brokers by allowing them to post self-authored content on firm-approved Twitter accounts.

***CG: Progress. progress, progress…


US Senate moves to curb oil speculation by banks
Joe Parsons – Futures & Options World
A group of US Senators plans to reign in speculative trading to prevent oil price hikes amid the increasing turmoil in Iraq. If successful it would mean the Commodity Futures Trading Commission (CFTC), which oversees the physical commodities derivatives market, will have to use its powers to crack down on excessive speculative trading despite criticism from industry experts.

***CG: How do you define “excessive”?


Why CLS’s Court Win Was Important
David Puth, CEO of CLS Bank, via Profit & Loss
The global financial economy has undergone severe shocks over recent years, from which it has not yet fully recovered. Stable economic growth and the preservation of market confidence must be the priority for central bankers and market participants around the world. The organisation I am proud to lead, CLS, is a critical component of providing that stability to the world’s largest and most liquid market, foreign exchange.



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Kim Bang; Dennis Woods; Duane Kullberg; Bill White; Chris Mead; Howard Simons

Companies, Organizations and Groups

BNP Paribas Group; SIX Group; Arthur Andersen & Co.; Dimensional Fund Advisors; BlackRock Inc.


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Lead Stories

Deutsche Boerse looks outside euro zone as transaction tax looms
Deutsche Boerse plans to expand operations outside the euro area to give non-European clients an opportunity to avoid the bloc’s proposed financial transaction tax, four people familiar with the exchange operator’s thinking told Reuters.

***CG: Capital can move at the click of a mouse.

***DA: And a server can be picked up and moved to any jurisdiction in the world.

Philippine exchange prepares for trading upgrade
Jeremy Grant in Singapore – Financial Times
The Philippine Stock Exchange, one of the fastest growing bourses in southeast Asia, has agreed to buy a new trading system from Nasdaq OMX as part of an overhaul to expand into derivatives and allow the widespread use of short selling.

BNP Paribas Admits Guilt and Agrees to Pay $8.9 Billion Fine to U.S.
After months of heated negotiations, state and federal authorities on Monday announced a criminal case against BNP Paribas, taking aim at France’s biggest bank for transferring billions of dollars on behalf of Sudan and other countries blacklisted by the United States.

***CG: Someone has some explaining to do

BNP Paribas Drops the Hammer as Part of Sanctions Plea
Andrew R. Johnson – MoneyBeat – WSJ
More than a dozen officials at BNP Paribas S.A. were pushed out as part of the French bank’s efforts to address investigations by U.S. authorities into sanctions violations, government officials announced.

***CG: Someone else will have to do the explaining

A Grieving Father Pulls a Thread That Unravels Illegal Bank Deals
A bus bombing two decades ago — and a New Jersey father’s quest for justice — inadvertently set off a chain of events that led American prosecutors to accuse some of the world’s biggest banks of transferring money for nations like Iran.

After Loud Complaints From French, Silence as BNP Penalty Is Announced
LIZ ALDERMAN – Dealbook – NY Times
As the American authorities announced a record penalty on Monday against BNP Paribas for violating United States rules on trading with blacklisted countries, the French political establishment had an unusual reaction: silence.

Optiver targets US but rules out purchase
Philip Stafford – Financial Times
Optiver, one of the world’s largest electronic market makers, has ruled out making a large US purchase even as the Dutch group targets the market in an effort to emulate a buoyant 2013 trading performance.

Comment: Banking to be defined by technology
Matteo Cassina – Financial Times
The global banking industry is at crossroads and evidence of change is more tangible than ever. There are many drivers to the bank restructurings we are seeing, including rising cost of capital, declining profit margins, litigation risk, rising technological complexity and costs. The universal banking model may be threatened as a result of these changes, but it’s too soon to write its epitaph.

***CG: The rumors of the death of banking are greatly exaggerated

Secrecy of Dark Pools Can Blur Both Ways
PETER J. HENNING – Dealbook – NY Times
It should not come as any great surprise that a brokerage firm, like the proverbial used-car salesman, would take a few liberties with the truth while trying to sell something. But the New York attorney general, Eric T. Schneiderman, has taken on Barclays by filing a civil suit related to the marketing of its dark pool trading platform, which the bank portrayed as safe for investors when it let plenty of sharks swim in the deep end.

Argentina Faces a Deadline for Hedge Fund Payments
PETER EAVIS – Dealbook – NY Times
Argentina’s government has 30 days to decide whether it should try to make peace with a group of New York hedge funds that it has bitterly fought for years in a dispute that could change the global market for government bonds.

***CG: Caveat emptor


CFTC extends reporting relief to support Asia
Joe Parsons – Futures & Options World
US banks have been granted an extension of relief to report swaps trades with non-US persons without the need to provide details of the foreign counterparty subject to certain conditions.

SEC Announces New Hires in the Office of Administrative Law Judges
The Securities and Exchange Commission today announced that two new judges and three new attorneys will join the Office of Administrative Law Judges this summer.

UK fintech sector readies for launch of industry body
Anna Irrera – Financial News
The UK’s financial technology sector will officially launch an industry body in July, bringing together representatives from leading fintech startups and large banks.

FX players reveal favoured regulatory fix
Catherine Snowdon – Euromoney Magazine
As the FX regulatory landscape gets revamped, data from the Euromoney FX Survey 2014 shed light on what the market wants when it comes to benchmark reform, including its views on sticking with the current WM Company and Thomson Reuters fix.

FINRA Brings 144A Corporate Debt Transactions Into the Light
The Financial Industry Regulatory Authority (FINRA) today began publicly disseminating Rule 144A transaction data in corporate debt securities, bringing transparency to a market that had previously operated in the dark.

***CG: Let there be light

A mini-tender offer and a major loophole
Sujeet Indap – Financial Times
Lorne Albaum has developed a better version of “buy low, sell high”. It is buy really low — as in well below the market price of publicly-traded stocks of big, famous companies in the United States and Canada. His Toronto-based firm TRC Capital Corporation is the leading practitioner of so-called “mini-tender offers”.

UK’s Financial Conduct Authority: EMIR Reporting Advice For Clearing Member Firms

ESMA Publishes Retail Investor Guide To MiFID II

Exchanges & Trading Facilities

CME Group Chairman Emeritus Leo Melamed Helps Honor the Humanitarian Acts of Chiune Sugihara in Japan
CME Group is pleased to announce that Chairman Emeritus Leo Melamed is traveling to Japan the week of June 30, to participate in various activities organized to honor the humanitarian acts of Chiune Sugihara.

NASDAQ Tops U.S. Exchanges For IPOs In Second Quarter Of 2014
The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) announced that it welcomed 79 new listings in the second quarter of 2014, including 55 initial public offerings (IPOs), on The NASDAQ Stock Market (NASDAQ), to bring its total IPO count to 99 for the first half of 2014. This represents more IPOs than any other U.S. exchange and a 57 percent increase in listings compared to the same quarter last year – marking the strongest first half of the year for NASDAQ listings since 2000.

CBOE Plans to List Options on GoPro, Inc.
CBOE Holdings, Inc. announced today that the Chicago Board Options Exchange plans to list options on GoPro, Inc. for trading beginning on Monday, July 7, 2014, contingent upon GPRO meeting new option listing criteria, and the OCC accepting CBOE’s certification that the stock meets CBOE’s listing criteria.

Single Guarantee Fund For WSE ATS And BondSpot ATS
A single guarantee fund for the WSE ATS and the BondSpot ATS will be launched on 1 July 2014. The fund will be formed under an agreement signed on 5 March 2014. The agreement provides for the formation of a new guarantee fund securing the clearing of transactions concluded in the alternative trading system organised by Warsaw Stock Exchange and in the alternative trading system organised by BondSpot. The new fund will replace two functionally and legally separate guarantee funds securing the clearing of transactions concluded in the systems which will be liquidated.

Tokyo Financial Exchange Trading Volume In June 2014
The trading volume of Three-month Euroyen futures in June was 259,762 (+11.7% MoM / +42.4% YoY) and its average daily volume was 12,370.

CADerivatives – June 2014: Montréal Exchange’s Quarterly Newsletter
This summer’s featured topic is MX’s newest product, the FTSE Emerging Markets Index Futures (MX-EMF), which launched in early June. Based on the performance of the FTSE Emerging Markets Index, this new contract is targeted at a wide range of market participants seeking exposure to emerging markets for hedging, asset allocation, speculative and arbitrage purposes.

TMX Group: Market Holiday
The Exchange’s offices and markets are closed today, July 1, 2014 (Canada Day).

NASDAQ OMX Welcomes Africa Oil To The Main Market

Hedge Funds & Managed Futures

Global Watchdogs to Re-Examine Systemic Risk in Fund Industry
Sarah Krouse – MoneyBeat – WSJ
Two global watchdogs plan to work together to evaluate the risks caused by asset managers, the latest development in a controversial process to determine whether the sector poses a threat to the financial system.

***CG: A risk-based approach is always good

Paulson’s Credit Opportunities fund up 6.6 pct ytd to end-May -source
Jennifer Ablan – Reuters
Hedge fund manager John Paulson’s credit opportunities and merger arbitrage funds were up 6.6 percent and 3.3 percent year-to-date through the end of May, respectively, easily surpassing their benchmarks, according to an investor in attendance at Paulson & Co’s recent mid-year client event.

Ex-SAC Executive, Solomon Kumin, Strikes Out on His Own
A former top executive for Steven A. Cohen is testing whether a person needs experience as a trader to raise big dollars for a hedge fund.

***CG: My guess is yes

UK fund manager Henderson aims to double assets by 2018
Chris Vellacott – Reuters
Fund manager Henderson Group is aiming to double its assets by 2018 to nearly 130 billion pounds ($221.2 billion) and its top target is a deal in the United States to fill “a big gap” in the company’s business mix.

Old Mutual kicks off float of U.S. asset management arm
Insurer Old Mutual said on Monday it had kicked off a planned listing of its U.S. asset management business. The move will give the company access to U.S. capital markets as it looks to expand in the country, the world’s biggest asset management market, including through acquisition, a spokesman said.

Banks & Brokers

Rival set for BNP’s US clearing
Luke Jeffs – Futures & Options World – Let’s Talk Derivatives
One of BNP Paribas’ main rivals could emerge as an unlikely beneficiary of the French bank’s record $9bn fine after BNP sought to reassure clients by saying it will pick a third party to clear their business for the duration of its one year ban.

Early Verdict Mixed from BNP Clients
MoneyBeat – WSJ
While several large institutional investors in BNP Paribas aren’t commenting on whether the bank’s guilty criminal plea related to sanctions violations will cause them to make changes, the Employees Retirement System of Texas says it’s halted some fixed-income trading with the bank.

Jeremy Murphy Leaves Barclays for Bank of America
SYDNEY EMBER – Dealbook – NY Times
Bank of America has named Jeremy Murphy a managing director in its consumer and retail investment banking group for the Americas. Mr. Murphy is the latest investment banker to leave Barclays, which is seeking to reduce the size of its investment bank in response to stiffer regulations.

***CG: So much for going down with the ship

Morgan Stanley eyes compensation cuts for financial advisers: sources
Lauren Tara LaCapra – Reuters
Morgan Stanley wants to pay out a smaller portion of wealth management revenue to the retail brokers who generate it, the final and perhaps most difficult front in Chief Executive James Gorman’s drive to reduce staff costs across the bank.

Monte dei Paschi Will Repay EUR3.45 Billion to Italian Government
Giovanni Legorano – WSJ
Italian lender Banca Monte dei Paschi di Siena SpA said it will repay the Italian government on Tuesday almost three-fourths of a loan it obtained last year. The bank said Monday it will pay back EUR3.45 billion, which will enable it to extinguish EUR3 billion of a EUR4.1 billion debt it had with the government.

Clearing & Settlement

Bloomberg Sef success leads to fee criticism
Peter Madigan –
Bloomberg is not exactly a new face in the swaps market, but post-crisis reforms have allowed it to dramatically expand its influence. While its customers will welcome this, detractors claim the company’s terminals business allows it to undercut competitors, and creates an incentive for it to obstruct third-party service providers.

***CG: Crafty moves by the Bloomberg juggernaut

Omgeo ProtoColl Links to DTCC Global Trade Repository
Omgeo, the global standard for post-trade efficiency, today announced that Omgeo ProtoColl, its automated collateral and margin management solution, is offering a standard interface to The Depository Trust & Clearing Corporation Global Trade Repository, the world’s largest derivatives trade data repository.

Banks look to pass CCP investment losses to clients
Cecile Sourbes –
Banks are seeking to pass through central counterparty (CCP)-related operational and investment losses to end-users, according to derivatives lawyers.

Indexes & Products

Mid-year Update: VPD Index is Up 7.6% Y-T-D, as SPX Historic Volatility Falls to 6.2
Matt Moran – VIX Views
As we reach the half-way point in 2014, here is an update on some key investment and volatility-related topics

***CG: If it is volatility-related, it will be a pretty short story

Thomson Reuters Acquires UBS Convertible Indices
Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today announced that it has completed the acquisition of the UBS Convertible Indices – a widely used benchmark in the convertible bond market.

S&P Dow Jones Indices: DJIA 2014 Q2 Report Card

S&P Dow Jones Indices Market Attributes: U.S. Index Dashboard

S&P Dow Jones Indices Market Attributes: Europe Index Dashboard


Q2 Orc News: Introduction of Customer Portal; Orc Trader+ Makeover
We’ve received great feedback on our new and expanded solutions offering and interviewed Orc’s Head of Product Management, Martin Nilsson, to further explain the enhancements. We’ve also made updates to Orc Trader+ and are in the process of introducing a new customer portal. Finally, Orc organized a global roadshow which included a series of events in Milan, Hong Kong, Toronto and Chicago during May.

At Integral, New Appointments for Barker, Farrell Ahead of Product Refresh
Timothy Bourgaize Murray – WatersTechnology
The FX platform has given new responsibilities to Jon Barker, now managing director of products, and hired Richard Farrell as managing director, who replaces Barker as global head of sales.

Ingage Signs Four Asset Managers
Marina Daras – WatersTechnology
Ingage, a new IT platform that aims to connect companies and investors directly to ease corporate access restrictions, has announced that Newton Investment Management, Majedie Asset Management, Pelham Capital and Union Bancaire Privee have joined the platform.

Quincy Data Adds to Low-Latency Microwave Service
Becca Lipman – Wall Street & Technology
Quincy is adding Carteret-sourced cash treasury data and select equity and energy futures from Cermak to its low-latency microwave distribution service.

Mergermarket Group Expands Product Offering Through Successful Acquisition Of Perfect Information
Mergermarket Group, the global BC Partners portfolio company, has successfully closed the acquisition of Perfect Information, the London-headquartered provider of global workflow solutions and financial information for investment banks and corporate finance advisory professionals, for GBP26 million.


U.S. seeks 9 years prison for ex-Jefferies trader in fraud case
Jonathan Stempel – Reuters
U.S. prosecutors have recommended that Jesse Litvak, the former Jefferies Group Inc trader convicted of defrauding investors in mortgage bond trades after the financial crisis, be sentenced to nine years in prison and a $5 million fine.

***CG: Please see my opening comments

Conviction overturned for woman who aided ‘squawk-box’ prosecutors
Joseph Ax – Reuters
A U.S. judge has vacated the conviction of a former Merrill Lynch administrative assistant who lied to a grand jury under pressure from her boss but then helped convict six former brokers and traders of generating illegal profits with information they overheard on a “squawk box.”

Madoff, Stanford fraud victims dealt setbacks by U.S. top court
Jonathan Stempel – Reuters
Victims of the Ponzi schemes of Bernard Madoff and Allen Stanford, two of the largest in U.S. history, suffered setbacks on Monday as the U.S. Supreme Court refused to hear appeals in two cases seeking to recoup more money for them.

ASIC win as adviser jailed for six years
The Australian
A FINANCIAL adviser has been sentenced to six years’ jail — one of the highest penalties for an adviser — in a coup for the corporate regulator as it ramps up its moves to rein in the scandal-plagued sector.

Environmental & Energy

Shanghai firms meet carbon targets after last-day permit auction
A total of 7,220 tonnes of CO2 permits were auctioned by the Shanghai carbon exchange on Monday, the bourse said, enabling local firms to meet a deadline to comply with their carbon targets.

***LB: Also in this story “The permits, sold to companies at a minimum price of 48 yuan ($7.73) per tonne, were only a small fraction of the 580,000 tonnes of permits put on offer by the Shanghai government, but were enough to allow seven laggard firms to meet their targets, the exchange confirmed.”

Australia risks isolation among G20 by scrapping carbon tax
Jamie Smyth, Financial Times
Tony Abbott has had little to celebrate since becoming Australia’s prime minister because of his plummeting approval ratings and a hostile senate.

(Australia’s) Liberal push to strip environmental groups of charitable tax status
Oliver Milman,
The government is being pressed to alter the charitable status of environmental groups after a Liberal MP successfully argued to his party that the groups are not “real charities” like the Red Cross or the Salvation Army.


Shanghai Free Trade Zone Reduces Restrictions
Richard Silk – WSJ
Shanghai is reducing restrictions on foreign investment in the city’s landmark free-trade zone, trimming the number of restricted sectors to 139 from 190. The slimmed-down “negative list”—unveiled on the Shanghai Free Trade Zone’s official website Monday—opens up sectors such as rail freight transport to foreign investment.

Shanghai may launch gold trading bourse in Q4
Shanghai may launch the international trading board for gold in the city’s pilot free trade zone in the fourth quarter of the year, while gold consumption edged up 0.8 percent in China during the first quarter, local media reports said last week.

Property mix served up Singapore sling with extra bubbles
Patrick Jenkins – Financial Times
Four months ago, when UK chancellor George Osborne made a trip to Singapore, the pretext was to promote a collaborative development of Singapore and London as offshore renminbi trading hubs. But Mr Osborne could have picked up some other useful intelligence en route. If there is one country that has seen a UK-style bubble develop in its property market, it is Singapore.

***CG: A new definition of “Singapore Sling”

Japanese Commodity Markets Summary for June 2014

JCCH SPAN Parameter update effective July 1

Tokyo Stock Exchange Trading Overview In June 2014 & First Half Of 2014 (January To June)

Tokyo Stock Exchange: Information On TSE IR Movie Square

[OSE] Price Limits for DJIA Futures and CNX Nifty Futures (from July 4, 2014)

Thai Alternative Bourse To Hold “InnoBiz Matching Day 2014” For SMEs

Frontier Markets

Offshore distributors voice fears over UAE sales practices
Vita Millers –
Some distributors say a combination of poor products, deficient adviser education and high commission fees in the United Arab Emirates could spell trouble for the structured products market. Are their fears justified?

Bombay bourse targets HFT firms after tech revamp
Anish Puaar – Financial News
The Bombay Stock Exchange is finalising deals to bring in high-frequency trading firms to its equities and derivatives markets, spurred by recent regulatory changes and the introduction of new technology.

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