Bits & Pieces
By John J. Lothian
Jim Kharouf and Doug Ashburn are headed to London shortly for IDX. I am staying home, continuing to heal my back. BTW, Walt’s Lukken’s Kilt Challenge for Futures for Kids has raised 7,543.29 pounds, which was 150% of his goal. There is still time to give at jlne.ws/1gz02VG.
Jim and Doug will be bringing the video gear to London as they have a gig for John Lothian Productions and will probably find some interesting people to interview for JLN.
My Boy Scout Troop is off to a canoe trip in Turkey Run State Park in Indiana. I am staying home to heal my back, which seems to be a theme.
Robby’s head shaving fundraiser went well for the whole team, including the manager who raised over $1000 to shave his head. The good news is that even more of the money they raised will go to cancer research than we thought. Or so is the expectation. They also have a fundraiser Saturday night at HB Jones in Elmhurst.
Save the dates of July 29, 31 and August 5, 7, & 8 for the Chicago version of the Summer Intern Education Series.
We have Rick Lane of Trading Technologies as a guest editor the last week of June. Carl Gilmore of KCG Futures will be our guest editor the shortened first week of July when we are in London for our education series. And Jeremie Bacon of Orc Group will be our guest editor the week of July 20th when I am away at Boy Scout Summer Camp.
The registration for the SFOA’s Buergenstock Conference has just opened. Go to www.sfoa.org for details.
Deutsche Boerse Said to Explore Sale of ISE Options Business
Matthew Monks and Aaron Kirchfeld – Bloomberg
Deutsche Boerse AG is exploring a sale of International Securities Exchange Holdings Inc., the U.S. options business it acquired in 2007, people with knowledge of the matter said. The exchange operator has been studying the matter internally for several months and hasn’t reached out to any buyers, the people said, asking not to be identified discussing private information. ISE, which Deutsche Boerse acquired for $2.8 billion, may fetch $1 billion to $1.5 billion in a sale, one of the people said.
***** The U.S. options market is very competitive. The U.S. options market is very competitive. Repeat.
***** I am somewhat surprised by this, but we have reached a new era of spin-off in the big consolidation epoch.
The brave new TR world gets complex, merely delegating the process is not the answer
Contango Markets News
Richard Wilkinson, Director, Post Trade Solutions at Contango believes that hard pressed operations teams are about to face another headache with trade reporting unless action is taken.
***** I am going to let you figure that out for me.
ASIC still hasn’t paid FMG bill
Andrew Burrell – The Australian
THE cash-strapped corporate regulator is yet to hand over at least $15 million it owes to Fortescue Metals Group and the miner’s billionaire chairman Andrew Forrest more than 18 months after it suffered a disastrous defeat in the High Court.
****** Will you take an IOU?
5 Things To Know When Launching A Private Equity Firm
The private equity industry is teeming with ambitious deal-doers looking to set up their own shops and be their own bosses. But raising a first fund is easier said than done. The number of first-time funds focused on Europe launched last year hit their lowest level since records began in 2000, according to data provider Preqin. Here are five of the top ten tips for launching a new fund, as told by industry insiders.
***** For a small fee I will tell you the other five top ten tips.
High-Speed Traders Face Scrutiny by Levin’s Senate Investigators
Silla Brush and Cheyenne Hopkins – Bloomberg
High-frequency trading is in the sights of a Senate panel that conducted some of the sharpest scrutiny of Wall Street firms over wrongdoing tied to the 2008 credit crisis.
***** If you can’t find them, it is because they are hiding under a picnic bench.
The Wall Street Buyers Club
David Weidner – MoneyBeat – WSJ
Dark pools may sound mysterious, but they’re really not. If you saw “Dallas Buyers Club” you have a general idea. Matthew McConaughey’s character creates a private “buying” club to circumvent rules restricting the sale of drugs used to combat AIDS. Wall Street’s dark pools have a similar intent. They are created to hide bids and offers from public markets where showing your hand in the form of an order can cost you money.
***** I am not sure I would have used that comparision, but then I compared banning payment for order flow to trying to make prostitution illegal at the CFTC’s TAC meeting. So maybe I should not talk.
MarketsWiki World of Opportunity Summer Intern Series Goes to London
John Lothian & Co. is pleased to announce the MarketsWiki World of Opportunity Summer Intern Education Series is coming to London on July 1st and 2nd, 2014 with the generous support of the [[CME Group]].
Fund Manager Sets Goats Grazing in Blighted Detroit
ALEXANDRA STEVENSON – Dealbook – NY Times
To most of the world, the solution to debt-ridden Detroit is money. But for one hedge fund manager, it’s goats. Mark Spitznagel, the founder of the $6 billion hedge fund Universa Investments, on Thursday brought 20 billy goats to graze among abandoned homes and general detritus in Brightmoor, one of Detroit’s most blighted neighborhoods.
***** My uncle tried that. It did not work.
The Post G20 Interest Rate Swap Challenge
Wednesday 11th June 2014, 11.30 to 12.30
The Queen Vault Room, The Brewery. Chiswell Street, London, EC1
The reforms instigated by the G20 in the wake of the global financial crisis have resulted in a number of structural changes to the world’s Interest Rate Derivatives Markets, changes that are now starting to have a significant impact on market participants. Using a ‘tennis-debate’ approach, with an umpire assuring no foul play, two teams of market participants will battle it out on stage and discuss this industry dilemma. The players:
Philip Simon, Head of OTC Derivatives Business,Eurex Clearing AG
Hirander Misra, CEO & Co-Founder, GMEX Group
Richard Walker, Head of EMEA Client Sales & Marketing, LCH.Clearnet
Charlotte Crosswell, CEO, NASDAQ NLX
John Wilson, Global Head of OTC clearing , SGCS Newedge
Alex McDonald, CEO, Wholesale Market Brokers’ Association
For details, visit jlne.ws/1kFNIbz
MarketsWiki Page of the Day
Sharon Y. Bowen
MarketsWiki Recent Updates
Companies, Organizations and Groups
49,525,834 pages viewed, 7,963 articles, 183,480 edits
S.E.C. Chief Calls for Sweeping Changes to Stock Market Rules
WILLIAM ALDEN – Dealbook – NY Times
The stock market has transformed over the past decade into a place dominated by high-speed traders zapping orders to numerous exchanges, while regulators have been slow to react. Now, the Securities and Exchange Commission is seeking to update the market’s rules for the new era.
NYSE parent says exchange structure still too complex
New York Stock Exchange needs to simplify its structure to expand its business and bolster investor confidence in the markets, Jeffrey Sprecher, chief executive of Big Board parent Intercontinental Exchange Inc , said on Thursday.
BNP Executive Firings Sought by Top New York Bank Regulator Amid Probe
Greg Farrell and Fabio Benedetti-Valentini – Bloomberg
New York’s top banking regulator, Benjamin Lawsky, is pressing BNP Paribas SA (BNP) to dismiss one of its top executives as part of settlement negotiations with the U.S. over alleged sanctions violations, according to a person familiar with the matter.
High-Speed Trading Rules Coming From SEC, White Says
Dave Michaels – Bloomberg
U.S. Securities and Exchange Commission Chair Mary Jo White unveiled the regulator’s most sweeping plan yet for reining in high-frequency trading and monitoring dark pools and other secretive trading practices in the world’s largest equity market.
Exchanges Say Simplicity Should Be Goal of Data-Driven Overhaul
Sam Mamudi and Matthew Leising – Bloomberg
Reducing the complexity of the U.S. equity market, where electronic orders cascade among more than 50 different venues, is the most urgent goal of any effort to reform it, trading executives said. “The markets could be much simpler, much easier to understand and in doing so will bring more confidence to the way they operate,” said Jeff Sprecher, the chief executive officer of Intercontinental Exchange Inc., which owns the New York Stock Exchange. He spoke at the same conference in New York where White revealed her proposal. “I’m glad that we have an SEC that’s engaged.”
Mexico moves to boost derivatives trading
Rob Dwyer – Euromoney Magazine
The Mexican finance ministry, the country’s banking regulator and the central bank have announced that they are to coordinate the standardization of derivatives contracts.
Deutsche Bank Warns Investors on Currency Investigation
Dealbook – NY Times
Deutsche Bank warned investors on Thursday that continuing investigations by financial regulators into potential manipulation of the $5-trillion-a-day currency markets could have a “material” financial effect on the bank.
Silver Market Wants New Fix To Be Electronic, Auction-Based — Trade Group
The London Bullion Market Association said Friday that it has found a market consensus on what should replace the London silver fix after it is published for the last time in August.
ETF Securities, Platts Declare Interest in Overseeing London Silver Fix
ETF Securities and Platts added their names to the list of companies interested in overseeing a new London silver fix. The exchange-traded funds pioneer and the commodities-information provider said they have joined the London Metal Exchange and CME Group Inc. in registering interest in providing a replacement for the benchmarking process
Bank of America could pay at least $12 billion to settle probes: report
Bank of America Corp (BAC.N) could pay more than $12 billion to settle probes by the U.S. Justice Department and a number of states into the bank’s alleged handling of shoddy mortgages, the Wall Street Journal said on Thursday, citing people familiar with the negotiations.
Barclays Fine Spurs New U.K. Scrutiny of Derivatives Conflicts
Dave Michaels, Suzi Ring and Julia Verlaine – Bloomberg
Britain’s markets regulator plans to scrutinize the conflicts of interest banks face when they use derivatives after fining Barclays Plc (BARC) for manipulating the price of gold to avoid a pay-out to a client.
The FX Debacle: Another Failure in Compliance Controls
Wall Street & Technology
The manipulations in the FX markets show that self regulation will only go so far and that dealers will have to vastly improve existing compliance technology.
SEC review to cater for smaller companies
Nicole Bullock in New York and Philip Stafford in London – Financial Times
The Securities and Exchange Commission said on Thursday that its wide-ranging review of equity market structure had to account for the needs of smaller companies.
U.S. Commodity Futures Trading Commission and Australian Authorities Sign Memorandum of Understanding to Enhance Supervision of Cross-Border Clearing Organizations
The U.S. Commodity Futures Trading Commission (CFTC) announced this morning that the CFTC and the Reserve Bank of Australia and Australian Securities and Investments Commission (Australian Authorities) have entered into a Memorandum of Understanding (MOU) regarding cooperation and the exchange of information in the supervision and oversight of clearing organizations that operate on a cross-border basis in the United States and in Australia.
Maijoor: defining Mifid II liquidity is “major task”
Cecile Sourbes – Risk.net
The chairman of the European Securities and Markets Authority (Esma), Steven Maijoor, has urged market participants to help the regulator strike the right balance between transparency and liquidity under the new Markets in Financial Instruments Directive, known as Mifid II.
Timothy Massad Sworn In As Chairman Of The U.S. Commodity Futures Trading Commission
FINRA’s Statement on Chair White’s Enhancing Our Market Structure Speech
NFA: Important Notice to CPOs and CTAs regarding changes to the CPO Form PQR and CTA Form PR that will become effective for the period ending June 30, 2014.
Proposed Amendments to NFA’s Articles of Incorporation to Increase CPO/CTA Representation on NFA’s Board of Directors
NFA’s Board of Directors approves reduction in assessment fees
Remarks At SEC Historical Society 2014 Annual Meeting: On The 80th Anniversary Of The SEC, Commissioner Daniel M. Gallagher, Washington, D.C., June 5, 2014
ESMA Chair,Steven Maijoor, Delivers Keynote Speech At ICMA Annual Conference In Berlin
Exchanges & Trading Facilities
ICE CEO: Generating a lot of cash now
Fox Business Video
Intercontinental Exchange CEO Jeffrey Sprecher on opportunities for growth and the markets.
Six plots trade repository for Switzerland
Anish Puaar – Financial News
Swiss market infrastructure provider Six plans to launch a reporting facility for derivatives trades, which could pose further challenges for regulatory oversight in Europe because of the fragmentation of data across multiple repositaries.
Euronext lays out EUR60m savings target
Tim Cave – Financial News
European stock exchange operator Euronext is eyeing cost savings of up to EUR60 million over the next three years as it gears up for life as an independent entity. The figure was revealed in an analyst presentation dated April and filed with the Securities and Exchange Commission last week.
French grain growers eye stake in Euronext
French grain growers could take a stake in exchange group Euronext as part of its upcoming initial public offering in a bid to defend the Paris-based grains derivatives market, the head of the growers’ investment fund Unigrains said on Thursday.
[SIX] May 2014: trading turnover of CHF 84 bn
Borsa Italiana Monthly Update – May 2014
Irish Stock Exchange Statistics May 2014
TOM Insight May 2014
Moscow Exchange June Holiday Trading Schedule
Hedge Funds & Managed Futures
Viking raider is free to return to the high street
Richard Milne, Nordic Correspondent – Financial Times
Jón Ásgeir Jóhannesson was the Viking raider extraordinaire. An Icelander with long, shaggy hair, he snapped up scores of UK high street brands in a shopping spree in the decade from 1998 to 2008.
The Relentless Bid’s impact on volume and volatility
Joshua M Brown – The Reformed Broker
Earlier this year, I explained why the market has been behaving as it has in my Relentless Bid post. The gist of it was that Wall Street firms are more fee-driven than transactional commission-driven than ever, and this change in incentives is altering the behavior of market participants which is manifesting itself in the market’s general manner of being. Today’s Wall Street Journal chronicles the symptoms of The Relentless Bid’s dominance over the stock market
David Tepper: My Fears Have Been ‘Alleviated’
Steven Russolillo – MoneyBeat – WSJ
David Tepper, the hedge-fund manager who spooked some investors last month when he said he was “nervous” about the markets, said many of his concerns have been “alleviated” thanks to the ECB’s unorthodox moves.
Pension fund settles legal dispute with Goldman Sachs
Mark Cobley – Financial News
Pensioenfonds Vervoer, a EUR16 billion Dutch pension fund for transport workers that launched a EUR250 million lawsuit against Goldman Sachs Asset Management in 2012, has settled its dispute with the US-based investment company.
eVestment’s May 2014 Hedge Fund Performance Report: Hedge Funds On Pace To Lag 2013 Performance, Activist Strategies Rebound, Emerging Markets Mixed
Banks & Brokers
Barclays M&A Chairman Resigns
Just four months after relocating to the U.S. from Asia, Ed King, Barclays PLC’s executive chairman for mergers and acquisitions, has resigned from the firm, a person familiar with the matter said. His move is latest in a wave of departures from the British bank’s investment banking arm.
U.S. Gives Swiss Banks More Time to Come Clean
The U.S. Justice Department has given some Swiss banks that may have helped wealthy Americans hide assets an extra month to hand over information about their activities.
BNP Paribas Executive Asked to Leave Amid Investigation
JESSICA SILVER-GREENBERG and BEN PROTESS – Dealbook – NY Times
Under pressure from the United States authorities, the giant French bank BNP Paribas is considering cutting ties to one of its most senior executives, a rare concession that points to the severity of an investigation into the bank’s dealings with Sudan and Iran.
Exclusive: As bank fines soar, U.S. threatened $16 billion BNP penalty
U.S. authorities negotiating with BNP Paribas over alleged sanctions violations at one point suggested that France’s biggest bank pay a penalty as high as $16 billion, according to people familiar with the matter.
BAML suffers Nordic plunge as HFT changes bite
Tim Cave – Financial News
Bank of America Merrill Lynch has slumped from first place to sixth in the equities broker league tables for the Nordic region, after Nasdaq OMX changed its rules to encourage high-frequency trading firms to trade directly on the market rather than through brokers.
Commodity traders won’t replace banks, says Citi’s Staley
Mark Pengelly – Risk.net
Harsher regulation and capital requirements are making life harder for banks in commodities, but Stuart Staley, London-based head of global commodities at Citi, says he doesn’t lose sleep about the threat from trading houses and oil majors eager to eat into banks’ market share.
Ex-Merrill exec to recruit for investment adviser consortium
Focus Financial Partners LLC hired former Merrill Lynch executive Chris Dupuy to head a group tasked with luring financial adviser teams away from big brokerages, like his former employer, to go independent.
Clearing & Settlement
OCC Wins Silver In The Best Annual Report Category At The PCC Golden Trumpet Awards
OCC announced today that its 2012 annual report won a Silver Trumpet in the Best Annual Report category at the 2014 Golden Trumpet Awards presented by the Publicity Club of Chicago at a dinner honoring the award winners on June 4, 2014.
Indexes & Products
ETF sophistication key to European expansion
Mike Foster – Financial News
The appeal of exchange-traded funds continues to increase among institutional investors, despite concerns about a potential liquidity squeeze in some asset classes.
Trading Technologies adapts to changing industry
James Janega – Blue Sky Innovation
As futures trading company Trading Technologies marked its 20th anniversary in May, it was stretching out in a renovated Chicago headquarters complete with an in-cafeteria wood counter doubling as a daytime tech-support bar and evening beer bar. It continues to celebrate the elevation of its onetime chief technologist, Rick Lane, to CEO. And it is about to roll into the public its new mobile-friendly, cloud-based trading platform, Nextrader.
The Latency Arms Race Is Dead, Long Live Latency Analytics
Wall Street & Technology
While the general public may only be gaining awareness of high-frequency trading’s existence with the recent launch of Flash Boys by Michael Lewis, there are still many who participate in the capital markets industry struggling to understand the real role of latency in electronic trading. What follows is a perspective about the future role of latency, based on the past several years of monitoring the world’s electronic trading networks.
Charles River Launches Integrated Cloud Compliance Environment
James Rundle – WatersTechnology
Charles River Development has announced the debut of its latest cloud offering for buy-side clients, geared towards centralizing data, software and services that it is dubbing “Compliance-as-a-Service” (CaaS).
Administrative agreement between William J. Henry & Associés inc. and AMF
Environmental & Energy
China’s Chongqing to launch carbon market trading on June 13
Kathy Chen and Stian Reklev, Reuters
The southwestern city of Chongqing will be the seventh region in China to launch carbon trading when its market opens on June 13, the local carbon exchange said Thursday, in a move designed to curb the city’s greenhouse gas emissions.
China to inject around 6 mln offset credits into domestic carbon mkt
China has agreed to let 14 projects that can generate around 6 million offset credits per year sell them into the country’s six carbon markets, offering a low-cost option for 2,000 power generators and manufacturers to comply with CO2 regulations.
***LB: Also in this story “Under the regional CO2 markets, China’s primary policy to halt the rapid growth of climate-changing greenhouse gas emissions, companies must hand over permits to the government each year to cover for their emissions, or face a fine.”
China’s planned shift off coal puts $21 bln investment at risk -report
China’s increasing efforts to shift away from coal to cleaner fuels could put annual investments of around $21 billion at risk of being stranded, a research report estimated on Thursday.
***LB: Also in this story “Chinese coal companies spent around $21 billion in 2013 on exploring and developing coal resources, despite a government push to use more natural gas, nuclear power
Thomson Reuters Recognised In WealthBriefingAsia Awards 2014
Thomson Reuters today announced it has been given special Editor’s Awards at both the Singapore and Hong Kong WealthBriefingAsia Awards for its leading position as a data provider. The awards recognise companies that have demonstrated innovation and excellence during 2013 in the private banking, wealth management and trusted advisor communities.
JCCH SPAN Parameter update effective June 2
HKEx On-Floor & Off-Floor Trading Statistics
Tokyo Stock Exchange: Announcement Of The Launch Date Of Arrowhead Renewal
EM upgrade cements gains for UAE exchanges
Dominic Dudley – Euromoney Magazine
The UAE is preparing for its imminent upgrade to emerging market status in a move that should help to cement the recent gains made by the country’s two main stock markets, the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX).
Brazil’s banks face new portability rules
Rob Dwyer – Euromoney Magazine
New rules on loan portability came into effect in Brazil in May, clarifying the basis on which consumers can transfer outstanding loans between banks to obtain better financing.
MCX Weekly Market Report – May 30, 2014 – June 05, 2014
Malawi Stock Exchange Weekly Trading Report-06 June, 2014