First Read

New Subscription Prices for 2014
By John J. Lothian

We are raising the price of an individual subscription of the John Lothian Newsletter to $150 per year, a $10 jump from the last couple of years. We are also raising the enterprise subscription price by $10 to $100 per reader per year for all firms that are not John Lothian News sponsors.

We are also raising prices for sponsorships of our newsletters, which have gained greater traffic as a result of the launch of JohnLothianNews.com and the new front pages on MarketsWiki and MarketsReformWiki.

The John Lothian Newsletter of 2014 is a product of the John Lothian News team, led by Editor-in-Chief Jim Kharouf. While I am still contributing commentary or comments for the daily newsletter, it is the diligent and creative work of the editorial team of Jim Kharouf, Jon Matte, Doug Ashburn, Sarah Rudolph, Jeff Bergstrom that has elevated this product in its 14th year.

Additionally, we have become known for our high quality video work, produced by our multimedia staff of Ryan Lothian, Patrick Lothian and RJ Roxas.

(To read the rest of the article, visit the John Lothian Newsletter blog at jlne.ws/1hlxkfv

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New Subscription Policy for New Readers in 2014
By John J. Lothian
It is time for a new subscription format for 2014. In 2003 when I started charging a fee to subscribers of the John Lothian Newsletter, I introduced the concept of voluntary pay subscriptions. Since then the John Lothian Newsletter has been offered in this unusual manner. But what exactly does “voluntary pay” mean?

(To read the rest of the article, visit the John Lothian Newsletter blog at jlne.ws/Kmd7b5 )

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I Still Believe in the Futures Industry Model
By John J. Lothian
I still believe in the futures industry segregated funds model. In fact as strange as it may seem, my own experience, or that of my former firm with Refco and MF Global, has only strengthened my belief in the structure and wisdom of the model. However, there is a flaw to the model which has weakened faith in the futures markets and the model. That flaw is the lack of stewardship from our regulators and bankers and the lack of what I will call a customer fund dislocation scheme.

(To read the rest of the essay, visit the John Lothian Newsletter blog at jlne.ws/KmeKWc )

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2013 Trading Volume Reaches New All-Time High At CBOE Futures Exchange
The CBOE Futures Exchange, LLC today reported that annual trading for total exchange-wide activity and for futures on the CBOE Volatility Index reached new all-time highs in 2013, with several other trading records set during the year.
jlne.ws/1dZtpzl

***JM: Nice to have another high note for year’s end. Well done!

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Record-Breaking Volume On OneChicago In 2013
Total 2013 Volume Tops 9.5 Million, An Increase Of 48% Over Prior Year Levels
jlne.ws/1dZtpzm

***JM: As for you guys… 2013 looks like an old-time anti-rock’n’roll party, with so many broken records.

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MGEX Reports 20 Percent Volume Increase Over 2012 – 49 Percent OI Increase
Total Exchange volume for the calendar year totaled 1,483,657 futures and options contracts traded, a 20 percent increase over calendar year 2012. Five months made the top 25 electronic volume records: February, April, August, September and November. Additionally, August and November were top 25 total Exchange volume months, with 169,809 and 164,845 contracts traded in those months, respectively. Also in 2013, 11 months saw year over year volume growth
jlne.ws/1dZtrHJ

***JM: Another solid year of consistent improvement – also well done!

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Anthony Belchambers

Finding Our Differences: FOA’s Anthony Belchambers Says Regulation Has Long Way to Go
JohnLothianNews.com
European regulatory changes continue to move forward, but there are significant differences between the US and EU, and also between the European states themselves. The Futures & Options Association’s Anthony Belchambers spoke with John Lothian News about where Europe stands in the rulemaking process and the challenges that still remain. Belchambers said that the issue of extraterritoriality continues to concern EU regulators and market participants.

Watch the video »

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Riddle Me This: Speculation Vs. Hedger Edition
Streetwise Professor
To get back to the substance of the speculation debate, let me reprise something I’ve discussed for years to illustrate the vapidity of many of the arguments about speculation. I’ve been making this point for more than 6 years: it was a focus of a presentation I made at a conference in Champuloc, Italy in January 2008.
jlne.ws/1dZtpzs

***JM: I note that the “it makes no sense and doesn’t work that way” argument seems to produce little more than a brief, blank-faced pause among the believers. Not sure what will wake those that hold their eyes that tightly shut.

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Levine on Wall Street: Cohen’s Loyal Lieutenants
By Matt Levine – Bloomberg
Sheelah Kolhatkar has another fascinating SAC Capital article in Bloomberg Businessweek. Per Kolhatkar, Cohen’s lieutenants “had hidden from Cohen where they were getting their information,” presumably to avoid tainting him with their illegal knowledge; that’s why they’re going to jail and he’s not. I would have done the opposite.
jlne.ws/1dZtpzt

***DA: If you don’t spot the chump at the table, it’s probably you.

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Comment: Regulatory predictions for 2014
Annette L. Nazareth and Gabriel D. Rosenberg – FT.com
Last year we offered our 13 regulatory reform predictions for 2013 and correctly predicted a year of intense rulemaking. This was highlighted by the adoption of final Volcker rule regulations, Basel III capital rules and swaps market reforms. Careful scrutiny and implementation of these rules are expected to be key themes of the financial regulatory landscape in the coming 12 months.
jlne.ws/1dZtpzw

***JM: I predict that Dodd-Frank will finally get straightened out and everyone will be happy about it. Also, gold will hit $2300 an ounce, and I will sprout wings and fly.

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MarketsWiki

MarketsWiki Page of the Day
Jürg Spillmann
jlne.ws/19MjkDz

MarketsWiki Recent Updates

People

Michael Bodson; Michael Dunn; Kathryn Meyer; Jürg Spillmann; Tracy Buell

Companies, Organizations and Groups

Object Trading; Netherlands Bank; ConvergEx Group, LLC; Minneapolis Grain Exchange, Inc.

Products

GCF Repo Index futures

Miscellaneous

Application programming interface; Credit default swaps

Statistics

46,250,784 pages viewed, 7,732 articles, 171,335 edits
MarketsWiki Statistics

Lead Stories

Eurex Acquires Stake In Taiwanese Futures Exchange TAIFEX – Existing Strategic Partnership Strengthened By Acquisition
Eurex Zürich AG, a subsidiary of Deutsche Börse AG, is becoming a minority shareholder of the Taiwanese futures exchange TAIFEX.
jlne.ws/1dZtrY7

Regulator Plans to Increase Visibility of Its BrokerCheck Website
MATTHEW GOLDSTEIN – NYTimes.com
Financial industry regulators are hoping to enact a rule this year that would make it easier for investors to find out if a broker pushing to sell them a stock, bond or other investment product has a clean record.
jlne.ws/1dZtpPO

Bill Gross’s Flagship Fund Suffers Biggest Loss Since 1994
Min Zeng – MoneyBeat – WSJ
It was a bruising year for the world’s biggest bond fund run by high-profile fund manager Bill Gross, as the fund suffered the biggest annual loss since 1994.
jlne.ws/1dZtrY9

Regulator of Wall Street Loses Its Hard-Charging Chairman
BEN PROTESS – NYTimes.com
Gary Gensler squeezed into a Washington auditorium last month, mingling with the 300 guests at his farewell party and basking in the attention as a who’s who of finance recounted his campaign to rein in Wall Street risk-taking.
jlne.ws/1dZtpPX

Breaking through the ZLB with virtual currencies
Izabella Kaminska | FT Alphaville
Here’s a crazy thought to start the New Year year with. What if virtual currencies were born less of an organic anti-government peoples’ movement and more of extreme unconventional monetary policy by the state? The ultimate central bank Jedi mind trick if you will, which takes easing to levels that conventional policy just cannot go.
jlne.ws/1dZtrYc

Reinhart-Rogoff Find Hangovers in Bank Crises: Cutting Research
Simon Kennedy and Stefan Riecher – Bloomberg
It takes eight years on average for economies to regain the level of income lost in a banking crisis, and the U.S. and Germany are alone among 12 in having already done so since the 2008 turmoil, according to Harvard University professors Carmen Reinhart and Kenneth Rogoff.
jlne.ws/1dZtpQ4

Regulatory

Davis Polk: Explaining the Volcker Rule in 27 Pages
James Sterngold – MoneyBeat – WSJ
Normally, it’s not in the nature of law firms to oversimplify complex government regulations for their biggest customers. But Davis Polk & Wardwell LLP has decided to do just that for its mega-banking clients to start off the new year, giving them a handy, color-coded, “user-friendly” flow chart to help them navigate the Volcker rule, which restricts banks from making market bets with their own capital.
jlne.ws/1dZtset

Finra Identifies HFT, Algo Integrity as Regulatory Priorities
James Rundle – WatersTechnology
The Financial Industry Regulatory Authority (Finra), a self-funded regulatory organization charged with overseeing US brokers and exchanges, has released a letter outlining its list of regulatory priorities for 2014, among them high-frequency trading (HFT) and algorithmic trading.
jlne.ws/1dZtsex

[FCA] Mortgage Market Review: data reporting
jlne.ws/1dZtsez

Exchanges & Trading Facilities

The Options Industry Council Announces December Options Volume Up 2% As 2013 Volume Rises Nearly 3%
The Options Industry Council (OIC) announced today that 320,209,356 total options contracts were traded in December, which is a 2.46 percent increase compared to the previous December when 312,528,471 contracts were traded.
jlne.ws/1dZtseE

Total Trading Volume At Eurex Group At 2.2 Billion Contracts In 2013 – Average Daily Volume Approximately 8.6 Million Contracts
The international derivatives markets of Eurex Group ended 2013 with a turnover of approximately 2.2 billion contracts (2012: 2.3 billion contracts). The total volume for 2013 splits into 1.6 billion contracts traded at Eurex Exchange (2012: 1.7 billion) and 639 million contracts traded at the International Securities Exchange (2012: 632 million). This corresponds to a daily average trading volume of 8.6 million contracts, thereof 6.1 million contracts at Eurex Exchange and 2.5 million contracts at ISE.
jlne.ws/1dZtseI

International Securities Exchange Reports Business Activity For December And Full Year 2013
The International Securities Exchange (ISE) today reported a combined average daily volume (ADV) of 2.4 million contracts in December 2013 for its two exchanges, ISE and ISE Gemini. This represents 18.3% of U.S. equity options market share.
jlne.ws/1dZtsLD

Turnover At Deutsche Börse’s Cash Markets At 1.16 Trillion Euros In 2013 – 85.4 Billion Euros Turnover In December
In 2013, E1.16 trillion were turned over at the cash markets of Deutsche Börse (2012: E1.16 trillion).
jlne.ws/1dZtsLF

BME: The Spanish Stock Exchange Traded E60.2 Billion In December, Up 5.45% Year On Year
jlne.ws/1dZtsLJ

NASDAQ OMX Nordic And Baltic Markets: Trading Statistics December 2013
jlne.ws/1dZtt21

Trading On Warsaw Stock Exchange: December 2013
The value of session trading in equities on the Main Market was PLN 16.5 billion in December 2013, an increase of 14.3% year on year compared to PLN 14.5 billion in December 2012. The average value of trading per session increased by 7.9% year on year to PLN 917.8 million in December 2013.
jlne.ws/1dZtsv4

Eurex Takes Small Taifex Stake
James Rundle – WatersTechnology
Derivatives bourse Eurex has announced that it has taken a five-percent stake in the Taiwan Futures Exchange (Taifex).
jlne.ws/1dZtt24

CBOE Holdings Reports 2013 Consolidated Trading Volume
CBOE Holdings consolidated trading volume for options contracts on Chicago Board Options Exchange and C2 Options Exchange and futures contracts on CBOE Futures Exchange totaled nearly 1.19 billion contracts. Average daily volume (ADV) in 2013 was 4.71 million contracts, an increase of four percent from 2012.
jlne.ws/1ix3Viy

TSX Block List Leaders By Volume And By Values – December 2013
jlne.ws/1dZtt2a

Hedge Funds & Managed Futures

Ebullience Over 2013 I.P.O. Market Spills Into New Year
MICHAEL J. DE LA MERCED – NYTimes.com
The next 12 months may not prove as rich for initial public offerings as the last year. But to Wall Street bankers, 2014 still promises an abundance of opportunity.
jlne.ws/1dZtsve

Joseph Lieberman Joins Private Equity Firm
RACHEL ABRAMS – NYTimes.com
Over lunch in Manhattan several months ago, Brendan Carroll, a partner and co-founder of the private equity firm Victory Park Capital, had a proposition for his former boss, Joseph I. Lieberman, the former senator from Connecticut and onetime vice-presidential candidate: Would Mr. Lieberman be interested in joining his firm?
jlne.ws/1dZtsvf

Loeb’s Third Point fund beats rivals, ends 2013 with 25 pct gain
Reuters
Activist investor and hedge fund manager Daniel Loeb beat most rivals hands down last year as his flagship fund kept pace with a rallying U.S. stock market and returned 25.2 percent in 2013.
jlne.ws/1dZtt2h

Best Foreign-Exchange Mutual Funds Diverge on Dollar
Joseph Ciolli – Bloomberg
The only two actively managed U.S. foreign-exchange mutual funds to turn a profit last year have divided views on how the dollar will perform in 2014, casting doubt on the notion of a market consensus on the greenback.
jlne.ws/1dZtvqG

Banks & Brokers

Citigroup paid $250 million to resolve U.S. mortgage suit
Reuters
Citigroup Inc. (C.N) paid $250 million to taxpayer-owned Fannie Mae and Freddie Mac to settle a lawsuit over soured mortgage securities, the regulator of the two housing finance firms said on Thursday.
jlne.ws/1dZtt2i

Deutsche Bank, U.S. shareholders settle lawsuit over mortgages
Reuters
Deutsche Bank AG has settled a U.S. lawsuit in which shareholders accused it of misrepresenting its ability to handle risks associated with mortgage debt prior to the 2008 financial crisis.
jlne.ws/1dZtvqH

No more room for bad bankers at Barclays, says Antony Jenkins
Neil Collins – FT.com
Jolly good news for Barclays shareholders. Chief executive Antony Jenkins says the bank will not be paying more to top executives than it needs to. This is in clear contrast to the last lot in charge there, whose approach at times seemed to be: here’s the cheque – you fill in the amount.
jlne.ws/1dZtvqO

Billions Vanish in Kazakh Banking Scandal
WSJ.com
A Ukrainian lawyer named Olena Tyshchenko traveled to the Royal Courts of Justice on the afternoon of July 22 as a bit player in one of the most complex legal dramas ever seen here.
jlne.ws/1dZttix

Clearing & Settlement

OCC Announces Cleared Contract Volume Reached 4.2 Billion In 2013 And Record Year For Futures And Stock Loan Activity
OCC cleared contract volume reached 4,170,855,768 contracts in 2013, up 3 percent from the 2012 annual volume of 4,042,175,801 contracts. OCC ended the year with cleared contract volume reaching 325,905,926 contracts in December, up 3 percent from the December 2012 volume of 317,190,974 contracts.
jlne.ws/1dZttiy

Indexes & Products

NYSE Euronext introduces new Amsterdam equity indices
ETF Strategy
NYSE Euronext, a wholly owned subsidiary of IntercontinentalExchange Group (ICE), has expanded its range of indices with the introduction of two new Dutch equity products: the AEX All-Tradable Index and the AEX All-Tradable Alternative Weighting Index.
jlne.ws/1dZttiA

Enforcement

CFTC Orders President Of A Russian Bank, Artem Obolensky, To Pay $250,000 Penalty To Settle Charges Of Making False Statements To The CFTC During An Investigation
jlne.ws/1dZtvqX

Asia-Pacific

GH Financials gets Hong Kong approval
Tim Cave – Financial News
GH Financials Group, a London-based provider of clearing services for exchange-traded derivatives, has won approval to operate in Hong Kong, marking another milestone in the broker’s aggressive global expansion plan.
jlne.ws/1dZtvHb

Shanghai Stock Exchange: Central Bank, CSRC Promote Cross-Market Issuance, Trading Of CDB Financial Bonds
jlne.ws/1dZtvHd

Frontier Markets

CSE to explore options with MCX-SX on trading platform
Economic Times
The Calcutta Stock Exchange is exploring options with MCX-SX Clearing Corporation to resume trading on C-star platform, after deciding not to proceed further with BSE-promoted Indian Clearing Corporation Ltd (ICCL) on the matter, sources said.
jlne.ws/1dZttiI

MCX Weekly Market Report – December 27, 2013 To January 02, 2014
jlne.ws/1dZtvHg

Malawi Stock Exchange Weekly Trading Report – 03rd January, 2014
jlne.ws/1dZttiM

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