Pipelines: Nick Solinger talks market infrastructure for SEFs
It’s been a historic year for swap execution facilities as more were launched in the wake of Dodd-Frank rulemaking by the Commodity Futures Trading Commission.
Nick Solinger, head of product strategy and chief marketing officer of Traiana, said that its been a good year for firms getting connected to SEFs and for SEFs getting off the ground. The firm connected 16 FCMs to 16 SEFs with six more on the way.
“The typical FCM has been able to clear, three, four, five, six different venues with that one connection to our hub,” Solinger said. “Buy-side firms can similarly trade across multiple SEFs with one-credit line. So we really have realized that initial vision we had as an industry.”
Bits & Pieces
By John J. Lothian
Our friends at Advantage Futures held their annual holiday party yesterday. It is kind of a blast from the past, as Advantage parties like I remember it from the 1980s. It was fun. Thank you to Joe Guinan and his team.
There were smiles on the faces of the NADEX crew at the Advantage party. NADEX is just 20K contracts short of doubling their volume from the last 2 years this year. This is the fourth year in a row they have accomplished this feat.
Word is that Jessica Titlebaum will step down from the WILD board of directors at the end of this month.
Hats off to all the winners of the recent FOW awards. We featured a few of them yesterday, and several more today in the exchange and technology sections. Today we feature Duco, Traiana and Trading Technologies
We are going to be releasing videos from our work with SGX for their anniversary video. These are interviews that did not make the cut, or as we call it “The Untold Story.” Look for these in 2015. You can see the official SGX anniversary video here
ICE CEO says no immediate plans to sell New York Stock Exchange
John McCrank – Reuters
Intercontinental Exchange Inc has no immediate plans to sell the New York Stock Exchange, which it expects to become more profitable as a result of extensive ongoing restructuring, ICE Chief Executive Officer Jeffrey Sprecher said on Wednesday.
**JK – In the meantime Jeff Sprecher is showing some new moves to Garry Kasparov.
**** JJL: The direct question from John McCrank was do you plan to sell the NYSE.
OptionsCity Software Appoints Iqbal Brainch as Vice President of Marketing and Product Strategy
OptionsCity Software, a global provider of electronic trading solutions for professional futures and options traders, today announced the expansion of its senior leadership team with the addition of Iqbal Brainch as Vice President of Marketing and Product Strategy. Brainch, who brings deep futures industry expertise and 15 years of experience in the financial industry, will lead all marketing efforts.
***** It was nice to see Iqbal Brainch was still invited to the Advantage holiday party.
SEC Lacks Reliable Tools to Monitor Employee Trades, Audit Says
By Dave Michaels, Bloomberg
The U.S. Securities and Exchange Commission lacks a reliable system for ensuring that its employees don’t trade stocks of companies under investigation, the agency’s watchdog said.
**JK – What’s wrong with a hammer?
**** JJL: This organization needs to be scrapped and started over. And so says Mark Cuban
It’s not insider trading if you have a middleman: court ruling
Michelle Celarier – NY Post
It could be the perfect crime. A federal appeals court on Wednesday ruled that Wall Street traders can’t be convicted of insider-trading by merely possessing and trading on privileged info — they have to know the original tipster benefitted from the leak.
**JK – Woo hoo! Party over at Martha’s house.
Brendan Bradley, chief innovation officer, Eurex – The New World of Finance
“We are the wheels of industry. You wouldn’t actually have the rest of these businesses operating if it wasn’t for the fact that the finance world still greases all of the wheels making all these businesses come around.”
Brendan Bradley, chief innovation officer of Eurex, compares the financial world to the tech industry, and discusses the connection between companies like Google and Goldman Sachs. Bradley says that while the appeal for young people to work for a financial organization may not seem as high as working for a tech firm, it is actually the financial industry that helps tie other industries together. Bradley also discusses market structure, mention how OTC is generally seen as being negative while CCP is seen as being positive. Finally, Bradley concludes with the future of market infrastructure, comparing Bitcoin to T2S, as well as discussing the possibility of more crypto-currencies appearing in the future.
U.S. regulators to probe financial institutions’ cyber defenses
By Sarah N. Lynch and Aruna Viswanatha, Reuters
U.S. regulators on Wednesday said they were stepping up efforts to examine financial institutions’ defenses to ward off cyber attacks, as a top FBI official warned of new “increasingly complex” threats to the financial sector.
***** And the expertise for this comes from where?
CFTC Orders IBFX, Inc. f/k/a Tradestation Forex, Inc. to Pay a $600,000 Penalty for Series of Minimum Net Capital Deficits, Untimely Notice, and a Failure to Supervise
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against IBFX, Inc. f/k/a Tradestation Forex, Inc. (IBFX), a Florida-based Retail Foreign Exchange Dealer (RFED), for violating CFTC Regulations by failing to meet the minimum net capital requirements on three separate occasions, failing to timely report one of the minimum net capital deficits, and failing to supervise its employees and agents diligently by establishing, im
plementing, and executing an adequate supervisory structure and compliance programs.
***** Maybe TradeStation should run a trading algorithm that watches the capital requirements.
Stuart McClymont, managing director, JDX Consulting – Financial Services Infrastructure
“We’ve got lots of people and lots of different technologies, but we’ve got common problems; common issues that try to reduce the amount of duplication and operation processes for a common function.”
Stuart McClymont, managing director at JDX Consulting, explains the infrastructure for financial services. He gives a brief history of how the industry functioned without today’s technology, and then delves into how the technology boom in the 90’s created an influx of new opportunities for the markets and its participants. One key point was how companies needed to collaborate more together in order to use new technology efficiently. McClymont also touches on opportunities for the future and where the industry is headed from here.
MarketsWiki Page of the Day
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Eurex Adds to Swap-Future Lineup as Rules Reshape Market
Eurex plans to offer a futures contract that mimics an interest-rate swap, the latest effort by an exchange operator to win a piece of the $421 trillion market for rate swaps. The new product, denominated in euros, stems from a licensing agreement with Global Markets Exchange Group International LLP and tracks a constant maturity index of interest-rate swaps. They aim to simplify bets on interest rates by reducing the need to keep buying new futures when previous ones expire.
Court Overturns Insider-Trading Convictions, a Blow to Justice Department; Judges Narrow Definition of Insider Trading, Say Prosecutors Took Too Broad a View in Wall Street Crackdown
By Christopher M. Matthews, WSJ
In a blow to the Justice Department’s Wall Street crackdown, a federal appeals court overturned two insider-trading convictions and ruled it isn’t always illegal to buy or sell stocks using inside information.
US insider trading convictions quashed
Gina Chon in Washington, FT
US prosecutors will face higher hurdles in pursuing future insider trading cases after an Appeals Court overturned two convictions of hedge fund managers that were part of Manhattan US Attorney Preet Bharara’s long-running probe.
Top Senate Dem says derivatives regulator still underfunded
By Vicki Needham, The Hill
A top Senate Democrat argued Wednesday that the Commodity Futures Trading Commission (CFTC) needs more resources to effectively regulate derivatives and maintain market stability.
Sen. Debbie Stabenow (Mich.), chairwoman of the Senate Agriculture Committee, said the 2015 spending bill released on Tuesday underfunds the agency and tacks on new restrictions at a time when the regulator is being asked to do more work.
Euronext to launch derivatives clearing service next spring
Pan-European exchange Euronext is to launch a service to allow market participants to report and clear bilateral derivatives trades, it said on Thursday, as it seeks to grab a bigger share of the derivatives market.
London Stock Exchange’s Westward Expansion
By Anita Raghavan – NY Times
Xavier Rolet is firmly rooted in London and wants to keep it that way, but that does not mean his eyes aren’t looking abroad.
CBOE Enters into Agreement with MSCI Inc. to List Index Options
– In U.S., MSCI Index Options to Be Solely Listed on CBOE
– Options Expected to Launch in First Quarter of 2015
CBOE Holdings, Inc. (NASDAQ: CBOE) announced today that it has entered into a licensing agreement with MSCI Inc., a leading provider of investment decision support tools worldwide, to offer options trading on several MSCI indexes. Under the agreement, in the U.S., options on the MSCI indexes will be solely listed for trading on the Chicago Board Options Exchange (CBOE).
Mexico eyes gas futures amid energy reforms
Jude Webber in Mexico City, FT
Mexico is developing gas futures contracts to exploit demand for hedging tools as the country opens up the hydrocarbons sector it has closed for nearly 80 years.
The country’s main derivatives exchange, MexDer, will work on the development in the coming year with CME Group, the US futures exchange and a longstanding partner, according to Jorge Alegría, chief executive of MexDer.
Johannesburg exchange targets top rivals
Andrew England — Johannesburg, FT
The Johannesburg Stock Exchange has launched an initiative to attract companies listed in London, New York, Toronto and Sydney to dual list in South Africa as it seeks to reinforce its position as the continent’s top exchange.
Lawsky Said to Probe Barclays, Deutsche Bank FX Algorithm
By Greg Farrell, Bloomberg
New York regulators have found evidence that Barclays Plc (BARC) and Deutsche Bank AG (DBK) may have used algorithms on their trading platforms to manipulate foreign-exchange rates, a person with knowledge of the investigation said.
Bank of England to publish minutes faster, cut number of policy meetings
By William Schomberg and Andy Bruce, Reuters
The Bank of England said on Thursday that it wanted to cut the number of monetary policy meetings it holds to eight a year from 12, and that from August 2015 it would publish minutes of its discussions immediately after policy decisions.
SEC Commissioner Warns Harvard of Vulnerability; Gallagher Says Harvard’s Shareholder Rights Project Could Spur Legal Action
By Jean Eaglesham and Liz Hoffman
A top official at the Securities and Exchange Commission has taken the unusual step of saying Harvard University could be vulnerable to legal action from the agency or investors over a corporate governance project. In an academic paper, Daniel Gallagher, one of five SEC commissioners, criticized the Shareholder Rights Project at Harvard, which helps large investors like pension funds file shareholder ballot measures meant to help investors get more influence over corporate boards.
CFTC Chief Pledges to Address Employee Unrest Plaguing Regulator
By Robert Schmidt and Silla Brush, Bloomberg
The head of the U.S. derivatives regulator is promising employees he will try to address low morale that has caused the agency to be labeled one of the worst places to work in government.
What’s New at the SEC
Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
EDGA: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rules 1.5 and 11.3 of EDGA Exchange, Inc. (Release No. 34-73797; File No. SR-EDGA-2014-32; December 9, 2014); see also Exhibit 5
EDGX: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rules 1.5 and 11.3 of EDGX Exchange, Inc. (Release No. 34-73796; File No. SR-EDGX-2014-33; December 9, 2014); see also Exhibit 5
NASDAQ: Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Modify NASDAQ Rule 7049 Fees (Release No. 34-73789; File No. SR-NASDAQ-2014-120; December 8, 2014)
NYSE Arca: Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend the NYSE Arca Options Fee Schedule to Amend the Application of Routing Fees Effective December 1, 2014 (Release No. 34-73793; File No. SR-NYSEArca-2014-137; December 9, 2014); see also Exhibit 5
NYSEMKT: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex Options Fee Schedule to Amend the Application of Routing Surcharge Fees (Release No. 34-73794; File No. SR-NYSEMKT-2014-98; December 9, 2014); see also Exhibit 5
FCA publishes the findings of its work into annuities sales practices and retirement income market
The Financial Conduct Authority (FCA) has today published the findings of its thematic review into annuity sales practices and the interim findings of a market study into retirement income.
Apollo Multi Asset Management LLP (clone)
Fraudsters are using the details of firms we authorise to try to convince people that they work for a genuine, authorised firm. Find out more about this ‘clone firm’.
FINRA Names New Floor Member Governor
WASHINGTON—The Financial Industry Regulatory Authority (FINRA) has named Joseph M. Mecane as the Floor Member Governor on FINRA’s Board of Governors. Mr. Mecane is currently a Managing Director of Electronic Equities and Credit Products at Barclays. Mr. Mecane recently joined Barclays to assist in the further development of the firm’s electronic product offering, with a particular focus on the equities and credit markets.
Testimony of Chairman Timothy Massad before the U.S. Senate Committee on Agriculture, Nutrition & Forestry
Thank you Chairwoman Stabenow, Ranking Member Cochran, and members of the Committee. I am pleased to testify before you today on behalf of the Commission. I last came before you as a nominee. It is a privilege to be here today as Chairman of the Commodity Futures Trading Commission (CFTC). I appreciate the opportunities I have had to meet with many of you during the confirmation process and since, and value your suggestions on the issues facing the Commission. I look forward to this Committee’s continued input going forward.
ASIC consults on proposals to remake ‘sunsetting’ class orders
ASIC has today released two consultation papers proposing to remake a number of class orders that are due to expire (‘sunset’) in 2015 and 2016.
Exchanges & Trading Facilities
Eurex and GMEX cooperate in swap futures trading and clearing
GMEX granted UK FCA approval/Interest rate swap future with innovative product design
Global Markets Exchange Group Limited (GMEX), a wholly owned subsidiary of Global Markets Exchange Group International LLP (GMEX Group), and the international derivatives market Eurex today announced the signing of a license agreement. Eurex will license GMEX’s Euro-denominated Constant Maturity Future (CMF) for trading via Eurex’s Multilateral Trade Registration (MTR) service and clearing on Eurex Clearing.
APPLICATION FOR GOLD REGULARITY
CME ClearPort API
Large Trader Requirements for the Listing of Fifteen (15) Interest Rate Swap Products
Euronext expands derivatives services using Cinnober’s technology
Cinnober Financial Technology has announced the signing of an order with Euronext, the pan-European exchange group. The deal is for a trade validation and confirmation solution that will run on the TRADExpress technology and be adapted to Euronext’s specific requirements.
Implementation Date for the Tied to Stock Order Marking and Reporting Requirements
Euronext makes OTC market push
Philip Stafford, FT
Euronext is to make a grab for the emerging market to clear over-the-counter equity derivatives as a regulatory overhaul takes effect. The European exchange operator will offer a service from next year that treats certain trades negotiated privately between brokers as exchange-registered deals. It will begin with equities but aims to add other asset classes at a later date.
Swiss exchange readies bond trading platform
By Anna Irrera, Financial News
Switzerland’s national stock exchange is readying the launch of a new secondary bond trading platform next year, as the industry ramps up its efforts to restore liquidity in the fixed income markets.
Hedge Funds & Managed Futures
Fed Bubble Bursts in $550 Billion of Energy Debt: Credit Markets
By Christine Idzelis and Craig Torres, Bloomberg
The danger of stimulus-induced bubbles is starting to play out in the market for energy-company debt.
Ed Davey calls for transparency on ‘risky’ fossil fuel investments
Pilita Clark in Lima, FT
Britain’s energy secretary has called for tougher rules to be applied to companies holding “risky” fossil fuel assets that could plunge in value because of global action to tackle climate change.
Banks & Brokers
GFI AND AMEREX RECEIVE 2014 COMMODITIES BUSINESS BROKER OF THE YEAR AWARD; Amerex #1 in Excellence in Emissions Markets
New York, December 10, 2014 – GFI Group, Inc. (NYSE: “GFIG”) and its subsidiary Amerex Brokers LLC have been voted Commodity Broker of the Year 2014 by Commodities Now magazine in this year’s Commodity Business Awards. Amerex has also achieved the top spot in the Excellence in Emissions Markets category.
Cantor Fitzgerald Leverages IEX as Part of Cantor Connect Clean Algo Suite
IEX’s smart order router and ATS are combined with Cantor customized equity algorithmic trading strategies to give clients greater control over orders and help to reduce execution risk
Cantor Fitzgerald & Co., a leading financial services firm, today announced the availability of customized equity algorithms leveraging IEX’s Smart Order Router (SOR) and Alternative Trading System (ATS), as part of the Cantor Connect Clean Algo Suite. Through Cantor’s Connect Clean Algo Suite, Cantor is one of the first major firms to leverage IEX’s SOR across a custom suite of algo strategies. By focusing on independent venues and leveraging IEX’s anti-gaming technology, the Cantor Connect Clean Algo Suite aims to prevent information leakage and help clients improve execution quality.
Clearing & Settlement
Clearing at a cost
Philip Stafford, FT
Morgan Stanley estimates recovery plans could hit operators with a EUR100m-EUR450m bill
Positions are being taken ahead of the next big lobbying battle — deciding where to apportion the losses from failing clearing houses. Clearing houses, their members, the members’ customers and regulators all have strong views in this vital and yet, in some ways, strange debate.
Indexes & Products
CBOE to offer options on MSCI indexes
Saqib Iqbal Ahmed – Reuters
CBOE Holdings Inc (CBOE.O), which runs the largest U.S. stock-options market, said on Wednesday it has entered a licensing deal with stock market indexes provider MSCI Inc (MSCI.N) which would allow the CBOE to offer options on six MSCI indexes.
Under the agreement, the CBOE plans to offer options trading in the MSCI EAFE Index .dMIEA00000PUS, and the MSCI Emerging Markets Index .dMIEF00000PUS, in the first quarter of 2015, subject to regulatory approval, it said in a statement.
Emerging Stocks Fall to Eight-Month Low as Commodities Decline
Zahra Hankir and Nguyen Kieu Giang – Bloomberg
Emerging-market stocks fell to the lowest level in eight months as a drop in commodity prices weighed on raw-material producers and technology shares declined. Russia’s ruble fell for a third day.
Duco Wins FOW Award for Best New Product – Reconciliation
Duco, a London-based technology provider of hosted reconciliation services, announced today that the firm has just won the 2014 FOW International Award for “Best New Product – Reconciliation” for its flagship Duco Cube, launched in April 2013. The award was bestowed last night by FOW, the leading news and data service for the global futures and options industry, during the FOW Derivatives World conference in London.
Trading Technologies Wins “Prop Traders’ ISV of the Year” at FOW International Awards
Trading Technologies International, Inc., a provider of high-performance professional trading software, was named “Prop Traders’ ISV of the Year” by FOW magazine at the FOW International Awards yesterday in London. TT was selected for this award by proprietary traders who voted in FOW’s annual proprietary trading survey.
Traiana wins 2014 FOW award; Best new product – Connectivity
London and New York, 10 December 2014 – Traiana, the leading provider of pre trade risk and post trade processing solutions, announces today that it has won the award for “Best new product – Connectivity” at the 2014 FOW awards ceremony held in London last night.
Options Expands Asian Co-Location Presence into Equinix’s TY3 Data Center in Tokyo
The managed services provider now offers co-location services in the largest FX trading facility in Asia
New York – December 9, 2014 – Options, the leading private financial cloud provider for the global capital markets industry, has today announced a further expansion of the firm’s Asian presence with the addition of co-location services in Equinix’s TY3 data center in Tokyo. Options’ expansion into TY3 will see the IaaS provider offer clients leveraging the firm’s Velocity platform access to managed hosting services in the largest FX trading facility in Asia.
SunGard Leads in Risk Magazine’s 2014 Technology Rankings
SunGard has been ranked top technology vendor in Risk Magazine’s annual Technology Rankings for Asset and Liability Management (ALM). SunGard has led in this category since 2007.
Insider Trading Prosecutions Just Got Harder as Court Raises Bar
By Patricia Hurtado, Bloomberg
Insider trading cases just got harder to make after a key federal court raised the bar on what prosecutors must prove, in a ruling that also imperils a handful of victories for the Justice Department in its multiyear probe.
SEC Announces Fraud Charges Against Buffalo-Based Firm and Co-Owners Accused of Misleading Investors in Hedge Fund
The Securities and Exchange Commission today announced fraud charges against a Buffalo, N.Y.-based investment advisory firm and two co-owners accused of making false and misleading statements to clients when recommending investments in a risky hedge fund. The hedge fund’s portfolio manager agreed to settle similar charges.
SEC Penalizes Morgan Stanley for Violating Market Access Rule
The Securities and Exchange Commission today penalized Morgan Stanley & Co. LLC for violating the market access rule when it failed to uphold credit limits for a customer firm with a rogue trader who engaged in fraudulent trading of Apple stock.
Environmental & Energy
United Nations backs BlackRock, State Street low carbon funds
By Ashley Lau – Reuters
The United Nations said Thursday it provided the initial funding for two new exchange-traded funds from BlackRock Inc and State Street Corp that invest in companies with low carbon emissions.
‘Berlin Wall’ climate divide looms over Lima
By Valerie Volcovici and Alister Doyle – Reuters
As UN climate talks enter their final days, the “Berlin Wall” that has for years divided rich and poor countries once again looms large as negotiators race to write a draft of a global deal that is meant to tear it down.
Climate pact gridlock sets in at Lima talks
By John Upton – Climate Central
For a sense of the frustrating tenor of climate negotiations underway here, which aim to agree on a clear outline of a new international climate-protecting agreement, consider this: One of the two draft documents being thrashed out had, by Wednesday morning, with just three days of a fortnight of talks remaining, ballooned into an unworkable 52-page opus.
HKEx Announces Temporary Holiday Risk Management Arrangements
Hong Kong Exchanges and Clearing Limited (HKEx) has announced the following holiday risk management arrangements.
Taiwan Stock Exchange will start cross trading links with Singapore, Japan – president
The Taiwan Stock Exchange will kick off cross-trading with the Singapore and the Tokyo stock exchanges next year, the Taipei bourse’s president said on Wednesday, in a bid to bolster its position after launch of the Shanghai-Hong Kong trading link.
Has SGX’s system become too unwieldy?
Goh Eng Yeow, Asia One Business
Time was that it took a war to close a stock exchange. Not anymore. Now all it takes is a technical glitch – and there have been a few examples here recently.
Russian Firms Lost Billions on Ruble Derivatives, Interfax Says
By Lyubov Pronina, Natasha Doff and Ye Xie, Bloomberg
Russian companies lost tens of billions of rubles on foreign-exchange derivatives amid a rout in the ruble, Interfax reported, citing Sergey Moiseev, the head of financial stability at the central bank.
Crisil to establish Chair of Financial Markets at IIM-Ahmedabad
The Economic Times
MUMBAI; Rating agency Crisil has signed an MoU with the Indian Institute of Management, Ahmedabad (IIM-A) to set up a Chair of Financial Markets at the business school.
Securities and Exchange Board of India Notices
Public Issue Data of Corporate Debt
PR – Order in the matter of M/s KMJ Land Developers India Limited and its directors
PR – Caution to Investors
NCDEX to launch forward trading in 17 new commodities
The Economic Times
MUMBAI: The National Commodity & Derivatives Exchange will soon launch forward trading in 17 additional commodities comprising major cash crops that form bulk of the physical agri trade in the country.
DGCX Named ‘Exchange of the Year’ for the Second Year in a Row
In September, the Exchange was named the ‘Emerging Exchange of the Year 2014’ by FOW Asia.
Dubai, December 11, 2014: The Dubai Gold and Commodities Exchange (DGCX) has been named as ‘Exchange of the Year 2014’ in the Middle East and Australia by Futures & Options World (FOW), a leading global derivatives magazine.