Oceans of Data: Ari Rubenstein Talks About the Next Data Challenge and Solution
Regulations are pushing firms to collect, store and organize data in new and complex ways. Ari Rubenstein, co-founder and CEO of Global Trading Systems, said this is creating a glut of data for firms and an opportunity as well. Managing big data in innovative ways, he says, will be the next competitive edge for firms.
Rubenstein’s firm has developed a solution which it believes can efficiently help firms manage and store trading data for regulatory and compliance needs. For him, that will help give firms an advantage over the competition.
Record day for derivatives exchanges
Neil Munshi in Chicago – Financial Times
As fear swept markets on Wednesday, US derivatives exchanges hit record highs.
***JM: Nothing like a good selloff to really get the blood flowing! No no, I meant as in, “invigorating”!
Chicago exchanges CME, CBOE benefit from trading frenzy
Lynne Marek – Crain’s Chicago Business
The capital markets’ ups and downs may spook investors, but turmoil is good for Chicago’s exchanges.
***JM: “Happy Day is Here Again!” La la la, da da da,…
Tim McDermott, CEO, NADEX – You Can’t Google Map Your Career
“You will find that your career will be all about change.”
Tim McDermott, CEO of NADEX, gives an illustration of the winding road he followed throughout his career. Beginning with his time as a lawyer working for a law firm, McDermott began to take on numerous cases for First Options of Chicago, a large client for his law firm. Participating in cases involving financial markets litigation gave McDermott an introduction to the financial industry, which eventually led him to work at the CME and handle the market regulation area. Moving forward a few years, McDermott joined NADEX and eventually became CEO of the company. His overall message was that where you start isn’t necessarily where you may end up, and that every experience can either help or hurt you down the road.
HFT Firm Fined $1 Million for Manipulating Nasdaq
Keri Geiger and Sam Mamudi – Bloomberg
Athena Capital Research LLC used $40 million to rig prices of thousands of stocks including EBay Inc. for at least six months in 2009, U.S. regulators said today when fining the high-speed trading firm $1 million.
***JM: …without admitting or denying… hence, that wasn’t really a “settlement over charges” as much as “an extra fee paid to the SEC as part of the cost of doing business”.
Share Your Secret Sauce! Alan Synder Says Emerging Managers Should Provide More Details
Fund managers are faced with a myriad of challenges from trading and risk management to compliance and operating a business. But the challenge of marketing and raising money can be most daunting of all.
Jim Kharouf, editor-in-chief of John Lothian News, spoke with Alan Snyder, managing partner of Shinnecock Group, who says there are several keys to attracting and keeping institutional investors, and one of them is “sharing your secret sauce.”
Snyder said that providing deeper information about how a fund trades is part of the real key in the sales process – engendering trust.
CTAs Post Best Quarterly Return in Four Years
Johanna Bennett – Barron’s
Commodity trading advisor hedge funds had their strongest quarterly performance in almost four years, posting third-quarter returns of 5.52%. According to the latest performance benchmarks from data tracker Preqin, the CTA benchmark has posted positive returns for six consecutive months and gained 7.13% so far this year.
***JM: Big profits already booked? Time to invest!
Markets are parched for liquidity despite a flood of cash
Gillian Tett – Financial Times
If Guy Debelle was a hedge fund trader, he might have made a killing this week. Three days ago Mr Debelle – a top official at Australia’s central bank – predicted that markets were heading for wild volatility, since investors were naive about structural risks. A “sizeable” number of them, he observed, probably presumed that they could exit their positions before any sell-off. “History tells us that this is generally not a successful strategy,” he warned. “The exits tend to get jammed unexpectedly and rapidly.”
Here’s What to Say When You Don’t Know Why the Stock Market Fell
Josh Barro – NY Times
The stock market is down sharply over the last week, and while German economic weakness and the Ebola crisis are factors, nobody is entirely sure why the sell-off is so sharp. Whenever this happens, business journalists, market analysts and financial TV talking heads will search for explanations.
***JM: Yep, it’s funny as heck when folks who don’t know much just write inane commentary that… ahhhh, dangit.
***SR: Can I say it was the full moon?
Craig Donohue, executive chairman, OCC – Clearing Today and Tomorrow
“When we first came into the industry, clearing, I guarantee you, was not sexy at all.”
Craig Donohue, executive chairman of OCC, begins by giving a quick overview of OCC and highlighting its achievements with equity derivatives contracts and margin collateral. He then goes on to discuss challenges in industry, including the 2008 financial crisis and the G20 response to shifting more risk to central counterparties. Donohue also explains what a systemically important financial market utility is, and what challenges OCC and other SIFMUs face in the future.
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Eurex Delays Plan for Moscow Exchange Partnership
Chiara Albanese – WSJ
Eurex, the derivatives arm of Deutsche Börse AG, has shelved plans to partner with the Moscow Exchange to offer trading in ruble derivatives partly because of concerns about Western sanctions on Russia, according to people familiar with the matter.
Exclusive: Wells Fargo to shut its ‘dark pool’ as demand falls
John McCrank – Reuters
Wells Fargo is closing down its alternative trading system, or “dark pool,” due to decreased customer demand, the company said on Thursday.
***SR: 41 dark pools and 11 U.S. stock exchanges – yep, sounds like there could be some fragmentation perhaps.
Demand for SEFs Goes Unmet Outside US
Profit & Loss
Participant demand for swap execution facilities (SEFs) outside US borders cannot always be fulfilled as some jurisdictions do not recognise or offer licensing to the year-old venues, claims Jodi Burns, head of regulation, post-trade networks at Thomson Reuters.
***JM: Profit & Loss is normally behind a paywall, but they unlocked this one JUST FOR YOU, so be sure to read it.
Fixing the cognitive problems at the root of the crisis
Alexander Campbell – Risk.net
The decision-making failures behind the financial crisis are being addressed in three very different ways: improving corporate culture, hiring more female managers and increasing the use of machine intelligence
***SR: Now, if only we could improve the human intelligence.
Two More Former Rabobank Traders Charged in Libor Probe
Tess Stynes – WSJ
The U.S. government indicted two additional former Rabobank traders for their alleged roles in a scheme to manipulate the benchmark London interbank offered rate, or Libor. According to the Justice Department, the indictments bring the number of former Rabobank employees charged in the inquiry of the lender to six.
The future of listed derivatives
Renaud Huck, Eurex Exchange-Deutsche Börse Group, Bruno Pannetier – Risk.net
With the move to exchange clearing, a new trading environment has emerged and, while many questions remain unanswered during this transition, new products and approaches are being created to the meet the challenges of this new environment. Renaud Huck, head of buy-side, Deutsche Börse Group-Eurex Exchange, and Bruno Pannetier, chief investment officer at Old Park Capital, discuss the evolution of the listed derivatives market and the opportunities and challenges that it represents within the current regulatory landscape.
CFTC’s Massad Sees ‘Progress’ On Global Derivatives Rules
Andrew Ackerman – WSJ
European policy makers are far behind their U.S. counterparts in setting up postcrisis regulations for the multitrillion-dollar derivatives industry but Timothy Massad, the top U.S. overseer of swaps, said a coordinated system will ultimately emerge.
Markit chief calls for more unity
Tim Cave – Financial News
Markit chief executive Lance Uggla has urged the financial industry to work “better together” as it faces up to regulatory headwinds, a pressure to reduce costs and a lack of data standards.
Russian derivatives reporting rules still in flux
Catherine Contiguglia – Risk.net
Just days after limiting the scope of its derivatives reporting regime, Russian regulators began discussing plans to reintroduce counterparties and trade types that were cut from original draft rules, according to lawyers who have been involved in the talks.
Back-testing expected shortfall: mission possible?
Laurie Carver – Risk.net
Shifting from value-at-risk to expected shortfall in trading book capital rules makes back-testing difficult, or even impossible. Regulators say continuing to test VAR is sufficient, but that leaves out the tail – the main reason for the change.
Britain’s PRA slams banker bonus caps
Luke Jeffs – Futures & Options World
Britain’s financial crime watchdog has said capping banker bonuses is not the answer to tackling what it sees as “the second phase of the financial crisis”. Andrew Bailey, the chief executive of the Prudential Regulation Authority, the UK body that fights financial crime, said making bankers’ pay variable for a period was preferable to capping pay.
CFTC Staff Issues Extension of Time-Limited No-Action Relief for Futures Commission Merchants from Requirement to Obtain an Acknowledgement Letter from Certain Depositories
Managed Funds Association – Remarks Of CFTC Chairman Timothy G. Massad
Speech By Martin Wheatley Chief Executive, UK Financial Conduct Authority, At The City Banquet, Mansion House Speech – Competition In The Interests Of Consumers
SEC Announces Date for Annual Government-Business Forum on Small Business Capital Formation
FINRA Receives Two 2014 Data Impact Awards
Ethics And Finance – Panel Remarks By Mark Carney, Governor, Bank Of England
Exchanges & Trading Facilities
LME takes battle to Washington after London warehouses win
Douwe Miedema – Reuters
Fresh from a court win in Britain, the London Metal Exchange now faces one of its biggest hurdles yet in its years-long crisis over its warehousing policy that consumers say has inflated prices: convincing U.S. lawmakers its reforms are enough.
CME Group Volume Reaches All-Time Daily High of 39.6 Million Contracts on October 15
CME Group, the world’s leading and most diverse derivatives marketplace, reached a record high in single-day volume with 39,567,064 contracts traded across all asset classes on October 15, 2014, shattering the previous record of 26,947,300 contracts set on May 29, 2013.
ICE Futures Sets Daily Volume Record In ICE U.S. Dollar Index
Intercontinental Exchange, the leading global network of exchanges and clearing houses, announced today that ICE Futures U.S. reported record daily volume in the ICE U.S. Dollar Index (USDX) futures contract of 118,291 contracts on October 15, 2014. The previous daily volume record of 116,372 contracts was established on June 6, 2013.
TMX Group Sets Trading And Clearing Records
TMX Group today announced that Montréal Exchange (MX) and the Canadian Depository for Securities (CDS) set new records on October 15, 2014.
Liquidnet bolsters fixed income team
Anna Irrera – Financial News
US-based dark pool operator Liquidnet has strengthened its fixed income team in Europe as it expands its presence in electronic bond trading.
SIX Exchange Regulation: Investigation Against LifeWatch AG
Hedge Funds & Managed Futures
Orange County Agency Poised to Drop Pimco After Two Decades
Sarah Krouse – MoneyBeat – WSJ
Pacific Investment Management Co. is poised to lose a mandate to manage $480 million on behalf of the Orange County Sanitation District that it has held since the 1990s, the latest blow to the bond giant as it works to retain clients following a string of leadership changes, including the high-profile departure of founder Bill Gross.
New Name, New Office, Similar Performance for Steven Cohen
Matthew Goldstein – Dealbook – NY Times
The best thing federal prosecutors might have done for Steven A. Cohen, the billionaire investor, is to force him to stop managing money for outside investors and convert his once mighty SAC Capital Advisors hedge fund into a family office.
Blackstone Posts Higher Profit and Sees Opportunity in Market Turmoil
William Alden – Dealbook – NY Times
A bout of market volatility rattled traders’ nerves on Wednesday. But the Blackstone Group is looking for ways to profit from the turmoil.
Einhorn’s Greenlight to Reopen Hedge Fund to New Capital
Simone Foxman – Bloomberg
Greenlight Capital Inc., the hedge-fund firm run by billionaire David Einhorn, plans to raise money for the first time in more than two years to take advantage of recent market turmoil.
Banks & Brokers
Goldman’s focus on bond trading pays off as profit soars
Lauren Tara LaCapra and Tanya Agrawal – Reuters
Goldman Sachs Group Inc (GS.N) reported a 50 percent jump in quarterly profit as last month’s pickup in bond market activity helped to boost trading revenue, showing that banks sticking with the notoriously volatile business can reap big rewards.
Goldman curbs bankers’ compensation even as revenue surges
Lauren Tara LaCapra – Reuters
Top Goldman Sachs Group Inc (GS.N) executives are determined to keep compensation costs under control. And that means even when the bank’s revenue spikes higher, bankers’ bonuses won’t.
Credit Suisse shakes up investment bank unit with new bosses
Katharina Bart – Reuters
Credit Suisse appointed two new investment banking bosses on Friday and promoted them to its top ranks, a move likely to raise fresh questions over its appetite to scale back a unit hit by volatility and lackluster profits.
Clearing & Settlement
Industry nears “Clearing Cliff” – lawyers
William Mitting – Futures & Options World – Let’s Talk Derivatives
The industry faces a “Clearing Cliff” if the Europe does not grant recognition to non-EU clearing houses by December 15, top international lawyers have warned.
Indexes & Products
Exclusive: Goldman Sachs in talks to acquire ETF provider IndexIQ – sources
Jessica Toonkel – Reuters
Goldman Sachs Group (GS.N) is in discussions to acquire IndexIQ, a Rye Brook, New York-based exchange-traded fund provider, according to three sources familiar with the situation.
Nasdaq Lists Vident Core U.S. Bond Strategy ETF – Fixed Income Strategy Designed To Guard Against Credit And Inflation Risks
Nasdaq Lists iShares Commodities Select Strategy ETF – All-In-One Commodity Solution That Utilizes A Dynamic Roll Methodology
BATS Exchange Welcomes iShares ETF -iShares MSCI Emerging Markets Horizon ETF Begins Trading Today
Fidessa takes Best Execution Management System crown in Financial News Awards
Fidessa group plc has been judged Best Execution Management System at the Financial News Awards for Excellence in Trading & Technology. Presented at a gala dinner in London on Wednesday, the award is testament to Fidessa’s ongoing programme of development of its Investment Management System (IMS).
The UPI, the LEI & Beyond
Allan Grody – Wall Street & Technology
The organizational mechanisms are in place. Now it’s time for the financial industry professionals to provide guidance on a global coding scheme that is fit for all the purposes intended.
‘Kill Switch’ Capabilities Move Corvil Beyond Latency
Faye Kilburn – WatersTechnology
Dublin-based network and latency monitoring technology vendor Corvil has adapted its monitoring tools to support the creation of automatic “kill switches” to protect trading firms’ infrastructures and trading strategies, as part of its efforts to reposition its platform as an all-purpose tool for network performance and security monitoring.
First Derivatives Secures a Majority Shareholding in Kx Systems in Transformational Deal
First Derivatives, a leading provider of software and consulting services to the financial services industry, today announces it has reached agreement with the founders of Kx Systems to acquire a further 46.47% stake in Kx for a total consideration of GBP36.0m.
Charles River Adds Thomson Reuters Pricing & Reference Data To Its Managed Data Service
SEC’s FY 2014 Enforcement Actions Span Securities Industry and Include First-Ever Cases
The Securities and Exchange Commission today announced that in fiscal year 2014, new investigative approaches and the innovative use of data and analytical tools contributed to a very strong year for enforcement marked by cases that spanned the securities industry.
SEC Charges New York-Based High Frequency Trading Firm With Fraudulent Trading to Manipulate Closing Prices
The Securities and Exchange Commission today sanctioned a New York City-based high frequency trading firm for placing a large number of aggressive, rapid-fire trades in the final two seconds of almost every trading day during a six-month period to manipulate the closing prices of thousands of NASDAQ-listed stocks. This marks the first high frequency trading manipulation case.
Two Former Rabobank Traders Indicted For Alleged Manipulation Of U.S. Dollar, Yen Libor Interest Rates
CFTC Revokes Registration of iFinix Futures, Inc. Based on Federal Court’s Permanent Injunction
[AMF Canada] Illegal practice as insurance of persons representative – Fred Pincemin pleads guilty
Environmental & Energy
MSCI unveils fossil-fuel free indexes
MSCI has launched a number of new indexes excluding companies that own oil, gas, and coal reserves in a move designed to aid those investors seeking to reduce the carbon intensity of their portfolios.
Fossil fuel industry supported by a ‘toxic triangle’ that puts 400 million at risk
Clar Ni Chonghaile, theguardian.com
Political inertia, financial short-termism and vested fossil fuel interests have formed a “toxic triangle” that threatens to push up global temperatures, putting 400 million people at risk of hunger and drought by 2060, Oxfam said on Friday, a week before a European Union summit to finalise a new climate and energy policy framework.
Dow Says World Carbon Market Needs Less Intervention to Work
Mathew Carr, Bloomberg
The world’s first global carbon market will need less intervention by regulators to succeed, Dow Chemical Co. said.
***LB: Also in this story “Politicians must avoid earlier missteps in Europe that included bans on imported carbon credits and a temporary cut of permits to curb a glut.”
New fund trading rules in Shenzhen
Simon Osborne – The Trade
The Shenzhen Stock Exchange (SZSE) has published new regulations titled ‘Implementation rules on trading, subscription and redemption of securities invested funds’.
Shanghai and CSRC ok bonds for securities firms
Simon Osborne – The Trade
The China Securities Regulatory Commission (CSRC) and the Shanghai Stock Exchange (SSE) have unveiled a pilot programme for securities companies to issue short term corporate bonds.
Asia Risk awards 2014: The winners
Aaron Woolner – Risk.net
Range-bound markets prompted a return of complex credit derivatives, such as credit repacks and CLOs. Elsewhere, China investors welcomed Shibor-linked products. In our annual Asia Risk awards, we hail the outstanding achievers in Asia’s derivatives industry during 2014
JCCH SPN Parameter Update effective Oct. 16
African Bond Selloff Could Crimp Future Debt Sales
Ben Edwards – MoneyBeat – WSJ
Investors selling off African government bonds this week could deter countries in the region from issuing new debt, analysts and bankers say.
Oil price fall triggers fears of Venezuela default
John Paul Rathbone in New York, Andres Schipani in La Paz and Vivianne Rodrigues in New York – Financial Times
When Venezuela last week demanded an emergency Opec meeting to try to stop the fall in energy prices, it was not the socialist country’s peers in the oil-producing cartel that paid attention but rather its increasingly worried bond investors on Wall St.
Malawi Stock Exchange Weekly Trading Report Week Ending 17th October, 2014
MCX Weekly Market Report – October 10, 2014 – October 16, 2014