Doug Ashburn, from FIA/SFOA Bürgenstock 2014
In yesterday’s commentary, I mentioned the fifth anniversary of the 2009 Pittsburgh Summit, in which the G-20’s finance heads set the table for the financial regulatory overhaul in which we are embroiled to this day. This is not, however, the only notable milestone from this week:
– Daily readers of JLN know that part of the reason I am in Europe this week is because my wife and I are celebrating our upcoming 25th anniversary. What readers may not know, however, is that Cheryl and John Lothian celebrate their 25th this week as well. Rumor has it they spent their special day at a high school band concert.
– Our co-hosts, the Swiss Futures and Options Association (SFOA), is celebrating its 35th Anniversary, as well as the 35th anniversary of the Bürgenstock conference.
Speaking of the SFOA, this conference marked the passing of the torch from Otto Nägeli to Dan Day-Robinson. Nägeli is not riding off, clad in lederhosen, into the Alpine sunset, though – he still retains his chairmanship of CME Europe
I cannot count how many times my favorite panel of the day has been the most thought-provoking and dynamic, but also the most poorly attended because it was the last one of the day. Wednesday’s final panel, “The Future of Non-exchange Trading Platforms,” was no exception. The panelists and their respective firms represent all that is forward looking, dynamic and disruptive in our industry. Non-coincidentally, the panel was mostly comprised of speakers at our upcoming London education event – Fidessa‘s inimitable Steve Grob led the show, with panelists Hirander Misra of GMEX, NLX‘s Charlotte Crosswell, and BATS Chi-X Europe CEO Mark Hemsley, who was slated as one of our speakers but has since had to cancel due to a scheduling conflict.
Finally, if there was one overarching theme of this year’s conference, it would be that, after the initial stab at a global regulatory overhaul, the ball is inching forward, but the goal is a long way down field with numerous obstacles (but also opportunities) ahead.
But isn’t that always the theme?
Profiles: Lee Stern
Lee Stern has seen it all in his career – the highs of great markets and the lows of market scandal. After completing his military service in 1947, Stern found his way to the Chicago Board of Trade after answering an ad for a runner on the floor. Stern recalls the thrill of making his first spread trade and the low point in 1992, when a customer schemed to manipulate the bond market and lost $9 million. That event led to a brief suspension and its eventual exit as a clearing member firm.
And if trading was his first love, his second is certainly professional sports – as the founder and owner of the Chicago Sting soccer team and then as a part owner of the Chicago White Sox. John Lothian News presents the story of a career that has spanned more than six decades – and counting.
FIA Global CCP Rulebook Review Will Provide Comprehensive Guide To Clearinghouse Rules
Today, FIA Global, in cooperation with the law firms Linklaters and Milbank, Tweed, Hadley & McCloy, announced a new guide to the rules of central clearing counterparties (CCPs). The FIA Global CCP Rulebook Review is a subscription service that will provide a standardized, comprehensive overview and analysis of the rules and procedures governing certain CCPs, as well as timely updates on changes to the rules and regulatory framework. It will highlight the issues most relevant to clearing members and end-users as they evaluate evolving regulatory obligations relating to CCPs on a real-time basis.
***** I will see your rulebook and raise you a MarketsReformWiki.
Julie Winkler, Senior Managing Director of Research and Product Development at CME Group – Innovation in the Futures Industry
“You can’t keep doing the same thing. You need to figure out different ways to innovate, different ways to collaborate…and by doing so, that’s how you come up with some breakthrough innovations.”
Einstein’s definition of insanity was repeating the same task over and over and expecting a different result each time. Julie Winkler of CME Group explains how innovation in the financial industry must also avoid repeating the same process over and over again in order to create change. Winkler defines innovation and gives examples of how companies like CME Group have been pioneers in their field. She also discusses designing successful new products and how innovation can start at the internship level.
Global repository plan ‘a dream’, says Isda CEO
Philip Stafford – Financial Times
Scott O’Malia, new chief executive of the International Swaps and Derivatives Association, said a recommendation by the Financial Stability Board to create a centralised utility for regulators to share data was “a nice vision for the future but the reality is dealing with what we have today and making that work”.
***** I will see your vision for the future and call your data sharing utility bet.
MGEX Announces New Clearing Member: Rosenthal Collins Group, LLC
MGEX, a Designated Contract Market and Derivatives Clearing Organization , is pleased to announce the addition of a new clearing member – Rosenthal Collins Group, LLC .
***** New to MGEX maybe, but otherwise an industry veteran firm.
Investor Confidence Still Dinged by Financial Crisis, Wells Fargo Survey Finds
Paul Vigna – MoneyBeat – WSJ
Six years after the collapse of Lehman Brothers, investors remain far less confident in their ability to prepare for retirement and in the markets than they did before the crash, according to a new survey from Wells Fargo.
**** What ability to prepare for retirement. I am preparing for the next armageddon.
Misha Malyshev: Why supporting STEM education is good for business
Misha Malyshev – Smart Business Magazine
Our nation’s scientists, engineers and innovators have driven the achievements that are positioning the U.S. as a global leader. With fewer American students pursuing expertise in the fields of science, technology, engineering and mathematics (STEM), and a shortage of teachers skilled in those subjects, our leadership position is vulnerable.
***** This commentary from the head of Teza Technologies is spot on for an endeavor I am currently working on with the Boy Scouts in Chicago to support STEM, Chicago and our industry. You will hear more about it in the coming weeks. Please do read this commentary and share it with your industry friends. It is a very important issue.
MarketsWiki Page of the Day
Scott D. O’Malia
MarketsWiki Recent Updates
Companies, Organizations and Groups
53,501,357 pages viewed, 8,045 articles, 186,126 edits
Euronext to innovate across asset classes – Cerutti
Chris Hall – The Trade
Newly-independent pan-European exchange operator Euronext will develop its core equities offering as well as boosting its hitherto “under-exploited” derivatives capabilities, according to CEO Dominique Cerutti.
CME says no current plans to introduce VSR in corn futures
Christine Stebbins – Reuters
CME Group Inc, owner of the Chicago Board of Trade grain exchange, said on Wednesday it had no immediate plans to introduce its controversial variable storage rate (VSR) scheme in its CBOT corn futures, the world pricing benchmark for the biggest and most valuable feed grain.
Goldman Sachs-Led Group Near Deal to Buy Messaging Startup Perzo
Justin Baer – WSJ
Wall Street firms led by Goldman Sachs Group Inc. are close to a deal to create an instant-messaging service to rival that of Bloomberg LP. A buyout of messaging startup Perzo Inc. could be announced as soon as next week, according to people familiar with the matter.
Intercontinental Exchange Announces Approval Of ICE Trade Vault By Ontario Securities Commission
Intercontinental Exchange, the leading global network of exchanges and clearing houses, announced today that the Ontario Securities Commission (OSC) approved ICE Trade Vault as a Canadian Trade Repository to serve the commodity, credit and foreign exchange asset classes. ICE Trade Vault will seek trade repository registration in Alberta once the provincial rules are finalized.
Pimco’s ETF Probe Said to Be Separate From Industry Sweep
Mary Childs and Joshua Gallu – Bloomberg
The U.S. regulatory probe into Bill Gross’s Pimco Total Return ETF is separate from a broader scrutiny of disclosure in the exchange-traded fund industry, according to a person familiar with the matter.
Hedge Fund Alpha Trades Shown to Lose Money
Laurence Fletcher – WSJ
Investors have piled into hedge funds for years because they supposedly possess the holy grail of investing—the ability to make money through their own skillful trades, regardless of the direction of financial market moves. But the presumptive skill of hedge-fund managers may not be what it seems, new research shows.
U.K. Seeks to Criminalize Manipulation of 7 Benchmarks
Gavin Finch and Nicholas Larkin – Bloomberg
The U.K. government plans to criminalize the manipulation of seven more benchmarks in markets from foreign exchange to gold and oil as it tries to revive confidence in the integrity of London as a financial center.
FINRA algo supervision could be “costly and ineffective”
John Bakie – The Trade
Tighter rules on the development of execution algorithms in the US could put further cost pressure on the sell-side without improving market stability, experts warn.
SEC Market Structure Research: A Characterization Of Market Quality For Small Capitalization US Equities
UK Government Consults On Extending LIBOR Powers To More Financial Benchmarks
Consultation Launched On Extending The New Legislation The Government Put In Place To Regulate LIBOR To Cover Further Benchmarks
Our Markets: A Regulatory Update – A Speech By John Price, Commissioner, Australian Securities And Investments Commission To The G100 Dinner, 24 September 2014.
Ontario Securities Commission Designates Three Entities As Trade Repositories
Exchanges & Trading Facilities
Euronext hosts the 3rd Pan-European IR Conference in Brussels
Euronext today announced that the Pan European Investor Relations (IR) Conference was successfully launched in Brussels with an IR awards dinner and a high-level IR conference which were attended by Investment Relations Officers (IRO) from all over Europe. This forum bringstogether delegates from the IR associations of the Netherlands (NEVIR), France (CLIFF), Belgium (BIRA) and Portugal (FIR), as well as IR Professionals from India, Germany, Sweden, and other European countries.
Speech By Magnus Bocker, CEO Of Singapore Exchange, At 15th Annual General Meeting Of SGX, NTUC Conference Hall, 25 Sep 2014
HKEx: Update On Legal Proceedings – London Metal Exchange And HKEx Class Action Lawsuits Filed In The United States – Aluminium Metal Warehousing
Oslo Børs: Jactel Lists Its First Bond Issue On Nordic ABM
Moscow Exchange November Holiday Trading Schedule
NASDAQ Announces Mid-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date September 15, 2014
Hedge Funds & Managed Futures
Fidelity slashes fees on passive multi-asset range
Nick Paler – Investment Week
Fidelity Worldwide Investment has cut fees on its passive multi-asset range in another aggressive pricing move.
Newton’s Morrissey: We need more female fund managers
Anna Fedorova – Investment Week
The fund management industry must address the issue of lack of female representation among fund managers, according to Helena Morrissey, chief executive of Newton Investment Management.
Harvard Picks Insider to Run $36.4 Billion Endowment
Michael McDonald and John Lauerman – Bloomberg
Harvard University named Stephen Blyth as head of the unit overseeing its $36.4 billion endowment, picking an insider as it looks to boost investment returns that have lagged Ivy League peers.
Bonham Carter: Managers chasing performance fees may ‘double their bets’
Julia Rampen – Investment Week
Fund managers must think carefully about the impact of performance fees on the firm’s culture, Jupiter’s vice chairman has warned.
Has Bill Gross Been Replaced as Pimco’s Most Popular Fund Manager?
Karen Damato – MoneyBeat – WSJ
For 16 straight months, investors have pulled out more money than they have put into the flagship mutual fund run by Bill Gross, Pimco Investment Management Co.’s marquee bond manager. But while investors have shrunk their holdings of Mr. Gross’s Pimco Total Return Fund , they have showered love and cash on some other Pimco managers.
Junk-Bond Investors Start to See Warning Signs
Mike Cherney – WSJ
Brian Kloss isn’t letting buoyant markets and U.S. economic expansion dull his sense of danger. Mr. Kloss, a portfolio manager who helps oversee junk bonds at Brandywine Global Investment Management, has been selling bonds from companies with some of the lowest ratings and highest levels of debt, or leverage.
BlackRock Offers Recipe for Transforming a ‘Broken’ Fixed Inome Market
Ivy Schmerken – Wall Street & Technology
The world’s largest money manager outlined steps for improving liquidity in corporate bond markets with expanded e-trading protocols and bond standardization.
Caxton Hedge Fund Hires Former BNP Paribas Trader Fourcade
Ambereen Choudhury and Julia Verlaine – Bloomberg
Caxton Associates LP, the hedge fund firm co-founded by billionaire Bruce Kovner, hired Philippe Fourcade, a former proprietary trader at BNP Paribas SA. (BNP)
Revealed: All the winners of the Fund Services Awards 2014
BNP Paribas Securities Services, Advent, RIva Financial Systems, and Kneip were among the winners at this year’s Fund Services Awards.
SunGard and CEB TowerGroup Paper Asserts Financial Planning is the Hub of Wealth Management
A new white paper by CEB TowerGroup analysts, commissioned by SunGard, reveals the importance of goal-based financial planning in wealth management firms’ ability to attract and retain new clients, satisfy advisor demand, and create client loyalty and cross-sell relationship opportunities.
Banks & Brokers
RBS chair Hampton to exit for Glaxo role
RBS chairman Sir Philip Hampton is to leave the bank in order to take up an identical position at GlaxoSmithKline, according to reports.
JPMorgan tops investment bank league table in first half
JPMorgan (JPM.N) was the top performing investment bank in the first half of the year, making $11.5 billion in revenue and ranking first for both its fixed income and deals advisory businesses, data showed on Thursday.
Nothing new about bank commodity exits, history shows
Alexander Osipovich – Risk.net
It’s tough being a bank in the commodity markets nowadays. Over the past 18 months, many US and European financial institutions have either shut down or significantly scaled back their commodity units, including some firms only recently regarded as titans of the business, such as JP Morgan, Barclays and Deutsche Bank. The trend has raised questions as to whether banks have any future in commodities at all. But a quick review of recent history shows plenty of episodes where they retreated from commodities, often to jump back in a few years later once market conditions changed.
BGC Partners’ Third Quarter 2014 Financial Results Announcement to be Issued Prior to Market Open on Thursday, October 31, 2014
Clearing & Settlement
Mandatory FX clearing in the US not an immediate priority
Jon Watkins – The Trade
New International Swaps and Derivatives Association (ISDA) chief executive Scott O’Malia believes FX clearing mandates in the US have been moved down the pecking order due to concerns over the ramifications of such rules.
CCPs criticise JP Morgan clearing white paper
Tom Osborn – Risk.net
Central counterparties (CCPs) have criticised a JP Morgan paper calling for them to hold more capital and create new recapitalisation funds, saying the proposals would be expensive and unnecessary.
LCH and CME have enough capital, says Isda’s O’Connor
Joe Rennison – Risk.net
Isda chair Stephen O’Connor believes LCH.Clearnet and CME “probably” have enough of their own capital at risk in case of a member default, which is at odds with recent statements by dealers.
FS-ISAC and DTCC Announce Soltra, a Strategic Partnership to Improve Cyber Security Capabilities and Resilience of Critical Infrastructure Organizations Worldwide
The Financial Services Information Sharing and Analysis Center (FS-ISAC), an organization focused on sharing critical cyber security threat information worldwide, and The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced the formation of a strategic joint venture to develop and market automation solutions that advance cyber security capabilities and the resilience of critical infrastructure organizations, including financial services firms and others worldwide.
ACM tri-party repo volumes top EUR 5 billion over past month
Newedge, a global leader in multi-asset brokerage and clearing, and MTS, Europe’s premier facilitator for the European fixed income market, today announced record trading volumes on their Agency Cash Management (ACM) platform for the tri-party repo market.
ISDA, Markit Launch Derivatives Reporting Tool
Joanna Wright – WatersTechnology
ISDA Amend, a joint ISDA-Markit solution, adds a feature to facilitate OTC derivatives trade reporting in three Canadian provinces facing an October 31 deadline
ISDA And Markit Offer Counterparty Classification Tool To Assist Compliance With Canadian Derivatives Trade Reporting Rules
Broadridge Launches New Innovations To Raise Efficiency Levels For Reconciliation And Confirmation Matching
Indexes & Products
The Fuzziness Behind Some Funds’ Precise Asset Values
Karen Damato – MoneyBeat – WSJ
Mutual funds and exchange-traded funds report the value of their holdings with seeming precision every trading day. But in some cases there is far less certainty about the worth of a fund’s holdings than that per-share “net asset value”—which may be quoted out to tenths or hundredths of a penny—might suggest.
Source, Kranefuss Go After U.S. ETF Market
Chris Dieterich – MoneyBeat – WSJ
One of the ETF industry’s founding fathers established a new beachhead in the American market on Tuesday with a war chest for potential deals.
BlackRock and Deutsche boost ETP sales ranks
Sarah Krouse – Financial News
Europe’s two largest exchange-traded fund businesses have made senior sales appointments in the region.
Xetra/Börse Frankfurt: Eight Currency ETNs From ETFS Foreign Exchange Launched On Xetra – First Currency ETNs With Leverage Factor Of Five
Luxembourg Stock Exchange: Interim Revision Of The LuxX Index
SEC Taps SmartStream for Reconciliations Data
James Rundle – WatersTechnology
The US Securities and Exchange Commission (SEC) has selected SmartStream’s TLM Reconciliations Premium and SmartRecs products to enhance its front-line oversight division’s capabilities.
Thomson Reuters turns up heat in chat wars
Anna Irrera – Reuters
Thomson Reuters has given users of its flagship chat service access to a directory of around 250,000 financial professionals via an agreement that comes amid increased competition between instant messenger providers.
Markit Collaboration Services Directory Integrated With Reuters Eikon Messenger
Becca Lipman – Reuters
The integration is helping users access and collaborate more efficiently with a community of over 250,000 financial professionals.
KCG Launches HotSpot QT
James Rundle – WatersTechnology
KCG Holdings has debuted a dark crossing venue for foreign exchange (FX), HotSpot QT.
BRED Selects SunGard’s Hosted Trading Service To Access Euronext Markets
Xignite To Showcase Its Breakthrough Market Data APIs At FinDEVr 2014
FS-ISAC And DTCC Announce Soltra, A Strategic Partnership To Improve Cyber Security Capabilities And Resilience Of Critical Infrastructure Organizations Worldwide
Company To Standardize And Automate Cyber Threat Intelligence Distribution, Increase Systemic Resiliency To Risks And Threats
Saba Software to Pay $1.75 Million in SEC Settlement
Tess Stynes – WSJ
Saba Software Inc. agreed to pay $1.75 million in a settlement with Securities and Exchange Commission of accounting fraud allegations involving the falsification of employee timesheets to help the company hit its quarterly financial targets.
Ex-investor relations exec pleads guilty in NY to insider trading
Joseph Ax – Reuters
A former executive at a New York investor relations firm, whose barefoot dash from news photographers last month caught the attention of Comedy Central’s The Daily Show, pleaded guilty on Wednesday to insider trading.
CFTC Orders Kennith Wayne Thrasher and Kennith Luke Thrasher to Pay $525,000 Penalty for Violating Speculative Position Limits in Live Cattle Futures
The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Kennith Wayne Thrasher (Kennith Thrasher) and his son, Kennith Luke Thrasher (Luke Thrasher), for exceeding the spot month speculative position limit for live cattle futures contracts traded on the Chicago Mercantile Exchange (CME).
FXDirectDealer, LLC Ordered to Pay $600,000 Civil Monetary Penalty and to Comply with Three-Year Registration Ban as FCM or RFED for Violating Minimum Financial Requirements and a Prior CFTC Order
UK’s Financial Conduct Authority: Complaints Fall By 5%: PPI, Current Accounts And General Insurance Still Most Complained About Products
New Zealand’s Financial Markets Authority Releases 2014 Investigations And Enforcement Report
Environmental & Energy
UN climate summit sets goals to save forests, use clean energy
Alister Doyle, Reuters
A United Nations summit on climate change agreed on Tuesday to widen the use of renewable energy and raise billions of dollars in aid for developing countries in an effort to increase the prospects for a wide-ranging deal to slow global warming.
U.N. Climate Summit Harvests a Host of Commitments
Andrew C. Revkin, The New York Times
It’s heartening to review the summary of governmental and private climate and energy commitments compiled by United Nations Secretary General Ban Ki-moon at the end of his daylong climate change summit.
World pledges to end deforestation by 2030
Jessica Shankleman, BusinessGreen
Businesses, world leaders, green groups and indigenous peoples have for the first time set a deadline to end net deforestation, in a bid to reduce billions of tonnes of carbon emissions each year.
Credit Suisse hires new Asian product head
Simon Osborne – The Trade
Credit Suisse has hired Eugene Khaimson as the new head of product for advanced execution services in the Asia Pacific region. He reports to Hani Shalabi, the head of advanced execution services, Asia Pacific and will be based in Hong Kong.
Chinese Leaders Discuss Replacing PBOC Chief
Lingling Wei and Bob Davis – WSJ
Chinese leaders are discussing replacing the central bank chief amid disagreements over the direction of financial policy, raising questions over how quickly and deeply Beijing wants to remake the economy amid slowing growth.
China hot money crackdown reveals $10bn in fake trade
Gabriel Wildau in Shanghai – Financial Times
China’s foreign exchange regulator has uncovered $10bn in fake cross-border trade since April last year and has turned 15 cases over to police in a crackdown aimed at curbing hot money flows.
HKFE Announces Revised Margins For Esprit Holdings Futures
HKEx Announces Details Of Temporary Holiday Risk Management Arrangements
eVestment Opening Dubai Office To Meet Growing Investor Interest In Traditional, Alternative Managers In Middle East/Africa