John Lothian Newsletter: European markets are not being rigged; ICE Announces Management Appointments And Board For ICE Futures Singapore And ICE Clear Singapore; Goldman Moves to Energize Stock Trading

Apr 16, 2014

First Read

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NYSE Owner Said to Buy Algo Technologies to Modernize Exchange
By Matthew Leising and Sam Mamudi
That was the diagnosis after its new owner, IntercontinentalExchange Group Inc. (ICE), examined the software known as the matching engine that pairs buyers and sellers, according to two people familiar with the matter. To modernize trading on the 222-year-old market, ICE bought Algo Technologies Ltd., a firm that claims to have the industry’s fastest matching engine, the people said.
jlne.ws/1hJ8INa

***** We have a need, a need for speed!

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ICE on the cutting edge of Asia pivot
By Jeremy Grant in Singapore, FT
Sitting in the colonial-era Fullerton Hotel building, the chairman of the New York Stock Exchange enthuses about the impression Singapore makes on visitors as they arrive in the tiny city-state by air.
jlne.ws/Roo6Vp

***** Jeremy Grant did not go to Singapore to write about exchanges ( so much ), but the global exchange competition story has followed him there.

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Lawmakers Back High-Frequency Trade Curbs in EU Markets Law
Bloomberg
High-frequency traders in the European Union are set to face some of the toughest rules in the world, after legislators backed rules that they said would curb volatility and make markets safer.
jlne.ws/1hJ7sd4

***DA: Minimum price increments, liquidity promises and a first step toward algo testing standards, but no substantive structural changes. This is far from over.

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Kiwis and Sheep: The Missing Link
By Clare Connagha, WSJ
Want to know how to predict sheep prices? Sure you do. Well, the New Zealand dollar can help, according to Deutsche Bank. In a new paper examining whether commodity prices can help predict currencies or vice versa, the bank has highlighted an often-overlooked link between the kiwi (as the currency is affectionately known) and sheep.
jlne.ws/1hIUH20

***** Good thing this is about Kiwis. I am tired of stories (jokes) about Scotsmen, kilts and sheep.

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Former ICAP brokers in court over Libor case
By Philip Stafford, FT
Three former brokers at ICAP, the interdealer broker, faced criminal charges in a London court on Tuesday over conspiracy to manipulate the Libor benchmark rate.
jlne.ws/1m79Ixl

***** “Former” being the operative word.

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COLUMN-Dubious new high-frequency trading case vs. Merc: Frankel
By Alison Frankel, Reuters
NEW YORK, April 14 – A class action in Chicago federal court presents a new theory of liability for exchanges, claiming that the Chicago Mercantile Exchange peddled inside information on price data and unexecuted orders to high-frequency traders. But didn’t we know that already?
jlne.ws/1ePS4qm

****** Dubious is not even close to describing this case.

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CME trading outage showed that man can still match the machine
Reuters
By Cezary Podkul and Tom Polansek, Reuters
Just over a week ago, CME Group Inc suffered the worst-ever trading outage on the world’s most important agricultural markets, plunging electronic screens into darkness and sending dozens of traders scrambling for Chicago’s famous but now often deserted trading “pits”.
jlne.ws/1nq34zQ

***** The amazing thing is not the these reporters drank the floor trader kool-aid, it is that the floor had any kool-aid left to give.

***DA: Good to know that the backup sump pump still works.

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Camp could punch ‘golden ticket’ to K St.
By Megan R. Wilson – 04/16/14 06:00 AM EDT
House Ways and Means Committee Chairman Dave Camp would be coveted by the private sector if he were to chose to head downtown after his retirement. The Michigan Republican announced last month he would not run for another term, opening the possibility of a bidding war for a powerful chairman with deep knowledge of tax policy and the IRS code. Washington headhunters say he could earn almost $1 million per year at a lobby firm and would likely be in the seven-figure range if he decided to go to a trade association.
jlne.ws/QcJD2B

***** One reason we have difficulty with revolving door politics is steady stream into and out of the door.

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Facebook’s European Money Service, Portability And The Solution To America’s Regulatory Mess
By Tim Worstall, Forbes
Parmy Olson reported here at Forbes yesterday on Facebook’s likely attempt to get into the European money transfer business. The most important question to me about this what, well, why start out in Europe? Why on earth try to work with 28 different countries rather than within just one, as an experiment, like the USA? The answer, as I explained over at Pando Daily, is that for regulatory purposes the US is actually 50 distinct money transfer markets, while the European Union is, while being 28 national markets, actually only the one regulatory regime. Thus it’s actually a great deal easier to get regulatory approval to launch over here where I am rather than over there in the US.
jlne.ws/QcFxaz

***** A Union outstrips United States.

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Market Winds Blowing in China, Mark Mobius Says
by Kosaku Narioka, WSJ
A new mentality is starting to take hold in some surprising places in China, according to Franklin Templeton’s Mark Mobius, after the government last year promised a greater role for market forces in the country’s economy and financial system.
jlne.ws/1nq05ax

***** Free press for free markets is my motto.

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John Lothian News Survey – Final Days!
We are closing out our survey campaign at the end of the week, so if you wish add your input, please
click the link below and give us 30 seconds of your time. More to the point, if you wish to get in the running for your choice of an iPad Mini or a pair of Bose Quiet Comfort Noise-Canceling Headphones, it is now or never (or maybe next year when we conduct our next survey).
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***** Please take the 30 seconds to take the poll. Then email me at johnlothian@johnlothian.com and let me know.

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Lead Stories

European markets are not being rigged
By Frank Gerstenschläger, FT
Technology has changed region’s equity trading structure, but exchanges are not being manipulated
US markets are facing fresh accusations of being rigged, but is this also true of Europe?
jlne.ws/1eIkpEo

ICE Announces Management Appointments And Board For ICE Futures Singapore And ICE Clear Singapore – Singapore Mercantile Exchange Renaming Reflects Planned Transition To ICE Trading And Clearing Platforms
ICE
IntercontinentalExchange Group (NYSE:ICE), the leading global network of exchanges and clearing houses, today announced management appointments and the Board of Directors for its Singapore-based exchange and clearing house, subject to regulatory approval.
jlne.ws/1nq0Pwv

Goldman Moves to Energize Stock Trading
ByJustin Baer and Scott Patterson, WSJ
Under pressure from unhappy clients and losing market share to rivals, Goldman Sachs Group Inc. is trying to jump-start its stock-trading business. At recent trading conferences with top clients, including Fidelity Investments and BlackRock Inc., and in private conversations, investors have vented their concerns with the way Goldman and other firms trade stocks, people familiar with the matter said.
jlne.ws/1mcm9Wa

Goldman Sachs plans to jump-start stock-trading business – WSJ
Reuters
Goldman Sachs is planning to jump-start its stock-trading business after top clients such as Fidelity Investments and BlackRock Inc voiced concerns about the way Goldman and other firms trade stocks, the Wall Street Journal reported, citing people familiar with the matter.
jlne.ws/1ePOCvW

Deutsche Börse, Thai Exchange Ink MoU
By James Rundle, Waters Technology
Deutsche Börse and the Stock Exchange of Thailand (SET) have signed a Memorandum of Understanding (MoU), which will see the two venue operators enhance securities and derivative market links between Germany and Thailand.
jlne.ws/RopHKR

Six ways Europe’s financial sector is meant to mend its ways
By Alex Barker in Brussels and Philip Stafford in London, FT
What Michel Barnier, the EU commissioner responsible for financial services, dubbed a “rulemaking spring” is drawing to a close.
jlne.ws/QcEUOe

Forex rule confusion risk to UK traders
By Delphine Strauss and Philip Stafford, FT
London’s foreign exchange industry risks having to put up more capital to back its trades if European regulators rule against it in an arcane debate over the definition of widely traded spot and forward contracts.
jlne.ws/1iZ6iYe

Mt. Gox Files for Liquidation; Defunct Bitcoin Exchange Gives Up On Plan to Rebuild
By Takashi Mochizuki and Katy Stech, WSJ
Defunct bitcoin exchange Mt. Gox has given up its plan to rebuild under bankruptcy protection and has asked a Tokyo court to allow it to be liquidated, people familiar with the situation said.
jlne.ws/1l14OCr

Stockbroker Records to Receive More Scrutiny; Regulators Expected to Propose Plan for Background Checks, Measures to Identify Red Flags
By Jean Eaglesham And Rob Barry, WSJ
Securities regulators are expected to unveil plans to step up checks on stockbrokers’ records, after investigations by The Wall Street Journal revealed flaws in the information available to investors.
jlne.ws/1ioY3qI

GW&K Live On Fidessa’s Sentinel Compliance Service – US Firm Implements Service For Fully Managed Compliance Solution
Fidessa
US firm implements service for fully managed compliance solution
Boston, 16th April 2014 – Fidessa group plc (LSE: FDSA) has today announced that GW&K Investment Management (GW&K), the Boston based multi-asset investment firm, is live on Fidessa’s Sentinel Compliance Service for fully managed, comprehensive compliance.
jlne.ws/1h2WtG6

Regulatory

Super Tuesday for EU bank regulation
FT.com
Europe’s biggest financial rulemaking spree since the creation of its single market more than 20 years ago reached its finale on Tuesday with the adoption of a slew of landmark reforms designed to make banks safer and financial markets more transparent.
jlne.ws/1gG1p8j

Biggest Banks Face Tougher Basel Rule on Risk Concentration
Bloomberg
Banks identified as systemically important to the global economy face tighter rules on how much business they can do with each other as part of a push to limit the chance a single failure would drag down multiple lenders.
jlne.ws/1eyodYs

Sifma tells FSOC Chair: More Regulators Must Require LEI
By Nicholas Hamilton, Waterstechnology.com
The Securities Industry and Financial Markets Association has highlighted the fact that only one US regulation requires the legal entity identifier and more than twice as many entities in Europe have registered for the identifier than in the US
jlne.ws/P4REp6

FESE Welcomes European Parliament’s Vote On MiFID II
4-traders.com
Yesterday, the European Parliament in plenary adopted the Commission’s proposal of the review of the Markets in Financial Instruments Directive (MiFID II). The Federation of European Securities Exchanges (FESE) welcomes the agreement of European policy makers on MiFID II Level 1 text. This directive, which was initially adopted in 2004, changed Europe’s trading landscape by increasing the competition between equities trading venues, but also led to increased market fragmentation and complexity for investors and companies.
jlne.ws/QcHjII

SEC Names David Gottesman as Deputy Chief Litigation Counsel
SEC
The Securities and Exchange Commission today announced the appointment of David J. Gottesman as deputy chief litigation counsel in the Division of Enforcement.
jlne.ws/1kxrebJ

SEC Charges San Diego-Based Investment Adviser
SEC
The Securities and Exchange Commission today announced charges against a San Diego-based investment advisory firm, its chief executive officer, chief compliance officer, and another employee for misleading investors and breaching their fiduciary duties to clients.
jlne.ws/1qZFMRB

ISDA Credit Derivatives Determinations Committee: Momentive Performance Materials Inc. Bankruptcy Credit Event
ISDA
NEW YORK, April 15, 2014 – The International Swaps and Derivatives Association, Inc. (ISDA) today announced that its Americas Credit Derivatives Determinations Committee resolved that a bankruptcy credit event occurred in respect of Momentive Performance Materials Inc.
www.isda.org/credit

Exchanges & Trading Facilities

NPG TECHNOLOGY TO START TRADING ON MAB ON 22 APRIL
BME
It is the first company to list on the MAB’s Growth segment in 2014
The Supervision Committee of the Mercado Alternativo Bursátil (MAB) has announced the listing of NPG Tchnology on the Growth Companies segment of this market, following a thorough review of all the information presented by the company and after the favourable assessment report on its listing issued by MAB’s Coordination and Admission Committee.
(by email)

Fermentalg lists on Euronext Paris
Euronext
Paris – 16 April 2014 – EnterNext, the Euronext subsidiary designed to promote and grow its market for SMEs[1], today congratulated Fermentalg, an industrial biotechnology company producing oils and proteins from microalgae, on its listing on Euronext’s regulated market in Paris (compartment C).
jlne.ws/1l70A82

NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (LO, PAO, PO) Effective Wednesday, April 16, 2014
www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv14-160.pdf

Listed companies on the Palestine Exchange achieve net profit of 241 million USD in 2013
Palestine Securities Exchange Co
Thirty five (35) of forty nine (49) listed companies on the Palestine Exchange (PEX) achieved profits in 2013.
jlne.ws/1iTudbv

Hedge Funds & Managed Futures

’40 Act no panacea for raising hedge fund assets
By Luke Clancy, Risk.net
Restrictions on fees charged for alternative mutual funds will discourage capacity constrained strategies from participating in this new market
jlne.ws/1eLYUgu

Largest hedge funds vulnerable to 2008 repeat
By Luke Clancy, Risk.nt
Japan and multi-strategy fund flows see uplift at the expense of emerging Europe, also reports eVestment
jlne.ws/1ePFura

Companies Face FX Bogeyman
By Chiara Albanese, WSJ
The currencies market is snoozing at the moment. Volatility has evaporated. But that has not stopped many companies from bemoaning the nasty past and potential impact of exchange-rate pressures. This week, luxury clothing company Burberry, food producing giant Nestlé and brewer SABMiller all warned that exchange-rate wobbles could eat into their performance in the coming months.
jlne.ws/1nq0jP4

Banks & Brokers

Bank of America slides to $276m loss on legal charge
By Camilla Hall in New York, FT
Bank of America reported its first loss in nearly three years as it took a $6bn litigation expense, missing analyst estimates.
jlne.ws/Rowu7A

Credit Suisse first-quarter profit falls as trading tumbles
Reuters
Credit Suisse (CSGN.VX) said on Wednesday its first-quarter net profit fell by more than a third on the year as revenue from bond-trading tumbled, raising question marks over the bank’s investment banking strategy.
jlne.ws/1nbefPF

Citi Names Head of Asia Markets and Securities Services
By Mia Lamar, WSJ
Citigroup Inc.C +1.32% has picked Patrick Dewilde to run its Asia markets and securities services business, putting a company veteran in one of the bank’s most important posts in the region, according to a memo seen by The Wall Street Journal.
jlne.ws/RorLCJ

Dealers benefit from OTC liquidity split, buy-siders claim
By Peter Madigan, Risk Magazine
Buy-side firms claim dealers stand to benefit from the division of OTC markets into US and non-US persons; all-to-all trading cannot exist until the break is closed
jlne.ws/1l6SDQd

Clearing & Settlement

Clearstream Approaches Taiwan Direct Settlement
By James Rundle, Waterstechnology.com
International central securities depository (ICSD) Clearstream has announced that it has moved a step further towards enabling direct settlement in Taiwan, by opening an account with the country’s CSD.
jlne.ws/1kxurs3

Indexes & Products

Moscow Exchange to Publish New Russian Market Volatility Indicator
By Giulia Lasagni, Waterstechnology.com
The Moscow Exchange announced that, starting Wednesday, April 16, it will begin publishing a new index that provides an indicator of Russian volatility designed to give investors and traders a wider range of tools to assess the market.
jlne.ws/1eFT6L2

Technology

Tech groups transform how finance is done in China
By Henny Sender, FT
The internet is making the country a much fairer place
Sometime soon, the newly formed though not yet formally named association of internet finance companies will receive official approval from Beijing. That is the view of Tang Ning, one such financial entrepreneur and the founder of Creditease, a peer-to-peer lending platform. It is a sign of how far the sector has come in just a few short years.
jlne.ws/1qZJTNC

Options Cuts NJ Network Latency
By Faye Kilburn, Waterstechnology.com
Infrastructure-as-a-service provider Options (formerly Options IT) has reduced the latency on its network route between the vendor’s datacenter facility in Carteret, NJ and CenturyLink Technology Solutions’ (formerly Savvis) NJ2 datacenter in Weehawken, NJ by 6.7 percent–though Options did not provide specific latency figures for the route.
jlne.ws/1hITHuG

smartTrade Technologies Is Elected Best Sell-Side Automated Trading Platform
Buesiness Wire
smartTrade Technologies announces today that LiquidityFX™, its extensive forex trading solution for spot FX, swaps, NDF and precious metals, was recognized as the best sell-side automated trading platform at the Sell-Side Technology Awards held by Waters Technology.
jlne.ws/Rorhwp

Enforcement

NY regulators probing former Credit Suisse exec
NY Post
New York state’s top financial regulator has ordered Credit Suisse to turn in the employment records of its former New York head as part of a widening investigation into potential tax evasion involving the Swiss bank, a source close to the matter told Reuters.
jlne.ws/1jKibDf

5 ex-Madoff staffers want guilty verdicts thrown
By Rich Calder, NY Post
The five ex-staffers of Bernie Madoff found guilty of helping the Ponzi monster pull off his epic $17 billion fraud are demanding an acquittal or new trial, claiming they were railroaded by flawed jury deliberations and false testimony from government witnesses.
jlne.ws/1ePULYY

Environmental & Energy

China set to elevate environment over development in new law
Sui-Lee Wee and David Stanway, Reuters
Smog-hit China is set to pass a new law that would give Beijing more powers to shut polluting factories and punish officials, and even place protected regions off-limits to industrial development, scholars with knowledge of the situation said.
jlne.ws/QmW23D

EU Nations Said to Set Next Carbon-Market Overhaul Talks in June
Ewa Krukowska, Bloomberg
European Union governments will hold further discussions in June about a proposal to make supply in the world’s biggest carbon market more flexible, according to two people with direct knowledge of the matter.
jlne.ws/1eJ2wzP

IMF, World Bank push carbon pricing
The Australian
The leaders of the World Bank and International Monetary Fund have called upon finance ministers to “tackle the issue of carbon pricing,” Fairfax reports.
jlne.ws/1hHtPjK

Asia-Pacific

Notice of Adjustment to Conversion Price of the Bonds
HKEx
jlne.ws/1hvk3kU

Poll Results of the 2014 Annual General Meeting
HKEx
jlne.ws/1hvk3kU

Tokyo Stock Exchange Banco Santander-Chile To List Yen-Denominated Foreign Bond On TOKYO PRO-BOND Market With Value Of JPY 27.3 Billion
MondoVisione
Today, Tokyo Stock Exchange approved a yen-denominated bond with a total value of JPY 27.3 billion (Fixed-interest corporate bond: JPY 2 billion (tenor : 3 years) and JPY 18.7 billion (tenor : 5 years), Floating-interest corporate bond: JPY 6.6 billion (tenor : 3 years)) from Banco Santander-Chile (http://phx.corporate-ir.net/phoenix.zhtml?c=71614&p=irol-IRHome) for listing on the professional-oriented TOKYO PRO-BOND Market.
jlne.ws/1m7bJK6

Kinetic Partners Continues To Develop Hong Kong Team
MondoVisione
Kinetic Partners, the global financial services advisory firm, has today announced two promotions within its team in Hong Kong as it continues to grow and develop its business. AnnMarie Croswell has been promoted to Member and Katrina Banh to Associate Director within Kinetic Partners regulatory compliance team in Hong Kong.
jlne.ws/1gFG3Yq

Frontier Markets

MCX-SX may bring foreign investors
By Rajesh Bhayani, Business Standard
Among options once ongoing rights issue is through; says some exchanges abroad and large liquidity providers have showed interest
MCX Stock Exchange (MCX-SX) is considering bringing in foreign investors and a couple of international stock exchanges have shown interest in buying a stake. The exchange has been struggling to raise funds with a rights issue, ending on Thursday. A spokesperson said, “The issue is not the only option available for capital infusion. Preferential placement, roping in strategic investors, M&A (merger and acquisition), etc, are under consideration, too.”
jlne.ws/1gFLiaD

MCX-SX equity volumes plunge sans incentives
By Kashyap Shah & Sachin P Mampatta, Business Standard
The fall comes as the exchange removed an incentive structure aimed at bringing in volumes to its trading platform
The equity segment turnover of MCX Stock Exchange (MCX-SX) in April has fallen by 99 per cent from its all-time highs. The fall comes as the exchange moved to remove an incentive structure aimed at bringing volumes to its trading platform.
jlne.ws/1eFSlS5

Miscellaneous

Cargill expects flour merger with ConAgra to be finalized in 6-8 weeks
By Rod Nickel, Reuters
WINNIPEG, Manitoba – U.S. agribusiness Cargill Inc expects the merger of its flour mill operations with those of ConAgra Foods Inc to be finalized in six to eight weeks after it clears a longstanding regulatory hurdle, Cargill Executive Chairman Greg Page said on Tuesday.
jlne.ws/1iZkuiL

China gets first bitcoin ATM, skirting bank crackdown
Reuters
BTC China, one of the country’s leading digital currency exchanges, has installed China’s first bitcoin ATM and launched an online app allowing individuals to buy and sell bitcoins using mobile phones, skirting local banking regulations seen as increasingly hostile to so-called crypto-currencies.
jlne.ws/1qZG4bc

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