First Read

World Of Opportunity Chicago 2014: Tony McCormick (Promo)

Our MarketsWiki World of Opportunity Summer Intern Education Series in Chicago is quickly approaching. Tony McCormick, CEO of BOX, will be discussing the importance of internships. McCormick looks back on his years as an intern and how they helped shape his professional life. For more information on the event and how to register, click here.

Watch the video »


Bloomberg buys RTS Realtime Systems
Bloomberg has acquired market connectivity and trading technology firm RTS Realtime Systems. Financial terms of the deal were not disclosed.

**** This is a WOW!!!


Note from John
Tomorrow the hard working John Lothian News team will be having an off-site day that we call our “Disaster Recovery Test and Summer Party.” Besides working from a remote location, we will be reviewing the previous year and our various products and initiatives and discussing ways to improve them.

As part of this, we will not be publishing JLN Financials and JLN Options tomorrow. JLN will go out, as will JLN Environmental/Energy.

Have a nice weekend!


Big Commodity Traders Gain Clout; Trafigura, Vitol Among a Handful of Firms Shaking Up Markets
By Tatyana Shumsky and Sarah Kent, WSJ
Move over, Wall Street. A handful of giant commodity traders such as Netherlands-based Trafigura Beheer BV and Vitol Group are increasingly taking a central role in global commodity markets. These once-obscure firms aren’t just betting on prices or arranging product shipments. They are taking on oil companies, miners and major Wall Street banks by sinking billions of dollars into refineries, power plants, ports and other assets.

***** The big get bigger and the little get trampled.


‘Big Short’ Case Raises Questions About Finra Arbitration
By WILLIAM D. COHAN, New York Times Dealbook
Deeb Salem, the former Goldman Sachs trader who helped devise the firm’s brilliant and highly profitable proprietary bet against the mortgage market, has never been shy about trumpeting his accomplishments. Mr. Salem no longer works at Goldman — he decamped to GoldenTree Asset Management, a New York hedge fund, in 2012 — but his continuing lawsuit, which contends the firm shortchanged him about $21 million in bonus and deferred compensation during the years after the financial crisis, raises fresh questions about the fairness of Wall Street’s compensation practices, its willingness to make scapegoats out of former employees and the arbitration system — run by the Financial Industry Regulatory Authority — that everyone who deals with Wall Street is forced to use to resolve monetary disputes.

***** The little get trampled.


PwC must face $1 billion lawsuit over MF Global collapse
By Jonathan Stempel, Reuters
* Lawsuit links PwC’s accounting advice to MF Global demise
* Judge has yet to review other PwC arguments for dismissal
A federal judge on Wednesday rejected PricewaterhouseCoopers’ request to dismiss a $1 billion lawsuit accusing the auditor of providing bad accounting advice that contributed to the October 2011 collapse of MF Global Holdings Ltd, a brokerage run by former New Jersey Governor Jon Corzine.

***** Or maybe the big can get trampled too.


It’s Easier This Way: Justin Llewellyn-Jones of Fidessa Maps A Compliance Path for Firms

Today, firms are dealing with three major issues: regulation, compliance and global economics. None of the three are friendly to firms and that’s where Justin Llewellyn-Jones, chief operating officer of Fidessa , believes there is opportunity.

Llewellyn-Jones spoke with JLN editor-in-chief Jim Kharouf last month at the IDX conference in London, about how Fidessa is developing new technology that will assist firms in making the trading, risk and account management, and compliance task easier.

Watch the video »


Chicago Fed Calls for Curbs on High-Frequency Trading
By Doni Bloomfield and Sam Mamudi, Bloomberg
The Federal Reserve Bank of Chicago entered the debate over whether financial markets are fair, proposing limits on high-frequency trading firms and incentives to bring more buying and selling into public view.


HFT Recommendations 2.0
by John McPartland

***** The Chicago Fed’s John McPartland makes his case to improve the markets.


Throwing Sharks out of the Dark Pool Tank
Dr. John Bates, WallStreet & Technology
Barclays is the most recent brokerage to be fined for letting predators into its dark pool. But will investors be happy with dark pools without sharks? Barclays received a harsh lesson in ichthyology last week, learning that sharks should not be allowed to swim with smaller fishes in a dark pool tank.

***** I have always liked the metaphor of fish to describe the different types of traders. As the sharks say in the movie Finding Nemo, “Fish are our friends.”


Barclays Offers ETN Wagering on Corporates With Female Leaders
By Margaret Collins, Bloomberg
Barclays Plc (BARC), the U.K.’s second-largest bank by assets, is selling an exchange-traded note tied to public companies with female executives, betting on demand for products that promote women in leadership.

***** What is that song about money for nothing and chicks for free?


Exclusive: Roosters’ fertility problem hits U.S. chicken supply, lifts prices
By Tom Polansek, Reuters
The world’s largest chicken breeder has discovered that a key breed of rooster has a genetic issue that is reducing its fertility, adding to problems constraining U.S. poultry production and raising prices at a time when beef and pork prices are already at record highs.

***** A rooster has one job and now this.


TOCOM to Host a Seminar in Hong Kong to Enhance Its Presence in the Region
The Tokyo Commodity Exchange, Inc., (TOCOM) announced a seminar it will hold in Hong Kong on July 16 at Exchange Auditorium, the Exchange Exhibition Hall. TOCOM will present an update of Japan’s commodity futures market and showcase trading opportunities. A significant development that will be highlighted is the ATS (Automated Trading Services) status granted by Securities and Futures Commission of Hong Kong to provide direct market access for the market participants in the region.

***** I will not be in attendance, but if you are in Hong Kong feel free to attend.



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Lead Stories

Financial Conduct Authority sets sights on high-frequency traders
By Sam Fleming and Philip Stafford, FT
High-frequency traders and the practices they use to get a jump on other investors are firmly in the sights of the UK financial watchdog as it launches a review of competition in the wholesale securities markets

Qatar to sell down stake in LSE
By Philip Stafford, FT
The Qatar Investment Authority is to sell down a third of its stake in the London Stock Exchange Group ahead of the bourse’s $1.6bn rights issue to help purchase Frank Russell, the US index compiler.

Joint Thomson Reuters/CME bid in lead for silver fix
By Neil Hume and Xan Rice, FT
A joint proposal by Thomson Reuters, the data and news service, and exchange operator CME Group has emerged as the frontrunner to provide a new global silver price benchmark when the 117-year old London silver fix is disbanded in August.

US banks will pay dearly for their failure to modernise
by John Gapper, FT
A country that often leads in consumer technology lags far behind in payments systems

ISDA Publishes Recommendation For FpML Version 5.7
The International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of the Recommendation for Financial products Markup Language (FpML) version 5.7.

McKinsey Says Bond Dealer Shift Could Boost Profit 30%
By Dakin Campbell, Bloomberg
The world’s largest bond dealers could boost profit as much as 30 percent at their securities units by demanding clients pay for services they’re now getting for free, McKinsey & Co. said.

The Next Step for Rengan Rajaratnam
By PETER J. HENNING, New York Times
The end of a prominent winning streak inspires trivia questions. Which team stopped the U.C.L.A. men’s basketball team at 88 wins in a row? Notre Dame. Which baseball team put an end to Joe DiMaggio’s 56-game hitting streak? The Cleveland Indians.

Statement from BGC Partners Regarding FINRA Arbitration Panel
BGC Partners
NEW YORK and LONDON, July 10, 2014 /PRNewswire/ — BGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners,” “BGC,” or “the Company”), a leading global brokerage company servicing the financial and real estate markets, today released the following statement. – (“FINRA”) in the matter involving (“Tullett”), BGC and certain others has issued its award. Tullett was found to have breached its contract with the people who sold it (many of whom now work for BGC) and is ordered to pay them over in damages. Tullett has also been found to have wrongly refused to pay expenses to one of its employees, who was awarded over .


U.K. Would Prioritize Pound in Crises, ECB Tells Court
The Bank of England and other U.K. supervisors may prioritize sterling over the stability of the euro area during a crisis, a lawyer for the European Central Bank told a court today to justify its policy on clearinghouses.

FCA to crackdown on payment for order flow
by: William Mitting, FOW
British regulator to rule following two-year probe into payment for orders. Britain’s Financial Conduct Authority is set to crackdown on the practice of Payment for Order Flow in a damning ruling this month that will significantly cut a lucrative revenue source for many brokers.

Regulators Ready Money-Fund Rules; SEC Vote Could Come as Early as This Month
By Andrew Ackerman, WSJ
WASHINGTON—U.S. regulators are poised to complete long-awaited rules intended to prevent a repeat of the investor stampede out of money-market mutual funds that threatened to freeze corporate lending during the 2008 financial crisis.

Fed independence questioned as Republicans ramp up pressure
By Michael Flaherty and Alistair Bell, Reuters
A surge of Republican pressure is bringing the Federal Reserve’s long-held independence into question again, as conservative lawmakers seek to place the U.S. central bank under tougher scrutiny.

The Capital Adequacy Of Banks: Today’s Issues And What We Have Learned From The Past – Speech By Andrew Bailey, Deputy Governor, Prudential Regulation, CEO Of The PRA

Excellence Program – AMF announces latest university scholarship recipients
AMF Canada
The Autorité des marchés financiers (the “AMF”) today announced the latest recipients of university scholarships, which are being awarded for the fourth time, under the Excellence Program of its Education and Good Governance Fund.

“We are using the eyes and ears of consumers” – FCA published its 2013/14 Annual Report
The Financial Conduct Authority will use the millions of consumers who use financial products and services to ensure that the industry meets their needs and expectations, said Chairman John Griffith-Jones as the FCA published its annual report for 2013/14.

Annual Report 2013/14
Our Annual Report 2013/14 covers our first year in operation. It sets out how we delivered against our statutory objectives and highlights our key achievements as an organisation.

FCA steps up focus on fair use of client dealing commission
The Financial Conduct Authority (FCA) has today published a review of how firms use dealing commission.

Exchanges & Trading Facilities

Swap execution facilities hit new high in June
by: Joe Parsons, FOW
Sef volumes are starting to pick up after relatively slow start for the new venues
Trading on the new breed of US swap platforms hit a record last month after months of slow trading in the aftermath of the execution reforms that took effect in February.

IEX’s ‘Broker Priority’ Plan Stirs Debate
By Bradley Hope, WSJ
IEX Group Inc.’s plans to bring its “broker priority” market structure into the light have stirred up a debate about exactly how this system works and whether anyone is disadvantaged.

CME, Thomson Reuters in Line for New Silver Fix; LME, Autilla Make Late Bid to Replace 117-Year-Old Benchmark
by Francesca Freeman, WSJ
CME Group Inc. and Thomson Reuters Corp. are expected to be crowned the new operators of the London silver fix this week, a person with knowledge of the matter said Wednesday.

Hedge Funds & Managed Futures

Prime Money Funds to Float $1 Share Price Under SEC Plan
By Dave Michaels, Bloomberg
The riskiest money-market mutual funds will have to let their share prices fluctuate and charge investors withdrawal fees during times of stress under tougher U.S. rules set for adoption this month.

U.S. financial advisers try to win over wary millennials
By Michael Leibel, Reuters
Wealth management firms are trying to get millennials excited about investing and hope to win their trust – and the sizeable wealth they are expected to control in the future.

Deutsche Bulks Up in Asset/Wealth Management
by Saabira Chaudhuri, WSJ MoneyBeat
Deutsche Bank AG on Wednesday said it has made a slew of hires in the Americas arm of its asset management and wealth management business, pulling new executives from J.P. Morgan Chase & Co., Comerica Inc., Aon PLC and Lord Abbett & Co.

A Record First Half for Exits, but ‘Meh’ for Private Equity Deals
by Hillary Canada, WSJ MoneyBeat
For private equity firms around the globe, the first half of 2014 was more about harvesting investments than sowing new ones. Firms sold a record $187.3 billion of holdings in the first half, nearly double the $97.3 billion recorded last year, according to data provider Dealogic Ltd. More than half of that tally, $98.8 billion, came from North and South America.

Crowdfunding Isn’t Just for the Little Guys; Deep-Pocketed Companies Test the Market on Indiegogo
By Katherine Rosman, WSJ
On Indiegogo, a website where entrepreneurs can raise cash, well-financed startups and deep-pocketed companies are testing the market for their ideas.

Banks & Brokers

Banks Racing to Pare Swaps Holdings Ahead of Rules, Goldman Says
By Matthew Leising, Bloomberg
Wall Street banks are racing to simplify their swaps holdings before new rules make it more costly to own the derivatives starting in 2017, according to a Goldman Sachs Group Inc. executive.

COLUMN- Did this trigger Goldman’s MBS ‘big short’?: Frankel
By Alison Frankel, Reuters
It is an axiom of the financial crisis that Goldman Sachs realized before any of the other big banks that the mortgage-backed securities market was going to implode in 2007. Goldman dumped MBS and shorted the market, turning a profit in its mortgage department when every other major financial institution suffered record losses. So what tipped Goldman to start off-loading its MBS exposure at the end of 2006? In a new brief in its securities fraud case against the bank, the Federal Housing Finance Agency has an intriguing theory.

How a Goldman Sachs Ethicist Became a High-Rate Lender
By Zeke Faux and Max Abelson, Bloomberg
Steven Mandis was working on a book about whether Goldman Sachs Group Inc. (GS) put profit above principles when he hit upon a new way to make money. The former Goldman Sachs banker decided two years ago to get into lending money to struggling small businesses, a niche on Wall Street where brokers offer loans with interest rates that can climb past 100 percent to dentists with bad credit and pizzeria owners behind on their bills. To some, it’s the new face of subprime.

Goldman and JP Morgan among LSE’s swap future backers
Tim Cave, Financial News
The London Stock Exchange is working with a group of major investment banks, including Goldman Sachs and JP Morgan, on a new swap futures contract that will form part of plans to build its derivatives franchise.

For Young Bankers, the Job Starts Now
By SYDNEY EMBER, New York Times
For first-year junior bankers, summer is anything but endless. Instead, these young employees, most fresh out of college, are now trading sunglasses for suits as they begin training programs in New York geared to prepare them for work on Wall Street.

BRIEF-Tullett Prebon says FINRA rules in favour of subsidiaries
Outcome of FINRA arbitration on claims brought by company’s subsidiary companies in united states which were raided by BGC partners inc

Clearing & Settlement

UK and ECB set to clash in court over clearing houses
By Sam Fleming, FT
Britain will step up its legal battle with its EU partners on Wednesday as it challenges rules that it fears would damage the City of London by forcing clearing houses to decamp operations to the eurozone.

Indexes & Products

Barclays launches Women in Leadership Index and ETNs
By Michael Leibel, Reuters
Investors who want to put money behind the idea that female leadership helps companies excel will have a new way to invest on Thursday when Barclays Bank PLC launches the Barclays Women in Leadership Total Return Index and exchange-traded notes.


Tullett Prebon
Domestic vendor Matriks Bilgi Dagitim Hizmetleri A.S. to redistribute; Tullett Prebon Information’s energy and CDS data locally –
London, Istanbul, 10 July 2014: Tullett Prebon Information (TPI), a leading provider of independent real-time price information from the global OTC financial and commodity markets, has signed a deal with domestic Turkish data vendor Matriks Bilgi Dagitim Hizmetleri A.S. (Matriks). The deal sees Matriks redistribute TPI’s data to the local market, providing its clients with accurate, reliable and independently-sourced information.


BNP pleads guilty for 2nd time in $9 bln U.S. sanctions accord
by Joseph Ax and Nate Raymond, Reuters
BNP Paribas, for the second time in nine days, pleaded guilty on Wednesday to conspiring to violate U.S. sanctions, as part of a nearly $9 billion settlement in which the French bank admitted to breaking embargoes against Sudan, Cuba and Iran.

BNP Paribas Pleads Guilty to Criminal Charge in Federal Court; French Bank Agreed in June to Plead Guilty in Sanctions Case
By Andrew R. Johnson, WSJ
BNP Paribas SA pleaded guilty to a criminal charge over its dealings with sanctioned countries in federal court on Wednesday, putting the finishing touches on the French bank’s record $8.97 billion settlement reached last week with U.S. authorities.

Daniel Gitner, the Defender Who Ended Prosecutors’ Winning Streak in Trading Cases
The defense lawyer who spoiled Preet Bharara’s perfect record in hedge fund insider trading cases has finally gotten a haircut.

Environmental & Energy

UN issued with roadmap on how to avoid climate catastrophe
Suzanne Goldenberg,
The United Nations was presented with a roadmap to avoid a climate catastrophe on Tuesday, prescribing specific actions for the world’s biggest economies to keep warming below 2C.

Blueprints for Taming the Climate Crisis
Eduardo Porter, New York Times
Here’s what your future will look like if we are to have a shot at preventing devastating climate change.

Want to limit global warming? Bring cash
Marianne Lavelle, The Daily Climate
The world lacks not only the will, but the technology to achieve the deep carbon cuts needed to avert catastrophic climate change, according to a report presented to the United Nations today by leading research institutions in 15 countries.

Responsible Business: Sustainable efforts show signs of paying off
Sarah Murray, Financial Times
There was a time when business investments in education, community initiatives, disaster relief or environmental conservation were treated as corporate philanthropy.


JPMorgan hires UBS’s David Li to be new China head
JPMorgan Chase & Co said it has hired former UBS AG banker David Li as its new China head, reinforcing its investment banking clout in the world’s second-largest economy after the departure of top China banker Fang Fang in March.

Reverse Gold Rush
by Aaron Back, WSJ MoneyBeat
There’s no golden dawn for Hong Kong-based Chow Tai Fook, the world’s largest jeweler. Retail sales fell by a third last quarter, but that wasn’t a surprise – the year-earlier period was boosted by a bizarre “gold rush,” when Chinese shoppers ran out to buy gold after U.S. Fed tapering fears drove down the yellow metal’s price. More shocking was the company’s outlook of flat to low-single-digit revenue growth for the fiscal year through next March, according to analysts who were on a management conference call.

Frontier Markets

DME volumes continue to soar with over 1.13 billion barrels of crude oil traded in the first half of 2014

Bucharest Stock Exchange: The Market Making Pilot Program Shows The First Results
Starting with January 3, 2014, became effective the new BVB market making program. The program, part of the Three Pillars plan, targets to develop the market making activity on the stock exchange and to enhance the liquidity and the market quality.

Emerging market fund managers ignore borders, chase profits
By Tim McLaughlin, Reuters
U.S. emerging market fund managers are paying less attention to where a company is located or listed than to whether it’s making money, either as an advanced world company doing business in the developing world, or the other way around.

Moscow Exchange: Change To EUR/RUB And EUR/USD Futures Settlement Price Calculation
Moscow Exchange is to change the calculation mechanism for EUR/RUB and EUR/USD futures settlement prices from September 2014. The relevant resolutions were adopted by Moscow Exchange”s Derivatives Market Committee on 25 June and FX Market Committee on 4 July.

Liquidity – Liquidnet Members Can Now Trade Indian Equities, Increasing Access To 43 Markets Globally

Qatar cuts holding in London Stock Exchange by a third; Gulf investor trims stake ahead of $1.6bn rights issue to fund acquisition of Russell Investments
by James Quinn, and Ashley Armstrong, The Telegraph
Qatar Holding is to trim its 15pc stake in the owner of the London Stock Exchange by a third ahead of a $1.6bn rights issue by the British bourse to fund its acquisition of Russell Investments.


Currency trading volumes more than $5 trillion in June-CLS
Average daily volumes in the global foreign exchange market surged by over $500 billion in June, data from FX settlement system CLS showed, suggesting a bounce-back for the world’s largest and most liquid market.

Global Advisors Announces World’s First Regulator Approved Bitcoin Investment Fund
Global Advisors Jersey Limited (“GAJL”), an investment management company based in Jersey, has today announced that it has received regulatory approval for a Bitcoin Investment fund. The Global Advisors Bitcoin Investment Fund (‘GABI’) has received certification from the Jersey Financial Services Commission (“JFSC”) and will launch August 1st 2014. The Global Advisors Bitcoin Investment Fund will operate within the Collective Investment Funds (Jersey) Law 1998 as an Expert Fund.

IBM Pledges $3 Billion for Semiconductor Research
Computer Giant’s Research Will Seek to Tackle Obstacles to Shrinking Circuitry, Develop Alternative Materials
By Don Clark, WSJ
International Business Machines Corp. on Wednesday pledged to spend $3 billion over five years on semiconductor research, a move to reassure customers that the technology underlying IBM’s hardware and software businesses will keep advancing.

The Man Who Swapped Currencies for Cappucinos
By Ewen Chew, WSJ
After a decade trading currencies for HSBC, where orders were sometimes as much as $100 million, Kenner Tham ditched it all to serve coffee. He swapped 5 a.m. starts and 14-hour days in New York for a life in Kuala Lumpur, where he set up Royal Post Café – a company that runs three coffee-vending trucks

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