First Read

Tony McCormick Out as CEO of BOX Markets, LLC
By John J. Lothian
The CEO of the BOX Options Exchange has stepped down as the CEO of the business side of the exchange, according to industry sources. Tony McCormick will remain as a consultant to the business side, BOX Markets, LLC, and will remain as CEO of the BOX exchange for the time being. Peter Layton, the chairman of BOX, will become the acting CEO.

BOX is one of 12 U.S. equity options exchanges and has struggled to break out from the competition. In February, BOX held a 2.5 percent market share among the US options exchanges, down from 3.53 percent a year earlier, according to OCC data.

McCormick, a former brokerage executive with Charles Schwab and Harris Bank, has been CEO of BOX since 2009. He had also previously served as a board member of CBOE and OCC

BOX is this year’s host of the OIC conference, set in Miami, Florida May 6-8.


The Life of SCI: John Rapa Looks at the SEC’s Reg SCI

After several high-profile market disturbances, from the 2010 “flash crash” to the Knight Capital algorithmic meltdown in 2012, the SEC considered a new set of rules to tighten up system compliance and integrity. The rules, known collectively as “Reg SCI” became effective in February 2015. John Rapa, president and CEO of Tellefsen & Company and a 30-year veteran consultant to exchange market structure, walks us through the new rules and what they mean for exchanges, dark pools and market participants.

Watch the video »

Masters in Business: Brad Katsuyama
By Barry Ritholtz, Bloomberg
This week, our “Masters in Business” radio podcast features Brad Katsuyama of IEX. Katsuyama may be best known for his role as the lead character in Michael Lewis’s book, “Flash Boys: A Wall Street Revolt.”

***** An interesting discussion with the star of “Flash Boys.”


Aaron Schock resigns after new questions about mileage expenses
By Jake Sherman, Anna Palmer and John Bresnahan, Politico
Illinois Rep. Aaron Schock resigned Tuesday, less than 12 hours after POLITICO raised questions about tens of thousands of dollars in mileage reimbursements he received for his personal vehicle.

***** Schock’s resignation is a loss for the markets as he was a staunch supporter and protector via his position on the U.S. House of Representatives Ways & Means Committee. Besides, if you are going to build a Downton Abbey shrine, do it with your own money. Like I did. I hear Tony McCormick’s chauffeur is available too.


FINRA Launches Redesigned Website
The Financial Industry Regulatory Authority (FINRA) today announced the launch of a new, redesigned version of its website, Key features of the site include a streamlined design, enhanced search and navigation, and a mobile-friendly platform providing a more simplified and user-friendly experience.

****** User friendly regulators? What is next?


CQG/Eris Exchange Webinar, Tuesday March 24, 3:30pm EDT
At last week’s FIA Boca, CQG announced our platform’s connectivity to Eris Exchange. This week we are hosting a webinar on trading Eris Exchange Interest Rate Swap Futures through CQG. Well worth 30 minutes of your time.

***** There are more smiles at Eris these days. Everyone wants to dance with them.


CFTC Final Rule: Residual Interest Deadline for Futures Commission Merchants
On March 17, 2015, the CFTC approved a final rule that alters sections of the CFTC Final Rule: Enhancing Protections Afforded Customers and Customer Funds Held by Futures Commission Merchants and Derivatives Clearing Organizations and, specifically, the “residual interest” rule to:

  • remove the phased in compliance schedule of December 31, 2018, and
  • provide assurance that no revisions will be made to the current schedule except through a separate commission rulemaking.

The rule becomes effective 60 days after it enters the Federal Register.
***DA: Also see the press release with links to commissioners’ statements HERE


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Access, Research, Trade: The A.R.T. of Futures Innovation
Object Trading/Deltix Webinar, March 24, 2015, 14:00 London / 15:00 Frankfurt / 10:00 New York / 09:00 Chicago
Listen in as we demonstrate how the Deltix Algorithmic Futures Trading Platform integrates with Object Trading’s low latency Direct Market Access Service Platform. Learn how the integration of two award-winning solutions – for market access, and quantitative research & trading – is speeding both discretionary and systematic traders’ time to market for futures exchanges globally.


Lead Stories

Fledgling Derivatives Market Hires Ex-DTCC Executive as Chairman
by John Detrixhe, Bloomberg
Former Depository Trust & Clearing Corp. executive Sandy Broderick has joined a fledgling European derivatives exchange as chairman.
Global Markets Exchange Group International appointed Broderick as a non-executive director, according to a statement on Wednesday. He was previously the chief executive officer of DTCC Deriv/SERV, DTCC’s repository for over-the-counter derivatives trades.

Hedge Funder Dalio Thinks the Fed Can Repeat 1937 All Over Again
by Kelly Bit Bloomberg
Ray Dalio, founder of the world’s largest hedge fund firm, Bridgewater Associates, told investors there’s a risk that the Federal Reserve could create a market rout similar to that of 1937 if it raises interest rates too fast.

S.E.C. Chief Voices Support for Higher Advice Standard for Brokers
By Michael J. de la Merced, NY Times
The chairwoman of the Securities and Exchange Commission announced on Tuesday that she planned to explore setting a higher standard for brokers in dispensing investment advice, putting the agency in the middle of a potential fight between the Obama administration and the financial industry.

SGX needs to serve up equities revival
Jeremy Grant, FT
Singapore’s chances of ever attracting big-ticket IPOs appear to remain slim
In London and New York the days when stockbrokers could take leisurely lunch breaks while share dealing stopped are long gone.

HKEx, LME and Borsa Istanbul agree partnership
The London Metal Exchange (LME) and Borsa ?stanbul A.S. are entering into two agreements under which (i) Borsa ?stanbul will acquire the LME’s stake in clearing house LCH.Clearnet, and (ii) Borsa ?stanbul, the LME and the LME’s parent company Hong Kong Exchanges and Clearing (HKEx) will partner on the dissemination of market data.

CME Said to Be in Talks for GFI Tech Assets After Losing to BGC
by Matthew Monks, Zeke Faux, Bloomberg
CME Group Inc. is pursuing GFI Group Inc.’s technology assets after losing a takeover battle for the brokerage to BGC Partners Inc., people with knowledge of the matter said.

***DA: Trayport and Fenics – all CME ever really wanted anyway.

Fed to Markets: No More Promises; Move away from explicit interest-rate guidance could unnerve investors used to some measure of clarity
By Jon Hilsenrath, WSJ
The Federal Reserve is about to inject uncertainty back into financial markets after spending years trying to calm investors’ nerves with explicit assurances that interest rates would remain low.

The Central Bank of Central Banks Says Keep Calm About Deflation
Bloomberg Business
The central bank for central banks has some advice for policy makers fretting about deflation: Don’t. In a study bound to prove controversial in the corridors of power and academia, economists at the Bank for International Settlements concluded the connection between economic growth and shrinking prices is weak.

Why Elizabeth Warren Is A Threat to America’s Growth
By Liz Peek, The Fiscal Times
“Liz Warren is Obama with conviction.” “Liz Warren is Hillary without the baggage.” Actually, the Massachusetts senator is a progressive firebrand whose family issues could cause serious problems for the country. She is dynamic, she has fire in her belly and she hates — absolutely hates – banks.

BIS warns on risks from big fund groups
Ralph Atkins and Neil Hume in London, FT
Decisions taken by only a few big fund managers could determine how well bond markets function in future crises, researchers at the Bank for International Settlements have warned.

Fannie, Freddie Could Be at Risk of Needing More Government Funds; FHFA inspector general report cites declining profits, capital cushions as vulnerabilities
By Joe Light, WSJ
Mortgage-finance companies Fannie Mae and Freddie Mac could be at risk of needing more government bailouts, a watchdog said in a report set to be released Wednesday.


CFTC Approves Final Rule on Residual Interest Deadline for Futures Commission Merchants
The U.S. Commodity Futures Trading Commission (Commission) today unanimously approved a final rule removing the December 31, 2018 automatic termination of the phased-in compliance period for the Residual Interest Deadline for futures commission merchants (FCMs).

Finra’s BrokerCheck gets a facelift
By Mason Braswell, InvestmentNews
Finra makes some information more prominent, but system still doesn’t go far enough plaintiffs’ attorneys say
As more investors use Finra’s BrokerCheck database, the regulator has made its first major change in years to make it easier for investors to find out certain background information about their broker.

New FINRA Broker Bonus Rule Out ‘Fairly Soon’: Ketchum
Arb task force should have first report out by summer, but ‘CARDS as it exists now is unlikely to move forward,’ Ketchum said

Remarks of Chairman Timothy Massad before the National Grain and Feed Association 119th Annual Convention
“At its core, our mission is to make sure that the farmers, ranchers, and other businesses that depend on these markets to hedge risk can use them effectively. Our job is to help these markets thrive, to do all we can to make sure they operate with integrity, to prevent fraud and manipulation, and to protect customers.”

Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
CBOE: Notice of Filing of a Proposed Rule Change Relating to Rules 6.74A and 6.74B (Release No. 34-74519; File No. SR-CBOE-2015-026)
FINRA: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Extend the Expiration Date of the Refund Program Under FINRA Rule 3110.15 (Temporary Program to Address Underreported Form U4 Information) (Release No. 34-74512; File No. SR-FINRA-2015-005; March 16, 2015)
NASDAQ: Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Rule 4751(h)(5) Relating to Market Hours IOC Orders (Release No. 34-74518; File No. SR-NASDAQ-2015-022); see also Exhibit 5

ASIC increasing use of behavioural economics across its regulatory business
ASIC today released two reports of behavioural economics (BE) research experiments conducted as part of its push to better understand market and consumer behaviour.

Statement of Chairman Timothy G. Massad in Support of Adoption of Amendments to CFTC Regulation 1.22 (Residual Interest Deadline for Futures Commission Merchants)
Chairman Timothy Massad

Statement of Commissioner Mark P. Wetjen in Support of Adoption of Amendments to CFTC Regulation 1.22 (Residual Interest Deadline for Futures Commission Merchants)
Commissioner Mark Wetjen

Statement of Commissioner J. Christopher Giancarlo in Support of Adoption of Amendments to CFTC Regulation 1.22 (Residual Interest Deadline for Futures Commission Merchants)
Commissioner J. Christopher Giancarlo

Exchanges & Trading Facilities

ICE Futures U.S. Sets Daily Volume Record in Mini MSCI Complex and Mini MSCI EAFE Futures
Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, announced today that ICE Futures U.S. reported record daily volume in the mini MSCI® futures complex as well as futures based on MSCI’s benchmark for international equity performance, the mini MSCI EAFE® index, which tracks equities in developed markets in Europe and Asia.

Euronext Brussels introduces spotlight options on Ontex and D’Ieteren
Euronext announced today the successful introduction of spotlight options on the shares of Ontex (option trading symbol: ONT) and D’Ieteren (option trading symbol: IET). The spotlight options will be available as of today on the derivatives market of Euronext Brussels.

CME Group Notices
REVISED: OTC Holiday Advisory ? Good Friday and Easter 17 Mar 2015
Amendments to NYMEX Rule 588.H (Globex Non-Reviewable Trading Ranges) for the European Low Sulphur Gasoil Futures Contract 17 Mar 2015
Updated March 2015 Final Foreign Currency Settlement Prices 17 Mar 2015
Update: CME ConfirmHub Migration Cancelled

CME Group Inc. Announces Date of First-Quarter 2015 Earnings Release, Conference Call
CME Group
CME Group Inc. will announce earnings for the first quarter of 2015 before the markets open on Thursday, April 30, 2015. The company has scheduled an investor conference call that day at 7:30 a.m. Central time.

LME may stop issuing Malaysia metal warrants over tax changes
A move by the London Metal Exchange to potentially stop issuing warrants for metal stored in warehouses in Malaysia due to planned tax reforms could push more shipments into neighboring Singapore, traders and warehousers said on Tuesday.

Hedge Funds & Managed Futures

Many Blackstone M&A bankers expected to depart ahead of spin off to Taubman
By Liana B. Baker and Greg Roumeliotis, Reuters
More than half of the 17 senior managing directors working in Blackstone Group LP’s mergers and acquisitions advisory arm may leave as the business is combined with the advisory firm headed by star Wall Street investment banker Paul Taubman, according to people familiar with the matter.

Crowdfunders seek revisions to FCA rules
Judith Evans, FT
Crowdfunding platforms are pushing back against new UK regulation that they claim is deterring investors from the industry and slowing its rate of growth.

Dalio warns Fed of 1937-style rate risk
Henny Sender and Stephen Foley in New York and Sam Fleming in Washington, FT
The US Federal Reserve risks causing a 1937-style stock market slump when it finally moves to raise interest rates, one of the world’s most powerful hedge fund managers has warned.

Meet the New Bond King; Joshua Barrickman is the opposite of Bill Gross. But his Vanguard index fund is poised to become the biggest bond fund
By Kirsten Grind
Vanguard Group’s Joshua Barrickman has one follower on Twitter, has never appeared on business TV shows, and even some of his own investors don’t recognize his name.

Banks & Brokers

Jefferies profit falls 90 pct on lower fixed income revenue
Investment bank Jefferies Group LLC, owned by Leucadia National Corp, reported a 90 percent drop in quarterly profit, hurt by lower revenue from its fixed income and investment banking businesses.

Results at Jefferies Expose the Bank’s Weaknesses
Jefferies is rubbing salt into its own wounds. The Wall Street firm managed to avoid a second straight quarterly loss, but only barely. Net income for its first quarter was a dismal $12.5 million as the three months to February exposed some of the investment bank’s weaknesses.

Citigroup, Barclays Close to Settling Forex Lawsuit With Private Investors; Two banks expected to pay as much as a combined $800 million to settle lawsuit
By Christina Rexrode and Chiara Albanese, WSJ
Citigroup Inc. and Barclays PLC are expected to pay as much as $800 million combined to settle a lawsuit with investors who say the banks manipulated foreign-exchange rates, according to people close to the situation.

Goldman Sachs Prices Shares in Lending Unit; Shares, set to begin trading Wednesday, price at $20 a share
By Katy Burne, WSJ
Goldman Sachs Group Inc. priced six million shares of its specialty lending arm late Tuesday at $20 apiece, the low end of its $20-$21 targeted range, raising $120 million, a person familiar with the matter said.

Clearing & Settlement

London Metal Exchange sells LCH.Clearnet stake to Borsa ?stanbul
The London Metal Exchange is selling its entire stake of about 2 percent in clearing house LCH.Clearnet to Borsa ?stanbul and will work with the Turkish stock exchange to develop products for the steel market, the LME said on Wednesday.

Clearstream and ICE collaborate on collateral
Asset Servicing Times
Clearstream and ICE Clear Europe are collaborating to create a tri-party margin collateral management service, linking the London-based central counterparty (CCP) to Clearstream’s Global Liquidity Hub.

Clearstream And ICE Clear Europe Launch Collaboration On Triparty Margin Collateral Management Service – ICE Clear Europe Now Linked To Clearstream’s Global Liquidity Hub – Clearing Members Who Are Customers Of Clearstream’s ICSD Can Use Global Liquidity Hub To Manage Margin Requirements At ICE Clear Europe
The London-based central counterparty (CCP) ICE Clear Europe and the international central securities depository (ICSD) Clearstream Banking S.A. have launched a new collateral management partnership which enables clearing members to use their assets held at Clearstream to manage their margin requirements.

Indexes & Products

Fund Manager Ab Nicholas Has Been Beating S&P 500 for 40 Years
Bloomberg Business
Albert Nicholas, who tops our annual ranking of mutual funds, defies those who say stock pickers can’t outrun indexes—or machines.

US small-caps raise dividends at vigorous pace
Smaller US companies focused on the domestic market have initiated and raised dividends at a vigorous pace over the past 15 months, offering yield-hungry investors an alternative to blue-chip companies. These smaller companies currently paying a dividend are now rivalling their larger peers, in a sign that executives are increasingly confident about the US economy.

Your Small-Cap ETF Is Soaring But Could It Be Better?
Like their midcap brethren, small-cap stocks have bounced back in 2015 after a relatively modest showing last year. They’re among the best-performing ETFs of 2015 so far, as ETF performance data shows. The $7.4 billion Shares Russell 2000 Growth is trading near an all-time high. So is its much smaller peer,PowerShares DWA SmallCap Momentum. With $376.8 million in assets, DWAS is up 6.2% year to date. IWO has risen 5.9% so far in 2015.

Not All Bonds Are A Sell, Even High Yield Is Split
ETF Trends
The high-yield bond market, as measured by the S&P U.S. Issued High Yield Corporate Bond Index, had recently been clawing its way up in performance for 2015. January’s mild return of 0.80%, coupled with a February return of 2.25%, was heading in the right direction, but March has been fatal so far. The index has returned -1.01% MTD, bringing its YTD return to 2.03% as of March 13, 2015.


Nasdaq sees tech partnership with HKEx in derivatives link-up
Press Release
Securities exchange operator NASDAQ OMX Group Inc is a “natural partner” for its Hong Kong counterpart should the latter need technological assistance for derivatives link-ups with other exchanges, Nasdaq President Adena Friedman said.

Financial tech firms go on £5bn shopping spree
By James Rundle, Financial News
Technology providers have been the targets of a spending spree in the past three months as trading firms reduce their reliance on in-house development and look elsewhere for the tools they need.

Microsoft sends Explorer into retirement
Richard Waters, San Francisco, FT
It was once used by nearly 1bn people, making it one of the world’s best-known technology brands. But even Microsoft, its maker, has been forced to admit that it is deeply unloved.
Internet Explorer — the software that launched the browser wars of the 1990s and became a symbol of the Seattle company’s former stranglehold on the tech world — is about to be ushered into retirement.

Facebook enters money transfer market
Hannah Kuchler in New York, FT
Facebook users will now be able to send money to their friends using its Messenger app, the social network’s first foray into peer-to-peer money transfer.

The top five most desirable skills in fintech now
Investment banks might need to invest in IT, but this doesn’t mean technologists are bullet proof. IT jobs are proliferating but banks are still considering outsourcing and offshoring arrangements to cut costs.

Winklevoss twins believe bitcoin will ‘wipe out’ cash
By James Covert, NY Post
The Winklevoss twins predicted a “cashless society” by 2025 as they continued their push to popularize the troubled virtual currency bitcoin.


Finra Probes Brokers’ Unreported Liens, Judgments
Wall Street’s self-regulator is going after firms whose brokers are subject to liens and judgments that have never been reported, according to

Environmental & Energy

How market forces are winning the climate change battle
By Don Pittis – CBC News
Despite the stereotype of a business lobby warning about the prohibitive costs of cutting back on greenhouse gases, there are increasing signs that capitalism and market forces are actually rescuing us from climate change.

House lawmakers debate power rule
By Lydia Wheeler – The Hill
Legal experts spent the majority of Tuesday’s hearing of the House Energy and Commerce Subcommittee on Energy and Power arguing whether a certain amendment to the Clean Air Act prohibits the Environmental Protection Agency from adopting its proposed clean power rule.

Excitement Over Mexico’s Shale Fizzles As Reality Sets In
By John Burnett – NPR (audio)
The prolific shale formation that has made people rich in South Texas doesn’t stop at the Rio Grande, as U.S. maps seem to indicate.


Shanghai Futures Exchange: Notification On The Opening Of Mock Trading Of Nickel And Tin Futures
In order to ensure the successful listing of nickel and tin futures and intensify futures investor education, we will initiate the mock trading of nickel and tin futures. We expect our members and customers to develop a sound understanding of futures market and increase awareness of risk prevention with respect to nickel and tin futures through active participation in the mock trading.

China’s market outpaces Japan thanks to US dollar
Remember, back in November, when China overtook Japan in stock market capitalisation? Well now there’s no contest: China’s market is worth about $1tn more (see chart).

Japan should influence the Asian Infrastructure Investment Bank from within
East Asia Forum
Japan should seriously consider joining the new China-led Asia Infrastructure Investment Bank (AIIB), regardless of the scheme’s detractors within the country.

Asian ‘wall of money’ comes with risks, says Westpac’s Rob Whitfield
Financial Review
The most senior institutional banker in Australia, Westpac Banking Corp’s Rob Whitfield, says a wall of money from Asia will drive equities and property prices even higher, while a lower Australian dollar and commodity prices will serve as a cushion during an inevitable market correction, but one that may still be some time away.

Frontier Markets

Bombay HC dismisses FTIL’s contention on supersession of its board; Court says merger and supersession separate issues, allows CLB to pass final order after hearing all parties
Dilip Kumar Jha , Business Standard
The Bombay High Court have on Tuesday dismissed a ‘notice of motion’ moved by Financial Technologies (India) Ltd, or FTIL, seeking an injunction on a proposed move by the ministry of corporate affairs (MCA) to supersede the FTIL board and appoint government nominees on it.

FIA Asia Holds Annual Derivatives Conference In Dubai – Event Sponsored By DGCX And DCCC Discusses State Of The Global Derivatives Industry
Futures Industry Association (FIA) Asia today held its annual derivatives conference in Dubai in conjunction with Dubai Gold and Commodities Exchange (DGCX) and Dubai Commodities Clearing Corporation (DCCC). The conference was attended by more than 200 market participants, which included representatives from global exchanges, broker members and traders from all over the world.

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