It’s amazing what you can learn from other people’s interests. I took a look at the top three emailed stories on WSJ.com yesterday afternoon and came up with the following. The top story focused on the now seemingly questionable link between saturated fat and heart disease. Which reminded me that I needed to make a dinner reservation. And yes, I opted for a steak house. The second most popular story reported on a survey that concluded that graduation from an elite college – presumably Harvard and its ilk – is no indicator of either professional competence or personal contentment. That explains a lot. The third most emailed story covered the results of a study that concluded that climate change is harming the economy. My first reaction was to plan to start composting, buy a Leaf and start weaving my own hemp shirts. Then I spent fifteen minutes watching America’s leading cable news outlet – and decided I didn’t need to do a thing.
While I’m offering up my personal observations, I’d like to make note of my long standing colleague at Intermarket, Bill Ferri. Bill has become the face of our firm to many of you during his nearly 18 years with Intermarket. (We hired him when he was 12.) He’s been a loyal, smart and hardworking employee and as of this morning he is a Managing Partner. Congratulations Bill!
***JM: Congrats, Bill! Press release below.
Intermarket Appoints William Ferri as New Managing Partner
Intermarket Communications, a leading independent provider of corporate and financial public relations services, today announced the appointment of William (Bill) Ferri as Managing Partner.
We Like Big Brother! Why Options Exchanges Want OCC’s Eyes
Jim Kharouf / JLN
Is this the holy grail of risk management? Maybe.
The OCC is the sole clearing house for the US options industry, what many would call a shining example of centralized clearing in today’s marketplace – with low clearing fees (even with the recent fee change), a straightforward focus on clearing – and with a new directive to take on a greater risk management role.
An interesting discussion percolated during the Options Industry Conference last week in Austin, Texas, where several exchange leaders promoted the concept of having OCC as THE central risk manager across the 13 US options markets.
Since it clears every US options trade, it is in the unique position of having a view of risk across the 13 different equity exchanges – every trade, every participant. That also means it could theoretically stop a rogue trader or algorithm before it sinks a firm or multiple firms.
(To read the rest of the article, visit jlne.ws/SzxYfM )
***MM: It seems to me that OCC has created a truly level playing field for options markets and led to healthy competition, innovation and lowered costs in that sector of the industry. Any system can be gamed — we need look no further than the debate on HFT — but OCC remains a respected, safe and solid partner to all it’s members..
High-Speed Trades Outpace CFTC’s Oversight, O’Malia Says
Silla Brush – Bloomberg
The U.S. Commodity Futures Trading Commission isn’t keeping up with high-speed derivatives trading and needs to invest in tools to detect manipulative and disruptive practices, said Scott O’Malia, a Republican commissioner.
***MM: Attended a panel at Katten yesterday evening on this topic. While lawyers can make anything sound boring, it actually turned out interesting. Key point — this ain’t nothing new. Someone is always standing closer to the buttonwood tree then the next guy (or gal.)
***DA: Meanwhile, I attended the TABB Forum event where Mr. O’Malia delivered this speech. While ‘Flash Boys’ highlights the result of the arms race between participants, the worrisome tech imbalance is the one between firms and the entities who regulate them.
LSE lines up Bill Templer for new swap futures unit
Future and Options Intelligence
The London Stock Exchange Group is lining up former Morgan Stanley and UBS futures head Bill Templer to run a new derivatives venture that plans to launch swap futures, FOW understands. Templer, a 25-year veteran and key figure in the listed derivatives industry, is believed to be working at the exchange on the launch of swap futures, according to sources.
***MM: Sounds like a great pairing — a prestigious English institution with one of England’s most famous crime fighters. Oops! That’s his cousin Simon. (I know the last names are spelled differently but couldn’t resist.) Seriously, congratulations to both the LSE and Bill and best wishes for success.
Aluminum Futures Debut on CME Amid Wrangling on LME Rules
Luzi Ann Javier – Bloomberg
CME Group Inc. (CME) futures trading started for aluminum that can be loaded from U.S. warehouses, a move supported by companies including MillerCoors LLC amid delays at depots linked to the London Metal Exchange.
***MM: Good luck with that. Having been involved in the launch of an AL contract that failed to unseat the LME some years back, I can tell you CME has their work cut out for them.
CBOE chief says fewer ‘dark’ trades would benefit markets
The quality of U.S. stock markets will improve if regulators limit trading that happens outside of exchanges, the head of CBOE Holdings Inc said on Tuesday after the company reported higher-than-expected quarterly earnings.
***MM: It’s easy to understand the need for “dark” trades but it would seem that their use has extended well beyond the original intent.
Turkey’s Borsa Istanbul dismisses three senior staff
Borsa Istanbul, Turkey’s state-run stock exchange, has dismissed three senior personnel after a restructuring eliminated their jobs, an official at the exchange told Reuters on Wednesday.
***MM: I wonder what public-sector severance packages are like in Turkey.
FIA Issues Second SEF Tracker Report On Swap Trading Activity
The Futures Industry Association today published the second issue of FIA SEF Tracker, a periodic report on trading activity taking place on swap execution facilities. This issue contains four additional weeks of data for the month of April as well as two enhancements-a breakdown of non-deliverable forwards trading by currency, and a breakdown of credit default swaps trading between contracts subject to “made available to trade” determinations and all other.
***MM: Seems like the shakeout may have already begun with yesterday’s announcement of executive changes at Javelin.
Why Europe Might Never Reach A Financial Transactions Tax Deal
Tim Worstall – Forbes
There’s much excitement in certain quarters that the European Union (or more accurately, just the eurozone part of it) will reach a deal to impose a financial transactions tax (FTT).
***MM: This sounds like a job for Grover Norquist.
12th Annual Midwest Open Your Heart to the Children Benefit
Hedge Funds Care
The Midwest financial communities will unite at the 12th Annual Midwest “Open Your Heart to the Children” Benefit on Thursday, May 8 at the JW Marriott Chicago. A highlight of the Chicago social calendar, the Benefit brings together the hedge fund, proprietary trading, private equity and venture capital communities to provide direct support for local charities that prevent and treat child abuse.
***MM: A worthy event for bleeding heart liberals and conservatives alike.
MarketsWiki Page of the Day
Matthew S. Simon
MarketsWiki Recent Updates
Companies, Organizations and Groups
48,756,360 pages viewed, 7,947 articles, 182,651 edits
Euroclear, DTCC to Set Up Collateral Joint Venture Amid Squeeze
Nandini Sukumar – Businessweek
Depositary Trust & Clearing Corp. and Euroclear Bank SA, two of the world’s largest settlement firms, are creating a joint venture to process collateral as banks globally struggle to find enough capital to back their trades.
SEC probing brokerages over handling of retail orders – sources
The Securities and Exchange Commission has sent out subpoenas and demands for records to brokerage companies as part of a probe into how retail customers’ orders are routed, executed and filled, according to several people familiar with the matter.
SGX Enhances Its Commodities Product Offering
SGX is building up its bulk commodity product offerings with 9 more derivative contracts over the next 2 months, subject to regulatory approval. These new contracts will further boost and complement the existing AsiaClear products to provide customers with access to more effective, efficient, and comprehensive risk management.
Washington delays big banks from writing wills before a collapse
Almost six years after Lehman Brothers collapsed, U.S. regulators still haven’t given Wall Street banks individual feedback on how to improve so-called “living wills” that detail how to go bankrupt without spending taxpayer dollars or causing a market panic.
Five Things Revealed by Markit’s IPO Filing
Tim Cave – MoneyBeat – WSJ
One of the U.K.’s fastest-growing financial firms, Markit, has lifted the lid on its business after filing its 71-page prospectus for an initial public offering in the U.S. last night.
Markit: taking on the Borg
Enormous new headquarters can be a symptom of corporate hubris. Consider the fleet of cranes above Bloomberg Place on Cannon Street in London. They are a reflection of Bloomberg LP’s confidence in its financial data empire – and a contemptuous invitation to competitors. Markit plans to accept.
Flash Crash, Four Years Later, Still Haunts Wall Street
Steven Russolillo – MoneyBeat – WSJ
Four years ago today, a stomach-churning stock-market plunge rattled Wall Street. And debate about the trading practices that contributed to the big move are back in the spotlight.
Mr Markets: Remembering Gary Becke
Ben Walshr | Counterparties
Economist Gary Becker, the Nobel Laureate who embodied and helped define what it means to be a Chicago school economist, died on Sunday at age 83. He “was the most important social scientist in the past 50 years”, writes Justin Wolfers.
What Tim Geithner Got Right
Jennifer Taub – NYTimes.com
Timothy F. Geithner‘s book, “Stress Test: Reflections on Financial Crises,” is to be released by the Crown Publishing Group on May 12. Based on the book’s website — I have no special inside track — Mr. Geithner will offer a candid self-evaluation of his performance during the 2008-9 financial crisis, first as president of the Federal Reserve Bank of New York, and later as Treasury secretary.
Regulators must act on coco bond risks
Alberto Gallo – FT.com
When Lloyds Group bankers issued the first bail-in bond in 2009, they did not expect it to turn into the new hottest area of bond markets. Today, sales of contingent convertible (coco) bonds have reached EUR75bn in Europe, and at this rate will probably reach EUR100bn by year-end. But without a swift effort to standardise and regulate the market, coco bonds threaten to make a future bank crisis worse, rather than being part of the solution.
Asic calm over HFT impact but Australian buy-side lobby groups disagree
Justin Lee – Risk.net
Australian market participants are split on the impact of high-frequency trading (HFT) as the Australian Securities and Investments Commission (Asic) has rejected any suggestions that HFT is a problem within the local market.
Keynote Address By CFTC Commissioner Scott D. O’Malia, Derivatives 2014: A Market in Transition – A TabbForum Event – We Have The Power To Reverse The Negative Impacts Of The Commission’s Rules On Market Structure
Spreading Sunshine In Private Equity: Andrew J. Bowden, Director, SEC Office Of Compliance Inspections And Examinations – Private Equity International (PEI), Private Fund Compliance Forum 2014, New York, NY, May 6, 2014
[FCA] FG14/4 – Changing customers to post-RDR unit classes
This guidance sets out our expectations of firms which are involved in the transfer of investors from pre-RDR unit classes to post-RDR unit classes.
[FCA] PS14/6: Competition in the Markets for Services Provided by a Recognised Investment Exchange: Feedback on CP13/16 and Final Handbook Text
ESMA Chair, Steven Maijoor, Delivers Keynote Speech At AFME Post Conference
ESMA Approves EuroRating As A Credit Rating Agency
Exchanges & Trading Facilities
CME May Have Tough Time Attracting Interest in Aluminum Contract
Ira Iosebashvili and Tatyana Shumsky – MoneyBeat – WSJ
If the first day of trading is any indication, CME Group may have a tough slog drumming up interest for its North American aluminum futures contract.
IntercontinentalExchange Earnings Preview: Post-Acquisition Derivatives Trading In Focus
While ICE’s trading business originally just comprised of derivatives trading, the company now has a cash equity operation with the acquisition of NYSE. With the acquisition of Singapore Mercantile Exchange earlier in the quarter, ICE is now the only operator in the world with exchanges across the U.S., Europe, Latin America (Brazil) and Asia (Singapore).
Alibaba Keeps NYSE, Nasdaq Waiting for Listing Venue
Sam Mamudi – Bloomberg
The New York Stock Exchange and Nasdaq Stock Market both still have a shot at the most coveted U.S. initial public offering in years.
Nasdaq May Have Inside Track on Alibaba IPO
Todd Shriber | ETF Trends
Chinese e-commerce giant Alibaba still is not a public company, but as is often the case with the most widely anticipated initial public offerings, and Alibaba certainly fits that bill, there is plenty of speculation about where the company will list its shares.
NASDAQ OMX April 2014 Volumes
BM&FBOVESPA Publishes April Market Performance
In April the equities market’s (BOVESPA segment) financial volume totaled BRL150.11 billion against BRL125.23 billion in March. Daily average was BRL7.50 billion against BRL6.59 billion in the previous month. Total number of trades in April was 19,724,219 against 18,503,854 in March. Daily average number of trades was 986,211 against 973,887 in the previous month.
BOX Options Exchange May 2014 InBOX
Euronext celebrates the city of Namur’s first bond listing on Euronext Brussels
SIX Swiss Exchange: Shares Of SFS Group AG (SFSN) Open At CHF 67.00
Statistics From The Baltic Securities Market For April 2014
TMX Group Equity Financing Statistics – April 2014 – Toronto Stock Exchange, TSX Venture Exchange
Hedge Funds & Managed Futures
European Private Equity Exits Hit a Fresh Record
MoneyBeat – WSJ
In the world of private equity, proving you can sell a company now can affect your fortunes for the next several years. So new figures that show European private equity sales hit a record in 2013 bodes well for those now raising funds to invest in the region.
2 Apollo Global Partners Are Said to Be Leaving
WILLIAM ALDEN – NYTimes.com
Apollo Global Management has climbed to the pinnacle of the private equity world, reaping billions of dollars in profit and raising a huge new buyout fund. But some of its executives are having doubts.
This is What Low Volatility Has Done to Macro Hedge Funds
Laurence Fletcher and Chiara Albanese – MoneyBeat – WSJ
The financial markets have fallen into a slumber. The euro has never been so steady against the dollar. Big trends such as the rise in Japanese stocks and the slide in the yen have stalled. U.S. government bonds are flat-lining.
Investors grill Allianz over Pimco turmoil
Alice Ross in Frankfurt – FT.com
Allianz endured a public grilling by some of its largest shareholders over its lack of intervention at Pimco, the German insurer’s US fund manager, which had been grappling with turmoil at its top management.
Insight: Pimco’s bad bets on emerging markets add to firm’s troubles
Betting on emerging markets has led to losses for many over the past year – but among big investors few got the timing of their wagers as wrong as Pacific Investment Management Co, the giant bond firm that has recently been roiled by a rupture at the top.
Hedge Fund Moguls’ Pay Has the 1% Looking Up
ALEXANDRA STEVENSON – NYTimes.com
Hedge fund managers heavily populate the so-called 1 percent in the United States. And they are getting richer. The 25 highest-earning hedge fund managers in the United States took home a total of $21.15 billion in compensation in 2013, according to an annual ranking published on Tuesday by Institutional Investor’s Alpha magazine.
Goldman Sachs Art-Loan Deepens Bank’s Ties to Steven A. Cohen
Juliet Chung – MoneyBeat – WSJ
Deutsche Bank AG may have pulled a line of credit after SAC Capital Advisors was indicted, but Goldman Sachs Group Inc. is taking another tack.
Aberdeen performance fees cut in half
Mike Foster – Financial News
Aberdeen Asset Management’s performance fees nearly halved in the six months to March, as it suffered net outflows of £8.8 billion after setbacks for emerging market equities, one of its strongest suits.
Boaz Weinstein-backed fund tops £1m profit in first year
Vivek Ahuja – Financial News
Camares Capital, the hedge fund launched by former Deutsche Bank flow credit trading head Antoine Cornut and seeded by Boaz Weinstein, a high-profile former proprietary trader at the German bank, made a profit of more than £1 million from its launch to the end of last year.
Banks & Brokers
JPMorgan names two commodities traders to succeed Blythe Masters
JPMorgan Chase & Co has appointed veteran traders John Anderson and Michael Camacho as co-heads of its commodities business, replacing Blythe Masters, as the bank prepares to sell its physical commodities business.
BGC Partners Receives Approval to Broker FX Options in China
BGC Partners, Inc., a leading global brokerage company servicing the financial and real estate markets, today announced that China Credit BGC Money Broking Company Limited, its joint venture with China Credit Trust Co. Ltd., has been granted a license by the State Administration of Foreign Exchange to broker FX options to the interbank market in China.
Returns at Investment Banks Likely to Fall, BCG Warns
Justin Baer – MoneyBeat – WSJ
Boston Consulting Group delivered a sobering thought Tuesday to Wall Street firms and their shareholders: Returns are going to get worse. And but for a few, they may not to improve.
Wealth Management, Not Investment Banking, Keeps UBS On Top
UBS surprised many investors today with profit levels that came in higher than expected in the first quarter.
Morgan Stanley CEO says bankers’ bad judgment was not a crime
Morgan Stanley Chief Executive James Gorman said on Tuesday that he does not believe more bankers should have gone to jail for the financial crisis.
Goldman Sachs names Mahoney new head for financials in Asia Pacific
Goldman Sachs will relocate John Mahoney to Hong Kong to become head of its financial institutions unit in the Asia Pacific excluding Japan, a spokeswoman for the U.S. investment bank said on Wednesday.
SocGen books $731 million writedown on Russia unit
Societe Generale, France’s second-largest listed bank, said it had booked a 525 million euro ($731 million) writedown on the value of its Russian unit Rosbank after months of political crisis in Ukraine.
Socgen remains committed to Russia (just in case you were wondering)
Izabella Kaminska | FT Alphaville
As the FT reports on Wedneday, France’s Socgen has taken a EUR525m writedown on the goodwill of its Russian assets, becoming the first big Western bank to suffer significant financial damage from the crisis in Ukraine.
Indexes & Products
ProShares ‘Temporarily’ Suspends Shares Creations in 11 ETFs
Chris Dieterich – WSJ.com
Exchange-traded fund issuer ProShare Capital Management LLC “temporarily” suspended shares creations in 11 of its ETFs on Friday due to a regulatory filing issue the company expects to be resolved in a few days, according to a spokesman.
Value Stock ETFs See Big Inflows in April, Growth Gets Whipped
Chris Dieterich – MoneyBeat – WSJ
April’s exchange-traded-fund money trail highlights the wildly divergent performance between large stocks and their “momentum” counterparts as investors found renewed demand for value.
VeloxPro Brings Order Book Visualization to TT Connected Partner Program
Trading Technologies International, Inc. (TT) and VeloxPro, global providers of market-leading connectivity and trading solutions for the financial community, today announced they have partnered to integrate VeloxPro’s BookMap order-book visualization solution with TT’s execution management system (EMS) software.
Numerix and S&P Capital IQ Sign New Partnership Agreement Extending Pricing Capabilities of Portfolio Risk Offering
S&P Capital IQ Leverages Numerix Analytics to Provide Best-in-class Instrument Pricing within its Next Generation Risk and Scenario Analytics Solution
Rapid Ratings Launches Company Comparison Report
Rapid Ratings International, Inc., a financial risk analytics firm, today announced the launch of its Company Comparison Report, a powerful new visualization tool that enables clients to compare up to five public and private companies side by side. In addition to Rapid Ratings’ objective Financial Health Rating and commentary about each company’s financial and operating viability, the report enables users to add metrics and comments of their choosing, to illustrate how the companies compare in areas such as cost, timing, duration of relationship, or exposure.
Equinix Launches Cloud Exchange to Unlock Full Potential of Cloud Computing
Equinix, Inc., the global interconnection and data center company, today announced the launch of the Equinix Cloud Exchange, an advanced interconnection solution that enables seamless, on-demand and direct access to multiple clouds and multiple networks across the globe.
Milestone Group Names Former J.P. Morgan Executive Robert Caporale As Head Of North America
Milestone Group, the global provider of fund processing solutions to the funds industry, today announced that Robert Caporale will join the company as Managing Director and Head of North America. The appointment reflects Milestone Group’s ongoing success in enabling the funds industry to achieve breakthroughs in efficiencies and operational effectiveness, underpinned by its pControl funds processing platform.
FINRA Fines Morgan Stanley Smith Barney LLC $5,000,000 for Supervisory Failures Related to Sales of Shares in 83 Initial Public Offerings to Retail Customers
The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Morgan Stanley Smith Barney LLC $5,000,000 for supervisory failures related to the solicitation of retail customers to invest in initial public offerings (IPOs).
SEC tells jury Texas tycoons profited from ‘scheme of secrecy’
A lawyer for the U.S. Securities and Exchange Commission urged jurors Tuesday to hold Texas tycoon Sam Wyly and his deceased brother Charles liable for a “scheme of secrecy” that reaped profits of more than $500 million.
Hong Kong’s Securities And Futures Commission Bans Helen Chow Hoi Ching And Choy Cheuk Tung For Life
Hong Kong’s Securities And Futures Commission Reprimands And Fines Kaiser $1.7 Million
Environmental & Energy
France says GE offer for Alstom not good enough
French President François Hollande says that an offer by General Electric Co. for troubled French engineering company Alstom is not good enough and wants the U.S. company to come up with a better deal.
France Wants GE to Alter Terms for Alstom Unit
Ted Mann and Inti Landauro, The Wall Street Journal
The French government urged General Electric Co. to alter the terms of its proposed $17 billion takeover of Alstom ‘s energy assets, saying it would reject a deal that allowed GE to completely absorb the businesses.
PEGAS: April Volumes Increase By 174 Percent Year-On-Year – New Monthly Record On TTF Futures
Exceptionally successful first day of trading at TFEX with new system
The Stock Exchange of Thailand (SET) and its derivative arm TFEX have successfully replaced their entire technology platform for derivatives trading and experienced their second-highest daily number of contracts traded ever, on the very first day of trading. This comes on the heels of a similar technology replacement for equities trading, which led to volume increases, leading low latency and state-of-the-art functionality. The Stock Exchange of Thailand selected Cinnober Financial Technology as its partner in this comprehensive replacement of trading infrastructure.
Shanghai to Regain Bourse Crown From Shenzhen: Chart of the Day
The Shenzhen Stock Exchange’s title as China’s dominant bourse may prove short-lived as policy changes boost its counterpart in Shanghai.
U.S. SEC expands probe into top banks’ hiring in Asia: WSJ
A U.S. regulator has expanded its probe into major banks’ hiring practices in Asia and sent letters to at least five U.S. and European banks in early March seeking more information, the Wall Street Journal reported on Tuesday.
GF Futures set to expand beyond London by joining CME
Xiao Wang – Risk.net
GF Futures has become the first Chinese broker to become a fully fledged member of the London Metal Exchange – and now it’s turning its attention to the US market
Regulator Warns Beijing Banks on Consumer Lending
In the latest sign of concerns over debt in China’s financial system, Beijing’s local banking regulator has warned banks to step up their vigilance in lending to individual borrowers.
TOCOM Palladium Advances Over 2,700 Yen Per Gram
Saudi Tadawul to Hire Banks for IPO of Biggest Arab Bourse
Matthew Martin and Deema Almashabi – Bloomberg
Saudi Arabia’s stock exchange plans to sell shares in an initial public offering as the Arab world’s largest bourse seeks to gradually open up to foreigners and boost institutional investment.
India opens door to foreign investors
Andrew Pearce – Financial News
India has never been famous for the lightning speed of its bureaucracy, and the rules for foreign investors in its financial markets are no exception. One market participant described them as “cumbersome”.
DGCX SENSEX Futures Climb 41% In April – Trading Volumes In April Total 819,941 Contracts, Valued At USD 24.69 Billion
SENSEX Futures on the Dubai Gold & Commodities Exchange (DGCX) recorded a month-on-month growth of 41% in April. The Exchange traded a total of 819,941 contracts last month, valued at USD 24.69 billion.
African Economic Data Service (AFED) launches
Exchange Data International (EDI), a provider of global securities data, announced today the launch of its latest service, AFED, an unrivalled reference source of macroeconomic and financial data for all 54 countries in Africa.
Qatar Exchange Closes New York Leg Of Investor Forums To Coincide With Inclusion Of Qatar In MSCI Emerging Markets Index
Non Jordanian Investment At The Amman Stock Exchange During April 2014
PEX Monthly Investor Newsletter- April 2014
ADX Discusses Relations With Brokers
In line with its efforts of facilitating coordination and communication with its multiple stakeholders, Abu Dhabi Securities Exchange (ADX) held a meeting with a number of its licensed brokerage firms to discuss strategy and services that ADX provides to brokers.