John Lothian Newsletter: ICE Said to Seek Mortgage Role Through Talks With Data Service; Asset managers may escape systemic label; Platinum to Palladium Fixings Join Precious Metals Revamp

Aug 1, 2014

First Read

Chicago Shooting and Suicide in Financial District Too Close to Home
John Lothian
Yesterday I was passing by the Bank of America Building just across the street from the Chicago Board of Trade Building and the Chicago Fed in the Loop when the Chicago Police were first responding to yesterday’s shooting and suicide at a firm called ArrowStream

We did not know what was happening and there were whispers of a hostage situation. It turns out it was a shooting and a suicide and the victim, Steven LaVoie, is a father of three daughters and a pillar of the community in suburban LaGrange, according to Doug Ashburn, also a LaGrange resident who knows the LaVoie family from the local swim club.

After I made my bank deposit at another institution down the street, I took this picture and tweeted it out, showing the impressive police presence for this shooting.

LaVoie is still in critical condition in a local hospital. Our thoughts and prayers go out to the family during this difficult time.

The shooter, Tony DeFrances, reportedly was motivated by being demoted. I gave everyone on the office yesterday a promotion. I did fire our intern, but she was leaving to back to college anyway. I didn’t promote Jon Matte, though, because he said it was too much trouble to fly back to the USA.


MarketsWiki Education Series, day 2
John Lothian and Doug Ashburn
Chris Edmonds, senior VP of financial markets for ICE, kicked off the day’s event by explaining the rise of central clearing, and how regulation has changed the OTC landscape. He said that, when he accepted the job at ICE in the days after the financial crisis, his mother wanted him to resign because he was in charge of clearing credit default swaps, which she heard were “weapons of mass destruction” according to Warren Buffett.

Edmonds was followed by another Chris, Chris Hehmeyer of HTG Capital Partners, who related the price risks we face on a daily basis as consumers to the price risks in the financial markets. It turns out today is the 37th anniversary of Hehmeyer starting at the Chicago Board of Trade as a runner, beginning his illustrious career which he outlined at the beginning of his presentation.

Next, Pat Kenny, VP of client relations for CQG, discusses his transition from the trading floor to an electronic platform. When asked by one of the interns about how he knew when it was time to move from trading to sales, he admitted that he was a bit of a “trading addict” and he needed a clean break. Kenny is particularly suited to relationship management, as much of the job requires him to entertain clients. “And who doesn’t like to entertain?”

Stefani Sandow, who has been working on Trading Technologies‘ Nextrader platform redesign, traced her career as an architect to her work designing trading software. She once designed the tilework in the bathrooms at the Philadelphia airport. That was not the basis of the software design though. She did introduce me and the audience to Vitruvius, a Roman writer who said design should incorporate three principles – firmitas, utilitas, venustas, or rather should be solid, usable and delightful.

Mead Welles of Octagon Asset Management concluded the event with a fascinating story of how and why he created A Leg to Stand On, a charity to help kids around the world to get life changing help to stand, walk and live a normal life. 12,000 kids so far and counting. By the way, ALTSO’s fundraisers Rocktoberfest in Chicago will be held on October 8 and Hedge Fund Rocktoberfest in New York will be October 22 (get your tickets HERE), with bands from professionals in our industry playing.

It was another great day at the Summer Intern Education Series. Next Tuesday we have another great lineup and our biggest audience signed up, over 200 interns. Thank you again to all the firms sending interns and to our sponsors, BATS, CBOE, CME Group, Spot Trading, The IFM and Illinois Institute of Technology Stuart School of Business


Trading experts’ advice: Embrace change
Thomas Dixon – Futures Magazine
Change was the most frequently used word Tuesday at the first day of the MarketsWiki World of Opportunity Summer Intern Education Series, hosted by John J. Lothian & Co. Five trading veterans spoke for 15 minutes each to a crowd of summer interns at the Illinois Institute of Technology’s Stuart School of Business in downtown Chicago, all emphasizing the importance of embracing change in the financial industry.

***DA: Dixon is working as an intern at Futures Magazine this summer, and is doubling as a journalist covering the event for the company. Perhaps we should amend the contribution requirements for the MarketsWiki Scholars program to include published works that mention us and our series.


Parting Thoughts
Robert Pickel – ISDA derivatiViews
Swaps and ISDA have played a central role in my professional career ever since the mid-1980s when I was with the law firm Cravath, Swaine & Moore, ISDA’s original outside counsel. As I leave this incredible organization and consider other opportunities, I wanted to share a few reflections from my various roles at ISDA.

***** The thing we will miss most about him is that JLN is a perfect forum for pickle jokes. One last time. It is clear that Robert Pickel relished his role at ISDA.


New U.S. CFTC head says he will be tough cop, tweak rules
Douwe Miedema – Reuters
The new head of the U.S. derivatives regulator on Thursday pledged he would be a tough cop now that the agency has largely finished a raft of new rules to oversee the $710 trillion global swaps market.

***** I would watch out, the CFTC just had delivered a new supply of rubber hoses.


SEC investigated its own ‘London Whale’ leak
Eamon Javers – CNBC
The inspector general of the Securities and Exchange Commission conducted an intensive, months-long dragnet in 2013 and 2014 involving phone, email and security searches to determine who inside the agency allegedly leaked information to the media about a closed commission meeting discussing the massive JPMorgan “London Whale” settlement, CNBC has learned.

***** It is not easy to leak a whale?


A bubblegum fix for banks will make finance safer
Gillian Tett – Financial Times
Four decades ago, a business revolution started with a packet of Wrigley’s Juicy Fruit chewing gum. On June 26 1974 the packet carrying a barcode was swiped under an electronic reader in an Ohio supermarket, marking the first time anything had “read” an item with a standardised, 11-digit barcode label.

***** Then they tried the doublemint and had a “double their pleasure” moment.


Nadex Launches iPad Trading App for Binary Options
The North American Derivatives Exchange (Nadex), a regulated online binary options exchange in the United States, today announced the release of its iPad app to provide retail traders the ability to trade binary options and bull spreads on an easy to use, intuitive platform.

***** Yes or no, do you like the new binary iPad app?


Market Data’s ‘Cambrian Age’ Offers Limitless, Untapped Potential
Paul Rowady – TABB Forum
Managing market data weighs as heavily on capital markets firms as perhaps any other component of the business. Your market data tools either enhance or handicap your ability to compete effectively. As we enter an age of limitless, untapped data sources, TABB highlights three keys to market data technology innovation.

***** There is so much data my head is going to explode.



MarketsWiki Page of the Day

MarketsWiki Recent Updates


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Companies, Organizations and Groups

GFI Group Inc; Quadriserv, Inc.; Trayport; Aite Group; Intrade; London Metal Exchange


51,534,439 pages viewed, 8,006 articles, 184,916 edits
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Lead Stories

ICE Said to Seek Mortgage Role Through Talks With Data Service
Matthew Leising, Jesse Hamilton and Jody Shenn – Bloomberg
Intercontinental Exchange Inc. (ICE), best known for energy trading and its control of the New York Stock Exchange, is engaged in negotiations that would give it a foothold in the $9.4 trillion U.S. mortgage market.

Asset managers may escape systemic label
Gina Chon in Washington and Stephen Foley in New York – Financial Times
Large asset managers, including BlackRock and Fidelity, have for now escaped being labelled ‘systemically important’ as regulators lifted the threat of costly new supervision.

Platinum to Palladium Fixings Join Precious Metals Revamp
Nicholas Larkin – Bloomberg
The company that runs platinum and palladium fixings in London is seeking a new administrator for the price-setting process after similar changes were proposed for rituals in gold and silver.

ICE Benchmark Administration Launches Error Policy Market Consultation
Intercontinental Exchange, the leading global network of exchanges and clearing houses, announced that ICE Benchmark Administration (IBA) is today launching a paper for consultation on a policy to provide transparency in the event that an error is discovered in the publication of ICE LIBOR.

Massad sees end to US-EU clearing dispute
Gina Chon in Washington – Financial Times
Timothy Massad, the new head of the main US derivatives regulator, said on Thursday he was committed to resolving a transatlantic dispute over compliance standards for clearing houses.

Former Libor Boss Quits Top UK Post At UBS
Mark Kleinman, City Editor – Sky News
The head of UK operations at the Swiss banking giant UBS is quitting after just 18 months, leaving a vacancy at one of the most prominent jobs in the City. Sky News has learnt Mark Yallop, who played a key role in the administration of the scandal-hit Libor benchmark, will leave his role as UBS’s UK chief executive at the end of September.

Argentina Debt Dilemma Spotlights Knotted World of Default Swaps
Abigail Moses – Bloomberg
Whenever the knotted world of credit-default swaps is pushed to the forefront in a financial crisis, conspiracy theories abound. Argentina is no exception.

Argentina Is in Default, and Also Maybe in Denial
Argentina may be in default, but you might not know it if you lived in Buenos Aires. Speaking to the nation in a televised news conference on Thursday, Axel Kicillof, Argentina’s economy minister, called it “atomic nonsense,” to say that the country had entered into a default.

European banks feel backlash of clean-up
Martin Arnold in London and Peter Wise in Lisbon – Financial Times
Investors in European banks received a harsh reminder of the risks posed by tougher regulation and closer scrutiny of financial balance sheets on Thursday as two big lenders announced record losses despite an improving economic outlook.


Wall Street arbitration reform proposal faces rocky path
Suzanne Barlyn – Reuters
A proposal to strengthen the arbitration process that aggrieved investors use against securities brokers is running into obstacles just as the U.S. Securities and Exchange Commission prepares to consider it.

Big Banks’ ‘Too-Big-to-Fail Subsidy’ Is Waning, GAO Finds
Cheyenne Hopkins – Bloomberg
The largest U.S. banks enjoyed lower funding costs than smaller rivals during the 2008 economic crisis although that advantage has declined in recent years, according to a report from a government watchdog.

Bloomberg Law Brief: Barr on Dodd-Frank Act (Audio)
Michael Barr, professor at the University of Michigan School of Law, discusses former Massachusetts Democratic Congressman Barney Frank’s recent Capitol Hill defense of the 2010 Dodd-Frank Act and its potential to prevent another economic crisis. He talks with Bloomberg Law hosts June Grasso and Mark Mills on Bloomberg Radio’s “Morning Bloomberg Law Brief.”

[AMF Canada] Derivatives market transparency – Two entities seek recognition as trade repositories in Québec
In view of the forthcoming implementation of a new regulatory obligation requiring counterparties to an over-the-counter derivatives transaction to report their data to a trade repository, the Autorité des marchés financiers (the “AMF”) is notifying market participants that two entities, DTCC Data Repository (U.S.) LLC (“DDR”) and ICE Trade Vault, LLC (“ICE TV”), have filed applications for recognition as trade repositories in Québec.

SEC Enforcement Division Modifies Municipalities Disclosure Initiative
The Securities and Exchange Commission today announced modifications to its Enforcement Division’s Municipalities Continuing Disclosure Cooperation (MCDC) Initiative that will provide greater opportunity for smaller municipal securities underwriter firms and municipal issuers to take advantage of the initiative.

Exchanges & Trading Facilities

Japan Exchange Group Trading Overview in July 2014
Daily average trading value for the TSE 1st Section was JPY 1.9527 trillion. In the ETF market, trading value in July was JPY 1.7597 trillion. For the TSE 2nd Section, trading value rose sharply by 119.1% from last month to JPY 621.7 billion, surging past JPY 600 billion for the first time in six months. For JASDAQ, monthly trading volume exceeded 3.7 billion shares, a new high since the TSE-OSE market integration. Derivatives Market: Trading volume in the derivatives market in July reached a total of 19,151,109 contracts. Trading volume for the night session was 5,689,391 contracts. The ratio of the night session was 29.7%.

Tokyo Financial Exchange: Trading Volume In July 2014
The trading volume of Three-month Euroyen futures in July was 195,180 ( + 24.9% MoM / + 19.9% YoY) and its average daily volume was 8,872.

BME Posts A Net Profit Of EUR83.7 Million In The First Half, Up 16.3% Year-On-Year

Stable Results Of WSE Group In Q2 2014 Despite Unfavourable Situation On Financial Markets
In Q2 2014, the Warsaw Stock Exchange Group earned total revenue of PLN 69.3 million, an increase of 7.3% year on year. The net profit of the WSE Group increased by 20.1% year on year to PLN 20.4 million and EBITDA was PLN 32.3 million (+2.7% YoY).

CME Group earnings miss estimates due to weak volumes
Tom Polansek – Reuters
CME Group Inc will cut costs by reducing hiring and employee travel to help compensate for weak trading volumes, the chief financial officer said on Thursday after the world’s largest futures market operator posted lower-than-expected earnings.

Warsaw to present stance on tie-up with Vienna bourse soon
The Warsaw Stock Exchange aims to present its stance on a tie-up with Vienna bourse operator CEESEG within weeks, newly appointed Chief Executive Officer Pawel Tamborski said on Thursday.

ASIC makes recommendations to improve ASX
Simon Osborne – The Trade
Australia’s regulator, the Australian Securities and Investment Commission (ASIC), has published its annual assessment report of the ASX Group (ASX).

Muted securities business drags on SGX
Simon Osborne – The Trade
The Singapore Exchange’s results for its financial year 2014, which has just ended, showed that with the exception of securities, all its businesses grew. SGX’s net profit was down 5% at S$320 million on a 4% fall in revenue to S$687 million.

ASX Board Renewal
The Board of ASX Limited (ASX) today announces the appointment of Mr Damian Roche as a non-executive director of the company effective 1 August 2014.

Direct Edge Trading Notice #14-31: BATS One Feed Update

Montréal Exchange Interest Rate Derivative Trading Ceases At 1:30 P.M. – Exchange’s Markets Closed On August 4, 2014

BME Approves The Distribution Of A Gross EUR0.40 Per Share Dividend – To Be Paid On September 12

Hedge Funds & Managed Futures

Man Group Assets Under Management Up 7% to $57.7 Billion
Lindsay Fortado – Bloomberg
Man Group Plc (EMG), the world’s largest publicly traded hedge-fund manager, said assets increased 7 percent in the first half of the year, in line with analysts’ estimates, after clients added money to its GLG Partners funds.

Ex-Goldman Banker Turnbull Said to Plan Hedge Fund
Bei Hu – Bloomberg
Alex Turnbull, a former executive director of Goldman Sachs Group Inc. (GS)’s special situations group, is planning a Singapore-based hedge fund, said people with knowledge of the matter.

Schroders shares drop after first-half revenue lags
Simon Jessop and Nishant Kumar – Reuters
UK-listed fund manager Schroders posted first-half revenue on Thursday that lagged expectations, sending its shares lower even as assets under management hit a record high.

Fortress Investment’s Results Are Buoyed by Private Equity Gains
WILLIAM ALDEN – Dealbook – NY Times
The Fortress Investment Group, a publicly traded alternative asset manager, said on Thursday that its second-quarter earnings rose 16 percent, aided by sales of its private equity investments.

Active fund managers underperform in Europe but not UK, S&PDJI
Richard Jory –
Active versus passive fund manager debate in Europe furnished with data from S&P Dow Jones Indices, which offers European version of Spiva scorecard

Funds of hedge funds reverse asset slide
eVestment –
Commingled fund of hedge fund assets under management reached $932 billion in Q1 2014, with investor flows accounting for two-thirds of a $21 billion increase

Buyout firms hope to avoid tripping up over new rules under AIFMD
Brian Bollen – Financial News
As the year-long transition period for fund managers to become compliant with the Alternative Investment Fund Managers Directive drew to a close last week, the industry’s apparent lack of preparedness surprised some.

Oaktree Capital Earnings Fell 55% in Quarter
WILLIAM ALDEN – Dealbook – NY Times
The Oaktree Capital Group, a large investor in distressed debt, said on Thursday that its second-quarter earnings fell as it received a lower level of profit from the funds it manages.

Banks & Brokers

RBS Reins in Lending To Russian Companies
MoneyBeat – WSJ
Royal Bank of Scotland Friday said it was reining in its lending to Russian companies amid tightening economic sanctions.

Société Générale Profit Rises as Loan Problems Recede
MARK SCOTT – Dealbook – NY Times
Société Générale, France’s second-largest bank after BNP Paribas, reported a 7.8 percent rise in second-quarter earnings on Friday as it benefited from a decline in exposure to risky loans.

Bank of Ireland Reports First Profit Since 2008
CHAD BRAY – Dealbook – NY Times
The Bank of Ireland said on Friday that it had returned to profit for the first time since a housing crisis derailed the Irish economy six years ago.

BGC Partners Reports Second Quarter 2014 Financial Results

Clearing & Settlement

DTCC Collaborates With the Industry to Launch New Client Data and Documentation Utility
Together with six founder banks, The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today announced the establishment of Clarient Entity Hub, a financial industry solution designed to provide increased controls, standardization and transparency during the client on-boarding process and ongoing client lifecycle events.

Icap hits latest swap volume record
Luke Jeffs – Futures & Options World
Icap has reported the third record month of trading on its new swap platform in the latest sign that clients are finally warming to these new systems after a relatively slow start.

ICAP’s i-Swap Sets Third Consecutive Monthly Volume Record For US Dollar Interest Rate Swaps
Press Release

What Will the Financial Back Office of Tomorrow Look Like?
Melvin Jayawardana – Wall Street & Technology
Asset managers are increasingly looking to automate their manual back office workflows. Confluence calls it the “back office revolution.”

Indexes & Products

Emerging market ETFs still have a lot to show – John Prestbo’s Indexed Investor
John Prestbo –
Emerging markets have been on a tear for most of this year, even though many of the world’s growing number of trouble spots are seething close by. Should an indexed investor turn cautious or keep on going?

VXST Futures and VIX Index Both Rose More Than 26% Today
Matt Moran –

VIX Spikes Again as Fear Creeps In to Market
Steven Russolillo – MoneyBeat – WSJ
Options traders rushed for protective positions Thursday amid worries about the Federal Reserve potentially raising interest rates sooner than expected.

Index Providers Mull Removing Russian Companies Following Sanctions
Ben Edwards – WSJ
Index providers are mulling stripping out some Russian companies, potentially undermining a key structural support for the country’s markets. In a statement late Thursday, MSCI Inc. said it is considering removing VTB Bank’s ruble shares from its Russian index after the U.S. Treasury Department slapped the bank with sanctions restricting its access to U.S. financial markets.

STOXX Announces Compliance With IOSCO Principles For Financial Benchmarks


Richard Harrington joins Redline Trading Solutions’ board of directors
Redline Trading Solutions, a provider of ultra-low latency market data and order execution systems, has appointed Richard J Harrington to the firm’s board of directors.

Quandl Adds Nasdaq Index Data to Free Financial Search Portal
Faye Kilburn – WatersTechnology
Toronto-based online economic and financial data search engine Quandl has added Nasdaq OMX’s global index family to its web-based platform for financial, economic and sociological datasets, to provide analysts, traders and economists with daily index values to support analysis and identify investment opportunities.

Milestone Group Appoints BNP Exec to Head Asia-Pacific
Marina Daras – WatersTechnology
Milestone Group, a provider of fund processing solutions, has appointed former BNP Paribas executive Enrique Gonzales as head of product management for the Asia-Pacific region.

Aspect Enterprise Expands Commodities, Shipping Data
Giulia Lasagni – WatersTechnology
UK-based commodities data and technology vendor Aspect Enterprise plans to expand the coverage of its AspectDSC data and analytics solution with the addition of data from marine fuels and shipping prices information provider Bunkerworld, and as chemical, energy and fertilizer supplier ICIS, as well as agricultural commodities price data from the IntercontinentalExchange-owned Liffe derivatives market.


NFA takes emergency enforcement action against Connecticut firm Nord Capital Advisors LLC and its principal, Yakov Shlyapochnik
National Futures Association (NFA) announced today that it has taken an emergency enforcement action against Nord Capital Advisors LLC (Nord Capital), an NFA Member commodity trading advisor and commodity pool operator located in Stamford, Conn., and Yakov Shlyapochnik, a principal and associated person of Nord Capital.

Ex-broker fined $850,000 for scheme to profit from terminally ill-SEC
Suzanne Barlyn – Reuters
A former broker who masterminded an annuity scheme to profit from the deaths of terminally ill patients has agreed to an $850,000 fine and to be banned from the securities industry, the U.S. Securities and Exchange Commission said on Thursday.

SEC Announces Award for Whistleblower Who Reported Fraud to SEC After Company Failed to Address Issue Internally
The Securities and Exchange Commission today announced an award of more than $400,000 for a whistleblower who reported a fraud to the SEC after the company failed to address the issue internally.


Hong Kong securities watchdog to clamp down on ‘dark pools’-sources
Michelle Price – Reuters
Hong Kong’s securities watchdog has warned banks it will clamp down on exchange trading platforms known as dark pools in a direct fallout from a contentious lawsuit against Barclays Plc in the United States, people familiar with the matter told Reuters.

Singapore’s regulator seeks China commodity lending data-sources
The Monetary Authority of Singapore (MAS) has sought information from some Singapore-based lenders about their Chinese clients and loan exposure to China amid an investigation into a suspected commodity financing fraud at China’s Qingdao port.

As Abenomics halo slips, Tokyo IPO investors press for value
Ritsuko Ando – Reuters
At the New York Stock Exchange last September, buoyed by high hopes for Japan’s economic revival, Prime Minister Shinzo Abe urged Wall Street to “Buy my Abenomics!” Amid sagging growth and Tokyo listing flops, investors are now looking for a discount.

Thailand to launch SME trading platform
Asia Asset Management
Thailand will launch a new trading board later this year with the intention of giving investors access to the country’s substantial SME sector.

JCCH: Japanese Commodity Markets Summary for July 2014

MAS And SGX Issue Response To The Consultation On The Review Of The Securities Market Structure And Practices

SGX welcomes Accordia Golf Trust to Mainboard

HKEx: Changes Of Designated Securities For Short Selling

HKEx Steps Up Promotion Of CES 120 Futures In Advance Of Shanghai-Hong Kong Stock Connect

Frontier Markets

Rising rates not always emerging markets poison
James Saft – Reuters
The taper tantrum was brutal, but rising rates do not have to mean lousy performance for emerging markets.

BSE: Revision In Scrip IDs of Listed Companies in Equity Segment

Malawi Stock Exchange Weekly Trading Report- 1st August, 2014

MCX Weekly Market Report -July 25, 2014 To July 31, 2014

The Egyptian Exchange Finished The Periodical Revision Of The EGX Indices

John Lothian Newsletter

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