RIP Gary Becker
Yesterday was a sad day for the “dismal science.” Gary Becker died. In a constellation of great Chicago School economists, Becker stood out. He was a man with many interests who applied his intellect to a wide variety of socially relevant topics. While he would probably call himself a conservative, he was willing to address topics that created equal unease among both liberals and conservatives. I’m thinking about his views on creating a free market for cadaver organs. Though I’m willing to wager that not many of us have actually read any of his papers, his contribution to popular culture can be found in the works of Stephen J. Dubner and Steven D. Levitt whose Freakonomics and its offshoots have informed and entertained millions.
Wonder what he thought of Thomas Piketty? Actually that’s probably not hard to figure out.
HFT Regulation Requires Attention to Motives and Consequences
Holly Bell – TabbFORUM
While there are several empirically demonstrated benefits of high-frequency trading, including improved liquidity and reduced transaction costs, the current arguments against HFT are largely qualitative in nature. With that in mind, what are the drivers behind global HFT regulation, and do they suggest a market failure attributable to HFT?
***MM: As you would expect from Larry Tabb’s shop, a thoughtful view of a topic that has elicited a lot of thoughtless comments, including some of my own.
Europe debate over ‘Robin Hood’ levy is taxing reality
Alex Barker in Brussels – FT.com
If political hype could be taxed, then the fuss over the EU’s planned financial transaction tax might generate enough cash to settle the bloc’s debt crisis.
***MM: Another benefit of private philanthropy. We don’t need a ‘Robin Hood’ tax over in the States. We have a fund. And unlike government, they throw amazing parties.
ICE Said to Seek Mortgage-Swap Rebirth for Dodd-Frank Age
Jody Shenn and Matthew Leising – Bloomberg
IntercontinentalExchange Group Inc. is pitching Wall Street on new derivative contracts allowing investors to wager on U.S. homeowner defaults, six years after subprime-mortgage swaps helped fuel the financial crisis, according to five people with knowledge of the matter.
***MM: Bringing a vulture market back from the dead. Sounds like a variation on a Mary Shelley novel.
Options Names Former NYSE Euronext Executive Richard Hughes as SVP, Managing Director for Europe
Options, the leading private financial cloud provider for the global capital markets industry, today announced a significant addition to the firm’s global team with the appointment of former NYSE Euronext executive, Richard Hughes.
CBOE Holdings, Inc. Reports Record Quarterly Results
First Quarter 2014 Financial Highlights: Operating Revenue Increases 11 Percent to $157.9 Million; Diluted EPS of $0.56, Up 17 Percent; Adjusted Net Income Allocated to Common Stockholders Up 14 Percent to $50.0 Million
***MM: Congrats to the management team at CBOE and a clear indication that slow and steady can still win the race.
The Rich List: The Highest-Earning Hedge Fund Managers of the Past Year
Institutional Investor’s Alpha
It took more than simply riding the stock market for hedge fund managers to earn an outsize haul in 2013. A number of the managers who excelled last year — and therefore top Alpha’s 13th annual Rich List ranking of the hedge fund industry’s 25 highest earners — shrewdly found opportunities in sectors and markets that were not widely targeted by the momentum set.
***MM: Another example of the rich getting richer and the rest of us dropping our fees.
China’s GDP Passing That Of The US Is Not A Threat To Traditional Western Capitalism And Free Markets
Tim Worstall – Forbes
We’ve all heard the news that, by one measure, the GDP of China has now passed that of the US. What we’d all like to know is well, what effect does that have on anything? And the truth is, not a lot. It doesn’t make very much difference to anything at all: other than that we can congratulate the Chinese on being a little less poorer than they used to be.
***MM: Lest we forget, China only ranks 93rd on per capita GDP @ slightly less than $10,000 a year. Thank you Wikipedia.
JPMorgan’s Dimon Sees Facebook to Google Challenging Bank Online
Matthew Martin – Bloomberg
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon sees challenges from companies such as Facebook Inc. and Google Inc. as they seek to compete in the provision of online banking and money-sending services.
***MM: Just imagine applying for a home loan on Twitter. That would certainly necessitate simplifying the application form.
Speedy Delivery: Keith Ross on HFT, Reg NMS and Dark Pools
Today’s financial markets can be summed up in three words – global, fast, and complex. But as the market structure evolves, so must the regulatory structure that oversees it. John Lothian News has spoken with several industry experts to create this series on the evolution of financial market structure.
In Part 3, Keith Ross, CEO of PDQ ATS offers his thoughts on HFT, Regulation NMS, maker-taker arrangements, and dark pools, and voices his concerns that regulatory oversight may give way to legislative overreach.
MarketsWiki Page of the Day
Markit Group Limited
MarketsWiki Recent Updates
Companies, Organizations and Groups
48,734,845 pages viewed, 7,946 articles, 182,493 edits
Markit IPO Filing Provides Peek Inside Dominant Data Service
Matthew Leising and Caroline Chen – Bloomberg
Markit Ltd., the financial information company whose price data forms the basis for much of the global derivatives and bond markets, filed for a U.S. initial public offering. The firm, whose clients include banks, hedge funds, accounting firms, exchanges and central banks, reported operating profit of $230 million on $948 million in revenue in 2013, up from $225 million and $861 million a year earlier, according to a regulatory filing.
Europe aims to resolve FX dispute by late summer
Philip Stafford – FT.com
European regulators aim to finalise their definition of foreign exchange derivative by late summer, in a dispute that will determine whether part of the $5tn-a-day forex market could face tougher legislation.
Banks back launch of US corporate bond dark pool
Michael Mackenzie in New York – FT.com
US corporate bond dealers will start trading securities in off-exchange venues to improve the operation of a market that has come under pressure from higher capital costs.
Javelin’s CEO James Cawley Departs SEF
Ivy Schmerken – Wall Street & Technology
Javelin Capital Markets, an electronic derivatives trading platform, is parting company with its founder and CEO, James Cawley who has led the firm’s swap execution facility. In a statement, Cawley indicated that the interest-rate swap trading platform and its founder and CEO have decided to part ways.
Banks Sued on Claims of Fixing Price of Gold
ALAN FEUER – NYTimes.com
Frustrated traders and offbeat activists have complained for years in whispers and in online screeds that the price of gold has been subject to collusion. On Monday, these accusations of manipulation found a more august arena for expression: the federal courts.
Holder Signals Criminal Charges Coming Against Some Banks
Tom Schoenberg – Bloomberg
U.S. Attorney General Eric Holder said his department is readying criminal cases against banks that show financial institutions aren’t too big to prosecute.
Credit Suisse in talks to pay $1.6 bln to resolve U.S. tax probe -source
Credit Suisse Group AG is in talks with the U.S. Justice Department to pay as much as $1.6 billion to resolve an investigation into the bank’s role in helping Americans evade U.S. taxes, a person familiar with the matter said on Monday.
TABB Group Promotes Matt Simon to Principal, Head of Futures Research
TABB Group has promoted Matt Simon to principal, head of futures research for the capital markets research and consulting firm’s expanding Research Alliance Derivatives practice. The promotion will be formally announced today at the firm’s second annual derivatives conference, Derivatives 2014: A Market in Transition at the W Chicago Center in downtown Chicago, where he will conduct a special “armchair” conversation with Michael Harris, President, Campbell & Company.
30th Annual World Cup Championship of Futures Trading Culminates in May 9 Award Ceremony; L.A. Actress Victoria Grimsley is Second Female Ever to Take First Place
Winners of the 30th annual World Cup Championship of Futures Trading will receive their coveted Bull & Bear trophies Friday in an award ceremony on the CME Group trading floor to culminate the 2013 year-long event. The industry’s longest-running, real-money trading competition produced winners from three different continents for the second consecutive year. Top finisher Victoria Grimsley is the second female ever to take first place in the Championship.
***MM: Here is someone who may well have a reason to quit her day job. Good on you Ms. Grimsley.
Seeking Guilty Pleas From Corporations While Limiting the Fallout
PETER J. HENNING – NYTimes.com
When it comes to bringing criminal charges against corporations, prosecutors have been gun-shy, fearing the dreaded “Arthur Andersen effect.” The effect, named for the accounting firm that went out of business in 2002 after its conviction for obstruction of justice, has prosecutors concerned that demanding a guilty plea from a large company could cause it to be dissolved, leading to job losses and disruption in the market.
CFTC Expands Portal Capabilities to Make Market Participant Electronic Submissions Easier, more Efficient
Beginning today, market participants can submit event-specific reports more easily and securely because of new enhancements to the U.S. Commodity Futures Trading Commission (CFTC) Portal. The new features also improve the CFTC’s ability to process submissions.
Exchanges & Trading Facilities
EEX To Relaunch Its Coal Market
In May, the European Energy Exchange (EEX) will start an initiative to relaunch its coal market. The initiative will focus on Trade Registration which means the registration of OTC trades for clearing.
EEX has attracted several well-known brokers that support the Trade Registration offer. As of 21 May 2014, GFI Securities Limited, Spectron Energy Services Ltd. part of Marex Spectron Group, Tradition Dubai Limited and Tullett Prebon (Europe) will offer the EEX coal products on their platforms.
ICE Reports April Volume
IntercontinentalExchange Group, the leading global network of exchanges and clearing houses, today reported exchange traded volumes for April 2014. ICE’s April average daily volume (ADV) was 5.9 million contracts, a decrease of 13% compared to April 2013.
The Trading Volume On The Spanish Stock Exchange Grew 36.4% In April To EUR78.6 Bn. – The Highest Monthly Trading Volume Since October 2013
April Trading Volume At Boerse Stuttgart Around EUR 7.2 Billion
Trading Volume Almost As High As In April 2013 // Turnover In Equities Significantly Higher Than In April 2013
Strong Month-End For The Oslo Market
After an unusually strong surge at the end of the month, with four all-time highs in a row and high trading volumes, the Oslo Børs Benchmark Index closed April up by 2.9% for the month.
Trading On WSE – Investor Activity On WSE Markets: April 2014
The total value of trading in equities on the Main Market was PLN 16.6 billion in April 2014, a decrease of 10.4% year on year.
WSE Derivatives Market In April 2014.
The volume of trading in all derivatives was 0.61 million instruments in April 2014; The number of open interest was 260.3 thousand at the end of April 2014; The volume of trading in mWIG40 futures was 6.7 thousand contracts in April 2014, an increase of 101% year on year.
Power Trading Results In April 2014 – 220 Members On EPEX SPOT
In April 2014, a total volume of 29.7 TWh was traded on EPEX SPOT’s Day-Ahead and Intraday markets (April 2013: 27.8 TWh). During April, the number of members surged up to 220, which is a new all-time high.
SIX Exchange Regulation: Delisting Weatherford International Ltd, Zug
TSX Markets: Top 20 Largest Consolidated Short Position Report – April 30, 2014
Direct Edge Trading Notice #14-17: Announcing Availability Of Connectivity To EDGA/EDGX Certification Ports In NY5 Effective June 2, 2014
TMX Group Consolidated Trading Statistics – April 2014 – Toronto Stock Exchange, TSX Venture Exchange, TMX Select, Alpha, Montreal Exchange, NGX
Hedge Funds & Managed Futures
Chicago’s Thoma Bravo raises big new private equity fund
Lynne Marek – Crain’s Chicago Business
Chicago private-equity firm Thoma Bravo LLC is joining the big leagues. The firm announced today that it has raised a new $3.65 billion fund, putting it on par with the other major players in the city, including GTCR LLC, Madison Dearborn Partners LLC and BDT Capital LLC.
Bad banks gain as private equity and hedge funds chase assets
Martin Arnold and Sharlene Goff – FT.com
Private equity and hedge funds have been good news for Europe’s bad banks. Bankers and private equity executives say the large sums of money chasing bargains among the assets being sold by banks has helped to reduce the losses suffered on the sales of non-core portfolios and even allowed some lenders to book gains by writing back provisions.
Hedge Funds With Overblown Debt Fixation Spark Danish Rebuke
Peter Levring and Marty Schenker – Bloomberg
Danish Finance Minister Bjarne Corydon criticized hedge funds and other foreign investors speculating against the nation, arguing their bet is based on a false picture of household finances.
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.
Ex-Lehman economist Llewellyn plans hedge fund
Mike Foster – Financial News
John Llewellyn, who was global chief economist at Lehman Brothers prior to its 2008 collapse, is hoping to make his debut as a macro hedge fund manager aged 69.
Banks & Brokers
The Real Reason Big Banks Stay Big
David Reilly – MoneyBeat – WSJ
It’s good to be the king — provided, that is, your kingdom is big enough. Chief executives at the biggest banks often talk about the benefits of their institution’s heft. This includes a diverse earnings base, economies of scale and balance sheets that can support multinational clients. What CEOs don’t trumpet as loudly: their own compensation tends to be bigger.
JPMorgan Leads Wall Street Lower on Trading-Slump Warning
Hugh Son – Bloomberg
JPMorgan Chase & Co. led shares of Wall Street banks lower, dropping the most in almost a month, after warning that a deepening trading slump may last through the second quarter.
JPMorgan $280 mln mortgage accord gets preliminary court approval
JPMorgan Chase & Co has won preliminary approval from a U.S. judge for its agreement to pay $280 million to resolve claims that it misled investors in billions of dollars worth of mortgage-backed securities.
Deutsche Bank Poaches BofA Consumer Banker Rose
Gillian Tan – MoneyBeat – WSJ
Deutsche Bank AG has poached Bank of America Corp. managing director Jeff Rose to become its global head of consumer and retail M&A, according to an internal memo seen by The Wall Street Journal.
Reminder: BGC Partners Plans to Host Investors and Analysts on Thursday May 29, 2014
Calstrs to Vote Against BofA Directors in Proxy Campaign
The California State Teachers’ Retirement System pension fund voted against four members of Bank of America Corp.’s board in response to the bank’s announcement last week that it had miscalculated capital levels. The move is largely symbolic, because many big shareholders have expressed support for Bank of America’s management and are expected to vote for the current board.
Barclays Posts Fall in First-Quarter Profit
Barclays PLC’s key earnings driver sputtered in the first quarter as a worse-than-expected fall in fixed-income trading cut profit in its investment bank by half.
Clearing & Settlement
TriOptima Completes First Cross Currency triReduce Compression Cycle Eliminating JPY12.318 Trillion Notional Principal in JPY/USD Swaps | Business Wire
TriOptima, provider of OTC derivative post trade services, announces that it eliminated JPY12.318 trillion ($120 Billion) notional in JPY/USD cross currency swaps with 12 institutions participating. This is the first ever triReduce cross currency compression cycle.
Indexes & Products
BM&FBOVESPA Announces New Portfolio For Ibovespa And Other Indices Valid For May-August 2014
Trade Talk – Trading Technologies
Have you ever wanted to buy something in one location to sell it in another location at a higher price? Imagine buying gold on CME only to turn around and sell it on TOCOM at a higher price. This type of trade is known as geographical arbitrage. While there is risk in every trade, geographical arbitrage is relatively low risk.
A New Vision for Managed Services in Capital Markets
John Avery – Wall Street & Technology
Reusing people, processes and technology wherever possible — helps firms reduce total cost of ownership (TCO) and achieve economies of scale, writes SunGard’s John Avery.
AgFirst Farm Credit Bank Selects SunGard To Help Improve Lending Operations
AgFirst Farm Credit Bank, a provider of funding and financial services to agricultural credit associations, has selected SunGard’s Ambit Commercial Lender to help modernize lending operations.
Madoff Customers to Receive More Than $350 Million in Fourth Payout
Jacqueline Palank – MoneyBeat – WSJ
Bernard Madoff’s cheated customers will receive $351.6 million soon, the fourth payout in the winddown of the Ponzi-scheme operator’s investment firm.
SEC Charges Ohio-Based Investment Adviser and President for Fraudulently Hiding Account Shortfall
The Securities and Exchange Commission today announced fraud charges and an asset freeze against a Columbus, Ohio-based investment advisory firm and its president for repeatedly hiding a shortfall of more than $700,000 in client assets.
SEC Sues Consultant, Others for Alleged Stock Manipulation
U.S. regulators Monday filed a civil lawsuit against a Toronto consultant and four other people for allegedly helping two Chinese companies enter U.S. markets and making millions of dollars in profit by manipulating the companies’ trading.
SEC ends Gabelli case after 6 years and U.S. Supreme Court loss
The U.S. Securities and Exchange Commission has dropped its lawsuit against a senior executive of Gabelli Funds LLC over alleged abuses involving a hedge fund’s rapid trading, a year after the U.S. Supreme Court said the regulator waited too long to pursue a key part of its case.
Environmental & Energy
China’s First Emissions-Tied Notes to Unlock Carbon Asset Value
Regina Tan – Bloomberg
CGN Wind Energy Ltd. plans to introduce China’s first structured notes linked to the price of carbon offsets in a move that may increase participation in the country’s fledgling emissions-trading market.
EU to hold gas price talks with Russia and Ukraine
Dave Keating, European Voice
The European Union will hold trilateral talks with Russia and Ukraine later this month designed to ensure that Ukraine has enough gas for the winter, the European Commission announced today (May 2).
***LB: Also in this story “The three are likely to meet twice (…) once in mid-May and once in late May.”
China Nuclear Power plans $2.6 bln share sale in industry’s first IPO
China National Nuclear Power Co Ltd plans to raise 16.3 billion yuan ($2.60 billion) in the industry’s first initial public offering, as part of the world’s biggest expansion of civilian nuclear power capacity.
Top Philippine Stock Fund Says Record Flows Show Best Growth
Ian Sayson – Bloomberg
The longest stretch of inflows into Philippine equities since at least 1999 shows growing confidence among foreign investors that the economy has the best prospects in Asia, according to the nation’s top-performing stock picker.
Outgoing SET president suggests goals for future of Thai bourse
As he prepares to step down at the end of this month as president of the Stock Exchange of Thailand, Charamporn Jotikasthira has outlined a broad range of goals for the bourse in the future.
SSE won’t extend trade time
Shanghai Stock Exchange (SSE) said Monday that it will not extend the A-share trading time to 4:00 pm to match the trading time with Hong Kong Exchanges and Clearing Limited (HKEx), news portal 21cbh.com reported Monday.
SGX commodities volumes rise in April
Singapore Exchange (SGX) today said commodities trading and clearing activities grew in April from a year earlier. Securities activities increased from March but were down year on year. Derivatives volumes were lower month on month and year on year.
RMB settlement of LME commodities futures could impede market progress
Xiao Wang – Risk.net
Hong Kong Exchanges and Clearing’s (HKEx) plans to launch renminbi-denominated metals and coal futures contracts on its trading platform later this year will create a potential foreign exchange risk for investors and may deter participants until the “through train” trial is extended beyond equities, say market experts.
Monetary Authority Of Singapore: Agreement To Facilitate Compliance By Singapore Financial Institutions With US Tax Laws
Shanghai Stock Exchange To Fuel Transformation Of Information Disclosure Regulation Through Annual Report Auditing
JSE Currency Derivatives Market Sees Highest Value And Volume Traded
As at the end of April this year the Johannesburg Stock Exchange’s (JSE) Currency Derivatives Market saw the value of futures and options traded reaching an access of R1trillion since the market’s inception in 2007.
Reliance Capital seeks annulment of MCX-FTIL contracts
Press Trust of India
Raising fresh concerns over Multi Commodity Exchange’s “umbilical dependence” on Jignesh Shah- led FTIL, the bourse’s main suitor Reliance Capital has asked regulator FMC to annul all agreements between MCX and its erstwhile promoter.
Jignesh Shah to blame for NSEL scam, says arrested chief executive’s affidavit
An affidavit written by arrested former NSEL CEO Anjani Sinha laying the blame for the NSEL scam squarely on the exchange’s promoter Jignesh Shah has been circulated among investors who lost money in the scandal, in an apparent attempt by Sinha to pressure Mumbai Police EOW to act against the top honchos of the company.
Google Finance Publishes JSE Delayed Data
Faye Kilburn – WatersTechnology
The Johannesburg Stock Exchange (JSE) is now making 15-minute-delayed equity prices available via Google Finance to enable local and global clients and investors to track price movements on JSE, alongside market updates from 35 stock exchanges globally.
BM&FBovespa CEO sees no Brazil IPOs unless expectations improve
Initial public offerings in Brazil are unlikely to take off this year unless investor confidence in the economy and the current business climate improve, the chief executive of the nation’s sole listed exchange said on Monday.
Fortress Investment’s Novogratz: Brazil assets could rally on Rousseff loss
Michael Novogratz of Fortress Investment Group said on Monday that Brazilian assets could rally if President Dilma Rousseff loses her bid for re-election later this year.