Repository Story: Jonathan Thursby Discusses CME Group’s SDR Services
The Dodd-Frank Act in the U.S. and EMIR in Europe introduced new data reporting requirements. Exchanges like CME Group have long been experts in processing and disseminating data to market participants. But regulatory reporting of swap data brings its own challenges. John Lothian News Editor-at-Large Doug Ashburn spoke with Jonathan Thursby, executive director and chief operating officer of data repository services at CME Group, about its repositories in the U.S. and Europe, and their philosophy and approach to repository services.
Help The Jennifer Jaff Center Fight for Those Affected by Chronic Illness
From JJLCO’s Ryan Lothian
Team McCready (part of Wishlist Foundation, a Pearl Jam fan non-profit organization) is helping to raise funds for The Jennifer Jaff Center, where I serve on the board. This is a great little organization that helps those affected by chronic illness through advocacy, public policy and education.
You can donate here: jlne.ws/1j3eGqq
One of the greatest things they do is fight for individual patients in health care appeals — a complex and harrowing process to take on alone. They also help secure reasonable accommodations for those suffering from chronic illnesses at work and school and help employees assert their rights under the Family and Medical Leave Act.
The most interesting man in the world, CQG’s Pat Kenny, is off to Bali for the Association of Futures Markets 17th annual conference. The event is hosted by the Indonesian Commodity and Derivatives Exchange and co-hosted by the Jakarta Futures Exchange. It is a good sign to see him travel overseas after his recent health issues.
Saracens link up with CME Group
Saracens today has announced that CME Group, the world’s leading and most diverse derivatives firm, has agreed to a long-term association with the London club renowned worldwide for its vision and innovation.
High-Speed Stock Traders Turn to Laser Beams
Scott Patterson – WSJ.com
As high-speed stock traders push to trade ever faster, their newest move involves harnessing a technology that U.S. military jets use to communicate as they soar across the sky: lasers.
***** We will have more on this soon in a video from our Summer Intern Series.
London Walkie Talkie Owners to Shield Car-Melting Beam
Patrick Gower – Bloomberg
The owners of the 37-story skyscraper in the City of London financial district known as the Walkie Talkie are seeking permission to mount sun-shading gear to block a car-melting light beam cast by the tower.
***** Global warming is replaced by Car Melting in the City.
S.E.C.’s Review of Stock Trading Will See Some of Its Own Work
STEVEN M. DAVIDOFF – NYTimes.com
There are now at least 58 stock exchanges in the United States, many of them dark pools where the trades can be made anonymously. With institutional investors claiming they are outgunned by high-frequency traders, and individual investors adrift in fragmented markets, it’s no wonder that Mary Jo White, the new head of the Securities and Exchange Commission, is moving to review and overhaul how stocks are traded. The issue is that the S.E.C. may have created the problem it is now hoping to solve.
***** Um, YES the SEC created this problem.
NYSE Is Still No. 1, But Not By Much
Bradley Hope – WSJ.com
The venerable New York Stock Exchange is hanging by a thread to its place as the country’s top trading venue as measured by volume. Its new head’s response: He doesn’t care.
***** I believe he is concerned about profitability, not volume, as is right of a public company.
London Regulator Brings Heavier Touch to Banking Rules
Lindsay Fortado, Stephanie Baker and Douglas Wong – Bloomberg
Martin Wheatley, who leads London’s top markets watchdog, says he wishes he could bike to and from his home in Greenwich, a borough along the Thames. He can’t because he’s lugging too much paperwork around.
***** A nice Burley wagon behind him should do the trick.
Banks make belated compliance push to combat market abuses
Simon Watkins – Euromoney magazine
As more financial scandals continue to emerge, regulators and banks are hoping technology and new internal controls will allow them to get to grips with the rogues. Trading floors might never be the same again.
***** Belated is a very kind word.
Clarus Financial Technology announces SEFView
Clarus Financial Technology announces the release of SEFView, its new service for tracking Swap Execution Facility (SEF) volumes.This service takes the daily data published by each SEF, extracts and normalizes it into a database, and provides a Web application for users to “slice and dice” the data.
***DA: For more on SEFView, visit jlne.ws/1g47gDb
Monster Volumes: Jon Najarian Says Weeklys Are Powering Options Volumes
US options volume reached its second highest level in 2013 but can it continue to grow in 2014?
Jon Najarian, co-founder of OptionMONSTER said the key drivers for the options industry are: weekly options, a strong economic recovery and continued demand for more options education. “The two biggest things driving volumes in options, or at least holding them, are weekly options,” said Najarian, who is also a regular contributor on the markets for CNBC. “As we get more weekly options, there is more turnover because of course they are an expiring option and you’re in an expiring option every single week. They are extremely popular because they let you drill down into the dates you want.”
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ICE warns of trading flight away from Europe
Neil Munshi in Chicago, Gregory Meyer in New York and Philip Stafford in London – FT.com
IntercontinentalExchange, facing uncertain rules in Europe, has warned it could steer business elsewhere if regulators make radical changes to the structure of the futures market.
Bank of England to Investigate Foreign Exchange Manipulation Claims
The Bank of England is taking the allegations that it indirectly condoned foreign exchange market manipulation “very seriously” and is working with lawyers to investigate the claims, Andrew Bailey, a central bank executive, said Tuesday.
Deutsche Börse buys minority stake in Bondcube
Philip Stafford – FT.com
Deutsche Börse’s push into emerging areas of the market shows little sign of slowing down, with Europe’s largest exchanges operator buying a minority stake in Bondcube, a UK start-up fixed-income trading platform.
Wall St’s grandfathers of commodities to survive Fed revamp better than others
As the U.S. Federal Reserve considers new ways of reining in banks’ trading in what it sees as risky physical commodity markets, Wall Street’s two oldest and biggest players may ultimately gain in stature.
LEI issuance well below targets as Emir reporting begins
Fiona Maxwell – Risk.net
With derivatives trade reporting due to start today in Europe, only one of the nine European services issuing preliminary legal entity identifiers (LEIs) – a unique code required by all market participants – has met its anticipated targets. The other services have handled anything from 12% to 50% of their forecast demand, implying tens of thousands of firms are currently unable to report new trades or backload old ones.
Judge allows customers’ lawsuit against MF Global’s Corzine
A federal judge on Tuesday allowed a lawsuit to move forward that seeks to hold former MF Global Holdings Ltd Chief Executive Officer Jon Corzine and other executives responsible for the brokerage’s collapse.
***** Corzine won some, but lost some and the case continues.
The Bitcoin FlashCrash
Jeffrey Carter – Points and Figures
The stock market has structural challenges that the SEC refuses to fix. Bitcoin’s marketplace has a lot of challenges too. Bitcoin is unregulated, so there is a chance that the structural problems can be fixed. It will just take the marketplace to come to a solution. Free markets are really messy, and they take time to come up with the best solution. Be patient, Rome wasn’t built in a day and the Bitcoin ecosystem isn’t anywhere close to developed. The solution made by the free market will be better than the decision made by a central authority.
Bitcoin hit by denial of service attacks as regulators prepare clampdown
Bitcoin is being hit by attacks from unknown computer hackers who are sending “mutated” lines of code into the program that runs the virtual currency, a spokeswoman from its main trade organization said in a statement on Tuesday.
The Glitch That Will Help Kill Bitcoin
Leonid Bershidsky – Bloomberg
As the world’s first, and most popular, cryptocurrency, Bitcoin has by now suffered every possible setback a payment project could encounter. In the face of all this adversity, Bitcoin remains amazingly resilient, which could mean one of two things: Either it is here to stay, or the people who invested in it during a speculative bubble are reluctant to accept losses and still able to prop up the market with their trades.
Bank Federation Head Says EU Regulatory Goals Ignore Reality
Niklas Magnusson – Bloomberg
Christian Clausen, the president of the European Banking Federation, criticized regulators for pursuing a model he said ignored the reality of national needs.
SEC Names Michael Maloney As New Chief Accountant in Enforcement Division
The Securities and Exchange Commission today announced that Michael F. Maloney has been named the new chief accountant in the SEC’s Division of Enforcement.
CFTC Requests Public Comment on a Petition Submitted by LCH.Clearnet Ltd for an Amendment to its Orders of Registration as a Derivatives Clearing Organization
The U.S. Commodity Futures Trading Commission (Commission or CFTC) is requesting public comment on a petition from LCH.Clearnet Ltd (LCH) for an amendment to and consolidation of its orders of registration as a derivatives clearing organization (DCO). Specifically, the amendment would permit LCH to provide clearing services for “swaps,” as defined in the Commodity Exchange Act and Commission regulations, as well as all futures and options on futures.
Carl Icahn Calls for Glass-Steagall to Return
David Benoit – MoneyBeat – WSJ
Carl Icahn ventured out of his comfort zone a bit and called for the reinstatement of the Glass-Steagall Act, which separated investment banks and commercial banks.
ESMA Provides Further Details On Trade Reporting In updated EMIR Q&A
New Zealand’s Financial Markets Authority AFA Update: Issue # 21 – Regulatory Reporting – Update
Exchanges & Trading Facilities
CME Group executives’ salaries unchanged in revised contracts
The salaries of CME Group Inc’s top two executives remain unchanged under employment contracts the exchange operator extended last week, regulatory documents filed on Tuesday show.
ICE beats expectations amid integration of NYSE
IntercontinentalExchange Group reported a fourth quarter loss on Tuesday because of onetime costs, including those related to its $11 billion purchase of the parent of the New York Stock Exchange, but expense control helped it beat expectations.
CME steps up push into Europe
Philip Stafford in London – FT.com
CME Group, the world’s largest futures operator, is stepping up its push into overseas markets by launching new hybrid fixed income derivatives for Europe.
Aluminum Lines Still Trouble the London Metal Exchange
Some of the aluminum industry’s biggest hitters are lining up to criticize the London Metal Exchange. Their beef? Getting metal still takes too long.
Bulgaria to Facilitate Listing on the Stock Exchange – Deputy PM
Deputy Prime Minister Daniela Bobeva has said that the government is working on a package of measures aimed at facilitating the listing on the Bulgarian Stock Exchange (BSE).
Deutsche Börse buys minority stake in Bondcube – The new cutting edge bond trading system
CME Group Chief Financial Officer to Present at Credit Suisse Forum, February 12
ASX Long-Term AA- S&P Rating With A Stable Outlook
TMX Group Chooses ULLINK for TMX Pre-Trade Risk Management Solution
TMX Group today announced that it has selected ULLINK, a global provider of market leading connectivity and trading solutions to provide an enhanced pre-trade risk management and connectivity solution for its equity trading customers.
Direct Edge Trading Notice #14-04: Market Holiday Reminder – President’s Day
NYSE Group Inc. Issues Short Interest Report
NYSE MKT Issues Short Interest Report
NASDAQ Announces End-Of-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date January 31, 2014
EnterNext welcomes Espírito Santo Saúde to Lisbon market
Hedge Funds & Managed Futures
Pimco’s Gross Raises Government Holdings
Min Zeng – MoneyBeat – WSJ
Bill Gross boosted holdings of high-grade U.S. government bonds and mortgage-backed securities last month for Pacific Investment Management Co.’s Total Return Fund as a flight for safety fueled a strong price rally in the debt securities.
KKR Shuts Down Flawed Mutual Funds
Breaking into the retail business isn’t easy. KKR is learning that the hard way. The private equity giant is closing two mutual funds after launching them less than two years ago.
U.S. Buy Side Focus Shifts to Investment Performance, Says Linedata Study
Anne Rawland Gabriel – Wall Street & Technology
The trend is driven by the completion of post-crisis regulation deployments by U.S. asset managers while E.U. firms remain focused on implementing new regulations.
Fledgling HFT Maven Securities eyes hedge fund spin-out
Tim Cave – Financial News
A fledgling European high-speed trading firm is looking to spin out its most successful trading strategies into a hedge fund after a bumper first full year of activity.
Commodities investing down but not out, Masters says
Alexander Osipovich – Risk.net
Despite the current lack of enthusiasm for commodity investing, veteran oil trader Daniel Masters sees light at the end of the tunnel. Masters, co-founder and portfolio manager at Global Advisors, a Jersey-based hedge fund focusing on commodities, acknowledges that commodity funds have fallen on hard times recently, but argues that the market will soon hit bottom and savvy investors will return.
Banks & Brokers
Goldman Sachs chief FX strategist Thomas Stolper to leave bank
Goldman Sachs chief global currency strategist Thomas Stolper is leaving the bank, it said on Wednesday.
Nary a Loss for Big Banks, With One Volcker-Driven Exception
Andrew R. Johnson – MoneyBeat – WSJ
An analysis of fourth-quarter results from the 25 biggest banks and thrifts by research firm SNL Financial showed that 14 of the firms increased earnings per share compared with a year earlier. Only one bank — regional lender Zions Bancorp – posted a loss, due to charges related to the Volcker rule’s effect on its portfolio of collateralized debt obligations.
John Mack: Stop Beating Up on Lloyd Blankfein and Jamie Dimon
Maureen Farrell – MoneyBeat – WSJ
The CEOs of Goldman Sachs and J.P. Morgan don’t deserve the public’s wrath, John Mack, the former CEO of Morgan Stanley told Bloomberg Television Tuesday.
Société Générale Swings to Fourth-Quarter Profit
Société Générale, the French bank, on Wednesday reported a return to profit in the fourth quarter, as it booked fewer one-time items than it did a year earlier, and said it would raise its dividend.
Investors mull action against Ocwen Financial -source
A number of institutional investors including BlackRock Inc are considering the possibility of legal action against Ocwen Financial Corp over its mortgage servicing practices, a person familiar with the matter said on Tuesday.
Darryl Hooker Joins EBS Executive Management Team
EBS, ICAP’s market-leading electronic FX business, announces today that Darryl Hooker has joined the EBS Executive Management Team, effective immediately. Darryl is appointed Head of Strategic Currency Initiatives and will report to Gil Mandelzis, EBS’s Chief Executive Officer.
Clearing & Settlement
Newedge debuts ‘indirect clearing’ service
Philip Stafford – FT.com
Newedge has debuted a clearing service in Europe that aims to solve one of the trickiest problems emerging from incoming clearing rules – providing access to mandated clearing for small institutions.
JSCC to be first Asian CCP to clear single-name CDS
Viren Vaghela – Risk.net
Japan Securities Clearing Corporation (JSCC) plans to start clearing single-name credit default swaps (CDS) on Japanese names as early as May following demand from member banks keen to avoid the extra cost of transacting the business when margin rules for uncleared swaps kick in during 2015.
Indexes & Products
Leveraged ETFs not just for day traders anymore
Leveraged exchange-traded funds, originally viewed as tools for fast-moving day traders, are showing up more frequently as buy-and-hold investments in Mom and Pop portfolios, thanks to the advisers who are putting them there.
EMs are paying the price of ETF liquidity
John Authers – FT.com
Are exchange traded funds the best way to invest in emerging market equities? Last week, I wrote a column arguing that the structure of ETFs, which allows trading through the day, had contributed significantly to the scale of the recent sell-off in emerging markets, and was helping to make the sector more volatile. This prompted some scathing responses.
STOXX Limited Voted “Most Innovative Index Provider In Europe” By Structuredretailproducts.Com
FIX Trading Community Addresses TCA Best Practices for Equities
Ivy Schmerken – Wall Street & Technology
FIX Trading Community, the non-profit, industry standard body, has published new guidelines for transaction cost analysis (TCA) in equities.
eVestment Quantum Analytics Brings Portfolio Construction Capabilities and Multi-Asset Class Portfolio Analysis to the eVestment Analytics Suite
eVestment, a leading provider of institutional investment data and analytics, announced today the launch of eVestment Quantum Analytics, a web-based solution that adds multi-asset class portfolio analysis and portfolio construction capabilities to eVestment’s existing data and analytics offerings.
Chaikin Completes ETF Data Addition to Desktop, iPad App
Thomson Reuters reports 50 pct drop in Q4 operating profit
Thomson Reuters Corp reported a 50 percent drop in operating profit in the fourth quarter and Chief Executive Officer Jim Smith said the external environment was tougher than expected.
Hong Kong-Based Firms Agree to Settle Insider Trading Case
Tess Stynes – MoneyBeat – WSJ
The Securities and Exchange Commission said that two Hong Kong-based firms–which managed accounts frozen in a major insider trading case in 2012–have agreed to pay nearly $11 million to settle allegations against them.
Federal Court in Nebraska Imposes More than $10 Million in Sanctions against Michael B. Kratville, Jonathan W. Arrington, Elite Management Holdings Corp., and MJM Enterprises LLC for Commodity Pool Fraud
The U.S. Commodity Futures Trading Commission today announced that Chief Judge Laurie Smith Camp of the U.S. District Court for the District of Nebraska entered a summary judgment Order against Defendant Michael B. Kratville, a licensed attorney, and a default judgment Order against Defendants Jonathan W. Arrington, Elite Management Holdings Corp., and MJM Enterprises LLC, all of Omaha, Nebraska, in a CFTC enforcement action charging the Defendants with commodity pool fraud in violation of the Commodity Exchange Act
Federal Court Orders North Carolina Resident Michael Anthony Jenkins and his Company, Harbor Light Asset Management, to Pay over $5.2 Million for Solicitation Fraud, Misappropriation, and Embezzlement in a Ponzi Scheme
The U.S. Commodity Futures Trading Commission announced that Judge James C. Fox of the U.S. District Court for the Eastern District of North Carolina entered an Order for a permanent injunction against Defendants Harbor Light Asset Management, LLC and its President and owner, Michael Anthony Jenkins, both of Raleigh, North Carolina.
Statement On Verdict In Jury Trial Of Fund Manager Involved In Petters Ponzi Scheme – Andrew Ceresney Director, SEC Division of Enforcement, Feb. 11, 2014
Environmental & Energy
Nasdaq OMX says will push further into German power forwards
Oslo-based exchange Nasdaq OMX Commodities will further raise its share of financial German power trading this year after making inroads in 2013, its president said on Tuesday.
EU Carbon-Glut Fix’s Start Seen in Middle of March by Commission
An emergency plan to prop up prices in the European Union’s carbon market, the world’s biggest, will probably start in the middle of next month, the European Commission said today.
China’s Hubei plans province’s first carbon auction next month
China’s Hubei province will auction up to 2 million carbon permits at a government-set minimum price next month to kick-start the nation’s sixth pilot emissions trading scheme (ETS).
Focus trumps full-service for SocGen in Asia
Michelle Price in Hong Kong – Financial News
Societe Generale is not trying to build a fully-fledged investment bank in Asia, according to the French bank’s corporate and investment banking chief for Asia Pacific, Hikaru Ogata – perhaps this is a wise move.
Rice Tumbling as Thailand’s Unpaid Farmers Urge Reserve Sale
Supunnabul Suwannakij and Chanyaporn Chanjaroen – Bloomberg
Thai rice farmer Pakasit Jamjaras usually spends his days tilling soil, just like his forefathers. Now he’s been harvesting signatures instead of grain, with a petition to King Bhumibol Adulyadej because the government hasn’t paid for his crop in five months.
ETFs based on China benchmarks take advantage of new liquidity rules
Vita Millers, Richard Jory – Risk.net
The renminbi is becoming an increasingly attractive investment opportunity, with exchange-traded funds (ETFs) on offer in Europe delivering the kind of daily liquidity that means they at least resemble open-ended funds.
HKFE Announces Revised Margins for CNOOC Futures
Indian banks: Five years after the global financial crisis
The Indian banking system emerged unscathed from the global financial crisis of 2008, but the subsequent economic slowdown (barring 2009-10) has exerted pressure on banks’ profitability and capital.
Ghana capital controls underscore FX fallout; won’t tackle structural problem
Kanika Saigal – Euromoney magazine
The west African republic’s recent interest-rate hikes and foreign-exchange regulation changes are only short-term measures to halt the free-falling cedi. Structural changes will be needed for meaningful change.