First Read

Bits & Pieces – Summer Intern Education Version
By John J. Lothian

Today is the kickoff (American football term) of the Summer Intern Education Series in Chicago, part of our MarketsWiki Education World of Opportunities theme. Perhaps this series was never needed more than today to help give a positive perspective on the financial markets and the opportunities in them considering today’s headlines.

Today’s newsletter features a verdict in the Libor scandal and a banker finally going to jail. We have the last trial in the Madoff investigation, ITG ousting their CEO over a dark pool issue and the good guys at Promontory hit with regulatory sanctions. On the good side, we have news that the University of Illinois was ranked the number one party school. Oskee-Wow-Wow.

This afternoon’s lineup at the Stuart School of Business auditorium at the Illinois Institute of Technology on West Adams features Scott Gordon of RCG, Derek Sammann of CME Group, Ed Boyle of BOX, Katie Burgoon of Trading Technologies and John Fennell of OCC. Ben Van Vliet of IIT will give a short introduction at the beginning.

Attendees for each session will be mailed a ticket for that day’s session the day of the event. Today’s tickets went out at 6 AM. If you are scheduled to attend and have not received your ticket, there will be a list at the door to check your name.

Thanks to Sungard, each attendee today will receive a MarketsWiki Education string backpack that my sons thought was very cool, and was of good quality. (Good choice Doug!)

Inside the bag will be some swag and some information from some of our sponsors. Additionally, between speakers we will be raffling off some cool swag, including t-shirts, backpacks, gym bags, battery chargers, and one Series 3 course packet a day. We will also have a mystery bag of miscellaneous items each day.

So come for the speakers, stay for the swag.

As always, we are greatly appreciative of our sponsors, including Global Premier Sponsor CME Group. Also, we thank our event partners BATS, CBOE, Barchart.com, NADEX, ICE, Trading Technologies, The IFM, The Stuart School of Business at IIT and Sungard

We have over 200 interns signed up for today, so come early and get a seat. If you (or your interns or new employees) would like to attend but have not yet registered, click the handy link below. Ditto for tomorrow’s session. The Friday session at TT, alas, is sold out.
MarketsWiki Education Intern Series 2015
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CME agrees to offer derivatives on Russell indexes
Reuters
CME Group said on Monday it struck an agreement with London Stock Exchange Group to list derivatives contracts based on Russell indexes that are currently listed only on rival Intercontinental Exchange Inc’s market.
jlne.ws/1Dm2Lmn

****** A great move from 2007 was ICE getting the exclusive Russell deal. Now 10 years later, CME takes it back.

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China’s Response to Stock Rout Exposes Regulatory Disarray; Poor coordination in responding to market plunge prompted Premier Li Keqiang to chastise officials at July 4 meeting
By LINGLING WEI, WSJ
BEIJING—As China’s summer stock slide deepened, threatening a key plank of Beijing’s plan to overhaul the world’s No. 2 economy, the country’s premier pounded the table and demanded that regulators get their act together.
jlne.ws/1M2mB7x

***** China has done more damage to their markets than they can imagine. Defend the price discovery process, not the outcome.

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Collateral Conference for the Americas
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MGEX Reports Best July in Exchange History
MGEX
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), has completed the best July in its history, recording new highs for the month in both total volume and electronic volume.
jlne.ws/1OMeafI

****** It was a very good July in a lot of ways.

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Securities Fraud Charges Bring Texas Attorney General, Ken Paxton, to County Jail
By MANNY FERNANDEZ, WSJ
Ken Paxton, the Texas attorney general, was arrested on felony charges Monday and booked at the county jail in this Dallas suburb after a grand jury indicted him last week for securities fraud, the start of a criminal case that could complicate and even jeopardize his tenure as the state’s top lawyer.
jlne.ws/1E5qwtz

****** Check the registration of anyone you deal with in securities and derivatives. EVERYONE!

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U of I named biggest party school
Crain’s Chicago Business
The University of Illinois stakes claim to 23 Nobel Prize winners and tech prowess that contributed to the creation of YouTube, Netscape, Java and light-emitting diodes, or LED.
jlne.ws/1MIQzOl

****** The scary thought is that Evan Fabry does not even turn 21 until November. What rank then?

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Video Killed the Radio Star: J2’s Esposito Stresses Importance of Digital Media
JohnLothianNews.com

“Video is king. Video is everywhere.”

Joan Esposito, co-founder of the media consulting firm J2 Strategic Communications, said that more companies are putting CEOs and other key personnel in video for their websites, internal communications and external strategies.

“That’s wonderful because it puts a human face and hopefully a passionate face on the company,” she said. “But if they make a video like that and they are dull or not energetic, or not passionate, or not clear, that’s not helping your company.”
Watch the video »
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Lead Stories

ITG Ousts CEO Gasser After Probe; Investment Technology Group’s investigation found Robert Gasser failed to disclose some details of alleged improprieties to board
By BRADLEY HOPE And SARAH KROUSE, WSJ
The chief executive of Investment Technology Group Inc. was ousted Saturday after an investigation by an outside law firm found that he hadn’t disclosed to the board some details of alleged improprieties related to the firm’s “dark pool,” according to people familiar with the matter.
jlne.ws/1SXJcCo

China Dethroned as World’s Most Liquid Stock Market After Curbs; The unprecedented boom in Chinese stock trading during the first half of 2015 has fizzled.
Bloomberg
China has lost its title as the world’s most liquid stock market as trading halts and regulatory efforts to curb bearish transactions drive away investors.
jlne.ws/1HnwupZ

N.Y. to deny Promontory Financial access to confidential bank data
By Karen Freifeld, Reuters
New York state’s financial watchdog effectively suspended Promontory Financial Group LLC, a prominent consulting firm, from doing regulatory work for banks licensed by the state after finding that it whitewashed reports it gave to authorities.
jlne.ws/1DoJhxf

Pimco Gets Warning From SEC That Lawsuit Could Be Coming; SEC’s Wells Notice pertains to the Pimco Total Return ETF
By KIRSTEN GRIND And GREGORY ZUCKERMAN, WSJ
Bond giant Pacific Investment Management Co. said Monday that it could be sued by the country’s top securities regulator over how it valued assets in one of its most popular funds aimed at small investors.
jlne.ws/1IIyIFu

Regulators Question High-Speed Trading in Treasurys; Comments from Fed, Treasury officials could presage new rules; concern has grown on volatility
By RYAN TRACY, WSJ
Senior officials at the Treasury Department and Federal Reserve questioned the benefits of high-frequency trading in U.S. Treasury markets, suggesting market overseers are building the case for new rules targeting the firms.
jlne.ws/1IllUS0

Bats Accelerates Foreign-Exchange Push With Free London Trading
by John Detrixhef, Bloomberg
Bats Global Markets Inc., the operator of Europe’s largest stock market, will offer free currency trading when it opens its London hub next month as part of an effort to muscle into the world’s biggest asset class.
jlne.ws/1MJHGFn

Wall Street’s new chatrooms could thwart probes
New York Post
Forget about Sen. Elizabeth Warren. The worst scourge on Wall Street is overly chatty traders. Since 2010, the world’s 13 biggest banks have shelled out more than $74 billion to settle probes, ranging from interest-rate rigging to currency manipulation, where incriminating exchanges between traders provided key evidence, according to a Post analysis of data compiled by the CCP Research Foundation. The eye-popping figure is a big reason why Wall Street is backing a new cutting-edge communications system. Symphony promises to give its clients, including Goldman Sachs and JPMorgan Chase, greater control of their data — and save them “billions of dollars in fines,” according to a company pitch to clients.
jlne.ws/1JHG2SH

Former Libor `Ringmaster’ Hayes Guilty of Manipulating Rates
Bloomberg Business
Former UBS Group AG and Citigroup Inc. trader Tom Hayes, the first person to stand trial for manipulating Libor, was found guilty of eight counts of conspiracy to rig the benchmark rate.
jlne.ws/1IArTBu

Libor Dreams End in Prison Term as Tom Hayes Loses Last Gamble
by Gavin Finch, Liam Vaughan, Bloomberg
The journey that led Tom Hayes to a drab courthouse on the banks of the River Thames started 6,000 miles away on a buzzing trading floor in Tokyo’s financial district in the summer of 2006.
jlne.ws/1ePTR4y

Hayes Conviction May Redeem U.K. Prosecutor After Botched Cases
by Suzi Ring, Bloomberg
U.K. Serious Fraud Office Director David Green may have let out a sigh of relief Monday, as the conviction of Tom Hayes offered some welcome news for the embattled agency.
jlne.ws/1P3dao1

China Stock Exchanges Step Up Crackdown on Short-Selling
By REUTERS
China stepped up a crackdown on short-selling of shares on Tuesday, unveiling rules that make it harder for speculators to profit from hourly price changes, as some of the nation’s major brokerages suspended their short-selling businesses.
jlne.ws/1HnwCFM

CIT’s Thain: financial companies without deposit funding face risks
BY DAN FREED, Reuters
CIT Group Chairman and Chief Executive Officer John Thain, who closed a merger Monday with OneWest Bank that acquired $30 billion in deposits, said financial companies that do not have deposit funding could be shaky in the future.
jlne.ws/1hgynzE

Promontory to Lawsky: Watch Your Language
By RACHEL LOUISE ENSIGN, WSJ
Promontory Financial Group is preparing to square off in court against New York’s top banking regulator, but it also seems to have a beef with how the department’s former head, Benjamin Lawsky, is marketing his new consulting firm.
jlne.ws/1KNBedh

Promontory suspended for indefinite period over StanChart work
Ben McLannahan in New York, WSJ
New York’s top financial regulator has issued a stinging rebuke to Promontory Financial Group, the influential consulting firm, ordering it to suspend business for an indefinite period for whitewashing a 2011 report on sanctions violations by Standard Chartered, the UK bank.
jlne.ws/1IlllaE

The UK government is selling some of its shares in the bank. It should have done so years ago
FT LEX
Well that took longer than it should have. The UK government has finally started selling down its 78 per cent stake in Royal Bank of Scotland. It should have started the process years ago. The shares closed at 338p on Monday. In August 2013 they were trading at around 340p, and in the intervening period there have been no dividends. About £31bn of UK taxpayers’ money has been tied up for two years in the bank, with no return. The public would have done better had its money been in a savings account, despite the woefully-low interest rates on offer. The government, it seems, is not a good allocator of investment capital.
jlne.ws/1Hnhet8

Regulatory

Statement of Commissioner J. Christopher Giancarlo
Six months ago I released a White Paper on the CFTC’s swaps trading rules. The White Paper analyzed the flaws in the CFTC’s implementation of its swaps trading regulatory framework under Title VII of the Dodd-Frank Act and proposed a more effective alternative. Since the White Paper’s release, I have had many good discussions with my fellow CFTC colleagues about improving the swaps trading rules. CFTC staff has initiated some small efforts to improve the rules, which I have commended. Unfortunately, the CFTC’s actions to date have fallen short overall of the necessary changes needed to truly improve swaps trading. The CFTC’s tweaks of the swaps trading rules in the last six months, mostly in the form of staff no-action letters, have failed to fix the underlying issues with the trading rules. This Six Month Progress Report reviews these measures and assesses the degree to which they ameliorate rule flaws.
jlne.ws/1Imju5w

Judge Adds to Pressure on SEC Over How it Names Its Judges; Unusual ruling gives SEC seven days to say whether it will change the way it appoints judges to its in-house court.
By JEAN EAGLESHAM WSJ
A federal judge’s unusual ruling on Monday ratcheted up the pressure on the Securities and Exchange Commission and its controversial use of its in-house judges.
jlne.ws/1VXY9sy

The Challenges of Fighting Money Laundering
By PETER J. HENNING, WSJ
The Watergate credo to “follow the money” is the reason for a number of laws that require banks, credit unions and money-transmission businesses to keep track of who their customers are and report suspicious transactions. These financial firms are the first line of defense against money laundering, and recent cases highlight just how difficult it is for the government to police the tidal waves of cash that wash through the banking system.
jlne.ws/1JIYgmM

U.S. Dept of Justice initiates criminal probe against Deutsche Bank: Bloomberg
Reuters
The United States Department of Justice is investigating trades worth billions of dollars that Germany’s Deutsche Bank AG made on behalf of its Russian clients, Bloomberg reported, citing people familiar with the matter.
jlne.ws/1M87tHg

Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
SEC

    • FINRA: Order Approving a Proposed Rule Change to Provide a Web-based Delivery Method for Completing the Regulatory Element of the Continuing Education Requirements (Release No. 34-75581; File No. SR-FINRA-2015-015; July 31, 2015)

 

    • NYSE: Order Granting Approval of a Proposed Rule Change Making Permanent the Rules of the NYSE New Market Model Pilot and the NYSE Supplemental Liquidity Providers Pilo (Release No. 34-75578; File No. SR-NYSE-2015-26; July 31, 2015); see also Exhibit 5

jlne.ws/1eCTnOv

Exchanges & Trading Facilities

CME Group and FTSE Russell to Offer Leading Index Derivatives
PRNewswire
CME Group, the world’s leading and most diverse derivatives marketplace, and FTSE Russell, a leading global index provider, announced that they have entered into a licensing agreement establishing CME Group as a global partner for futures, options on futures and OTC cleared products on FTSE Russell.
jlne.ws/1VYLTrD

Eurex: Trading statistics July 2015
Deutsche Boerse
Eurex Exchange: ADV 5.9 million contracts, 39 percent growth year-on-year/ISE: ADV 2.6 million contracts, 21 percent growth year-on-year
3. August 2015
Eurex: In July 2015, the international derivatives markets of Eurex, part of Deutsche Börse Group, recorded an average daily volume of 8.5 million contracts (July 2014: 6.3 million). Of those, 5.9 million were Eurex Exchange contracts (July 2014: 4.2 million), and 2.6 million contracts (July 2014: 2.1 million) were traded at the New York based International Securities Exchange (ISE). The volume traded on the spot and derivatives power markets of the European Energy Exchange (EEX) amounted to 209.9 terawatt hours (TWh) in July 2015 (July 2014: 179.4 TWh). Eurex Repo recorded in all markets in July 2015 an average outstanding volume of 158.2 billion euros.
jlne.ws/1P3cI9A

EEX Trading Results Of July 2015 – Strong Growth In French And Italian Power Derivatives
Press Release
In July 2015, trading volumes on the Power Derivatives Market of the European Energy Exchange (EEX) amounted to 172.9 TWh. Compared to the same month in the previous year, the volume increased by 16 % (July 2014: 148.6 TWh). In particular, the growth in French (+ 282 %) and Italian Power Futures (+ 131 %) contributed to this result. Trading volumes in Spanish Power Futures (+ 621 %) have also seen strong growth in comparison to last year’s figures.
jlne.ws/1VYKlhp

SGX derivatives market opens per normal today
SGX
Singapore Exchange’s (SGX) Derivatives market opened per normal today with pre-opening at 0730 hours and continuous trading at 0740 hours. This follows a temporary suspension of trading yesterday, 3 August, at 1956 hours after a number of trading participants experienced problems connecting to the Derivatives market due to an intermittent technical failure. The failure required SGX to switch certain services to backup systems to ensure that all members were fully able to connect and trade the Derivatives market.
jlne.ws/1MIQ86O

DGCX Partners with UAE’s Wealth Monitor Magazine
Mondovisione
DGCX and Wealth Monitor will create and explore areas of mutual cooperation; The partnership seeks to promote the activities and work of DGCX through the Wealth Monitor platform
UAE-based Semantics Global Media FZ-LLC, publisher of the flagship monthly financial markets related magazine ‘Wealth Monitor’, is pleased to announce that it has clinched partnership with Dubai Gold & Commodities Exchange (DGCX) to develop mutual cooperation.
jlne.ws/1E5ZK4c

CBOE Futures Exchange Reports July 2015 Trading Volume
CBOE
VIX Futures ADV, Total Volume Up From Prior Month and Year Ago
5 Million VIX Futures Contracts Traded; July Was Second-Busiest Month of All Time
CBOE Futures Exchange, LLC today reported that July 2015 monthly average daily volume and monthly total volume, both exchangewide at CFE and for futures on the CBOE Volatility Index , rose from June 2015 and from year-ago levels. Total volumes hit a second consecutive monthly high for 2015, surpassing the previous monthly high for the year set in June.
jlne.ws/1P25CSJ

CBOE Holdings Reports July 2015 Trading Volume
CBOE
Total Volume of 106.5 Million Contracts Up 7% From June, Down 2% From Year Ago; ADV of 4.8 Million Contracts, Up 7% From June, Down 2% From Year Ago
CBOE Holdings, Inc. (NASDAQ: CBOE) reported today that total trading volume in July for options contracts on Chicago Board Options Exchange and C2 Options Exchange and futures contracts on CBOE Futures Exchange was 106.5 million contracts, an increase of 7 percent from June 2015 and a decrease of 2 percent from July 2014.
jlne.ws/1IC5gg9

ISE Holdings Reports Business Activity for July 2015
ISE
ISE and ISE Gemini combined represent 16.8% of equity options market share, excluding dividend trades; ISE and ISE Gemini reported a combined ADV of 2.6 million contracts Dividend trades made up 0.4% of industry volume in July 2015.
jlne.ws/1Dm1MTd

Hedge Funds & Managed Futures

Glamour is out at Pimco as it begins to recover from Gross exit
BY JENNIFER ABLAN
Dan Ivascyn, who succeeded Bill Gross as Pimco’s new chief investment officer nearly a year ago, acknowledges that life at the firm is now “less glamorous.”
jlne.ws/1KOLTEB

Citadel’s Ken Griffin Leaves 2008 Tumble Far Behind; Hedge-fund firm that nearly collapsed during the financial crisis is thriving again and expanding as aggressively as ever
By ROB COPELAND, WSJ
On hedge-fund titan Kenneth Griffin’s 46th birthday last October, his firm paid former president Bill Clinton $250,000 to speak to investors and employees at the New York restaurant Daniel.
jlne.ws/1M2nIUD

Fund Caught in Snare of Global Probe; Kijani fund, seized by regulators in Cayman Islands, spotlights risks in lightly regulated market
By MARGOT PATRICK, WSJ
On this tiny Mediterranean peninsula, a hedge fund run by a polo player has been seized by regulators, as part of a global probe into offshore funds, highlighting the risks lurking in this lightly regulated, multibillion-dollar market.
jlne.ws/1DoIXOV

Banks & Brokers

ITG Announces Management Changes – Also Announces Accelerated Release Of Second Quarter 2015 Earnings
Mondovisione
ITG (NYSE:ITG), a leading independent execution broker and research provider, today announced that it has replaced Bob Gasser as its chief executive officer with Jarrett Lilien, a member of the ITG board and the former president and chief operating officer of E*TRADE Financial, effective immediately.
jlne.ws/1HnhlF8

OTCGH’S EOXLive Reaches 59 Percent Of Natural Gas Options Market Volume
Press Release
OTC Global Holdings (OTCGH), the leading independent commodities interdealer broker, announced today that on July 31, 2015 its EOXLive platform represented 59 percent of CME options volume on the NYMEX Henry Hub natural gas benchmark. The volume represented 82,338 contract sides.
jlne.ws/1ImiT3G

JPMorgan Questioned on Private Bank’s Hedge Fund Disclosures
by Neil Weinberg, Bloomberg
JPMorgan Chase & Co. said authorities are examining what its wealth management businesses and private bank told customers when selling them the company’s own investment products and enlisting hedge funds.
jlne.ws/1IJBUku

J.P. Morgan to Accelerate Timeline for Cybersecurity Spending Boost; Bank expects cybersecurity spending to double to $500 million in 2015
By EMILY GLAZER, WSJ
J.P. Morgan Chase & Co. said it expects to increase spending on cybersecurity in the coming years, accelerating its initial timeline of such spending growth.
jlne.ws/1E5toGR

Good Timing for Britain to Shed Its R.B.S. Stake
By GEORGE HAY, NY Times
Britain shouldn’t obsess about losing money on its Royal Bank of Scotland stake. George Osborne, the chancellor of the Exchequer, is about to get cracking on reducing the government’s 79 percent holding, which will mean a short-term loss on the 46 billion pounds handed over by taxpayers in 2008 and 2009. That hit needs to be put into perspective.
jlne.ws/1SXKgGj

For His Next Trick, Barefoot Genius Aims to End Broker Rip-Offs
by Ryan Hoerger, John Detrixhe, Bloomberg
The man who helped revolutionize high-frequency trading greets guests to his Paris office in his bare feet.
jlne.ws/1ImjzGk

Crédit Agricole shares fall on alert over reorganisation hurdles
Michael Stothard in Paris, FT
Shares in Crédit Agricole tumbled after France’s second-largest bank by assets signalled problems in winning backing for a reorganisation that may have freed up capital to pay investors.
jlne.ws/1SH9Nc3

Deutsche Bank asked to pay former employee $3 mln in damages
Reuters
Wall Street’s industry-funded watchdog on Monday asked Deutsche Bank to pay $3 million in compensation damages to Jorge Usandivaras, the former head of its Latin American Strategic Transactions unit.
jlne.ws/1IC7FaL

Citi declines comment on former trader Hayes guilty verdict
Reuters
Citigroup declined comment on Monday on a guilty verdict against former trader Tom Hayes, who worked for the U.S. bank for 10 months, in the first trial of a defendant accused of Libor interest rate rigging.
jlne.ws/1OMdtTA

UBS distances itself from Libor guilty ruling for former trader
Reuters
Swiss bank UBS on Monday distanced itself from its former trader Tom Hayes, who was found guilty of conspiracy to defraud in the first trial of a defendant accused of Libor interest rate rigging.
jlne.ws/1JIZjmW

CIT’s Deal Is Done, But Thain Says Don’t Hold Your Breath for Another
By RACHEL LOUISE ENSIGN, WSJ
John Thain says his first big bank deal since leaving Merrill Lynch & Co. will likely be his last for a while.
jlne.ws/1UjzMUk

Mesirow to close bankruptcy consulting business
By LYNNE MAREK, Crain’s Chicago Business
Mesirow Financial’s consulting business helped distressed companies restructure their businesses over the years, but now it’s the one revamping, with a plan to dismantle the unit.
jlne.ws/1IUR5t3

Clearing & Settlement

OCC Cleared Contract Volume Increased 7% in July
Business Wire
OCC, the world’s largest equity derivatives clearing organization, announced today that cleared contract volume in July was 385,404,937 contracts, up 7 percent from July 2014 volume of 360,585,699 contracts marking the highest July volume on record. OCC’s year-to-date average daily cleared contract volume is down 4 percent from 2014 with 16,252,971 contracts in 2015.
jlne.ws/1VYKphg

Waters Rankings 2015: Best Reconciliation Management Provider ? Bloomberg WatersTechnology
Every once in a while, however, the readers’ choice seems to upend the category, itself, on a definitional level. That is the case this year with the best reconciliation management provider category—which, for fairly obvious reasons, has been historically controlled by the DTCC or its Omgeo subsidiary unit. The 2015 award—in quite a twist—goes to Bloomberg and its AIM (formerly POMS) buy-side platform.
jlne.ws/1VYKdyz

CLS to develop settlement service for cleared FX products
Finextra
CLS, the leading provider of settlement services for the global foreign exchange (FX) market, today announced that it is working with LCH.Clearnet, a leading global multi-asset clearing house, to develop a service to facilitate the settlement of cleared foreign exchange products.
jlne.ws/1VYKiSE

Indexes & Products

Calvert Unveils Responsible Index Funds
Financial Advisor
Bethesda, Md.-based Calvert Investments, a broker-dealer and RIA focusing on responsible investing, has launched a suite of responsible indexes and related index funds that will track them.
jlne.ws/1VYKFww

MSCI may still reclassify Greece if capital curbs persist
Reuters
Index provider MSCI said it continued to monitoring capital controls at Athens’ stock exchange and may still launch a consultation to reclassify the country from ’emerging’ to ‘standalone’ status if significant restrictions continued. Greece’s stock market .ATG reopened on Monday after a five-week shutdown brought on by fears the country was about to be dumped from the euro zone, but ended the day with heavy losses.
jlne.ws/1VYKKjN

Ex-S&P exec may proceed with case against SEC, U.S. judge rules
BY NATE RAYMOND
Aug 3 The U.S. Securities and Exchange Commission on Monday lost a bid to dismiss a constitutional challenge to its ability to pursue claims against a former Standard & Poor’s executive before one of its own in-house administrative judges rather than in federal court.
jlne.ws/1K1dK1t

Concentration Consternation
Indexology – S&P Dow Jones Indices
“There are 3 kinds of lies: lies, damned lies, and statistics.”- Mark Twain
Earlier this week, The Wall Street Journal pointed out that a mere six stocks (Amazon, Google, Apple, Facebook, Gilead, and Disney) had accounted for more than 100% of the S&P 500’s year-to-date gains. This degree of concentration (reminding some of the peak of the 1990s’ technology bubble) is said to raise “concerns about the health of the market’s advance.” While the article’s arithmetic was correct, its concerns may be misplaced.
jlne.ws/1VYL6qB

A challenge for SA index trackers
Moneyweb
There is no doubt that the biggest story in the global fund management industry over the last ten years has been the rise of index trackers. At the end of last year 40% of all equity investments held by institutional investors in the US was in passive products. Analysis from Morningstar shows that last year passive US equity funds saw $166.6 billion of inflows, while active US equity funds saw outflows of $98.4 billion. Across all long-term asset categories in the country, $420.1 billion went into passive strategies while active funds had inflows of only $44.3 billion.
jlne.ws/1VYKXn7

JP Morgan updates methodology for EM indexes
Reuters
JP Morgan & Co updated its methodology for its emerging markets indexes, a move that will boost the weightings of China, Brazil and Russia in its key corporate EM broad diversified index, the firm said Monday.
jlne.ws/1SEVjJQ

Technology

Eze Software Enhances Buy-Side and Sell-Side Capabilities of EMS
Press Release
Eze Software Group, a premier provider of global investment technology, has released a number of new features for the buy-side and the sell-side in the latest version of its EMS. Enhancements include actionable IOI support, securities borrowing improvements and enriched support for ACT reporting.
(Via email)

Spy software gets a second life on Wall Street
ByBradley Hope, The Wall Street Journal
A wave of companies with ties to the intelligence community is winning over the world of finance, with banks and hedge funds putting the firms’ terrorist-tracking tools to work rooting out employee misconduct before it leads to fines or worse.
Spy software gets a second life on Wall Street

Why are Canadians so good at FinTech?
Cantech Letter
With so many Canadian companies emerging to the forefront of the financial technology industry, a lot of fellow investors ask us “How did this happen?”
jlne.ws/1VYNa1Y

Enforcement

SEC Charges Houston-Area Businessman in Ponzi Scheme
SEC.gov
The SEC’s case filed in federal court in Houston charged Frederick Alan Voight of Richmond, Texas with defrauding more than 300 investors in multiple offerings of promissory notes issued by two partnerships he owns, F.A. Voight & Associates LP and DayStar Funding LP. While Voight’s latest offering promised investors returns as high as 42 percent a year from loans to small public companies, most of the funds went to pay earlier investors, the complaint alleges. Approximately $22 million of Voight’s allegedly ill-gotten gains remain unaccounted for to date.
jlne.ws/1DllcHL

CFTC Charges Illinois Resident Husam Tayeh, Dinar Corp., Inc., and My Monex, Inc. with Fraud and Other Violations Involving Foreign Currency Scheme
The Complaint alleges that beginning from at least January 2012 and continuing to the present , Tayeh, DCI, and Monex NV engaged, and are engaging, in a fraudulent scheme involving the offering of agreements, contracts or transactions in off-exchange forex on a leveraged, margined, or financed basis to retail customers who were not eligible contract participants (ECPs) and that do not result in actual delivery of forex within two (2) days of the transaction date(s). Defendants, who have never been registered as required with the CFTC, have engaged in more than $8 million of these illegal, off-exchange retail forex transactions.
jlne.ws/1Imjl26

‘Fugitive’ ex-UBS trader cannot escape U.S. case over Libor: judge
BY NATE RAYMOND
A former UBS AG trader charged as part of a U.S. investigation into Libor rate manipulation lost a bid to have the case dismissed on Monday, with a federal judge ruling that a fugitive from U.S. justice had no right to mount a legal challenge.
jlne.ws/1E5t2A2

With final defendant, Madoff criminal case comes to an end
BY JOSEPH AX, Reuters
In 1964, Irwin Lipkin became one of the first employees at a small New York trading firm called Bernard L. Madoff Investment Securities.
jlne.ws/1MJCy41

Hong Kong regulator fines BNP Paribas over dark pool operations
By Julie Steinberg, The Wall Street Journal
Hong Kong’s securities regulator on Monday fined a unit of BNP Paribas for misconduct related to its dark pool operations.
jlne.ws/1DpK8xx

Former Citigroup and UBS Trader Convicted in Libor Case
By CHAD BRAY, NY Times
Tom Hayes, a former trader at Citigroup and UBS, was convicted Monday on eight counts of conspiring to manipulate a global benchmark interest rate known as Libor, bolstering efforts by prosecutors here to pursue financial wrongdoing.
jlne.ws/1KNCvRD

How Libor Trader Tom Hayes’s 14-Year Jail Term Stacks Up Against Others
By GILES TURNER, WSJ
Fourteen years. That was prison sentence handed down Monday to Tom Hayes, the former trader at UBS and Citigroup who was found guilty in the U.K. for fraudulently trying to rig the London Interbank Offered Rate.
jlne.ws/1IfSxCC

Pimco says may face SEC action over fund Bill Gross once ran
Reuters
Pacific Investment Management Co said on Monday it may face civil charges from the U.S. Securities and Exchange Commission over an exchange-traded fund once managed by portfolio manager Bill Gross.
jlne.ws/1M1MV1n

Environmental & Energy

G20 countries pay over $1,000 per citizen in fossil fuel subsidies, say IMF
By Damian Carrington – The Guardian
Subsidies for fossil fuels amount to $1,000 (£640) a year for every citizen living in the G20 group of the world’s leading economies, despite the group’s pledge in 2009 to phase out support for coal, oil and gas.
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New Nuclear Power Seen as Big Winner in Obama’s Clean Power Plan
By Jonathan Crawford and Mark Chediak – Bloomberg News
The Obama administration gave the struggling U.S. nuclear industry a glimmer of hope this week by allowing new reactors to count more toward meeting federal emissions limits.
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British team designs high-tech kites to harness wind energy
By Damian Carrington – The Guardian
“Oh wow! Look at that, it’s really hoofing some power out now,” beams Bill Hampton, looking up at his outsize kite as it swoops over a wheat field on the Essex coast.
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Asia-Pacific

Citadel account frozen in China ‘spoofing’ probe
Bloomberg
Citadel Securities, the trading firm started by Ken Griffin, owns one of the 38 accounts frozen by Chinese exchanges as authorities investigate whether algorithmic traders are disrupting the nation’s stock market.
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China Curbs Short Selling; Commodities Weakness Spreads; China shares make early gains after officials continue to target high-frequency trading
By CHAO DENG, WSJ
China shares made tentative gains after officials announced fresh steps to rein in short selling, while commodities weakness spread to some Asian currencies, including the Malaysian ringgit.
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Frontier Markets

Commodities Rout Erases Billions from Africa’s Biggest Fortunes; Are the go-go years over for the continent’s commodities billionaires?
by Devon Pendleton, Marcia Klein, Bloomberg
The collapse in commodity prices and the rise of the African middle class has flipped the fortune trends of the continent’s richest people.
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Emerging markets: Redrawing the world map
FT.com
The term has become obsolete, say critics, as developing markets overtake developed ones in some areas
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Miscellaneous

Archer Daniels Midland completes sale of chocolate business
AP via Chicago Tribune
Archer Daniels Midland says it sold its chocolate business to agribusiness conglomerate Cargill for $440 million.
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ADM says expects soy profit margin to fall in Brazil
Reuters
Archer Daniels Midland Co expects profit margin in Brazil’s soy production to fall to 122.20 reais ($35.42) per hectare in the upcoming 2015/16 season from 539.03 reais in 2014/15, the company’s South America President Valmor Schaffer said at an event in Sao Paulo on Monday.
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