Killing Dark Pools Is CME Chairman’s Fix for Broken Stock Market
Matthew Leising – Bloomberg
Terrence Duffy, who as executive chairman of CME Group Inc. oversees the world’s largest futures exchange, has a solution for those seeking to fix the U.S. stock market: kill dark pools.
While all futures trades happen on exchanges such CME Group’s, only about 60 percent of American equity volume does. The rest takes place on venues including dark pools, where orders are hidden until transactions are completed. That hurts investors because it obscures the true price of stocks, Duffy said yesterday during an interview at Bloomberg News headquarters in New York.
***** Robust price discovery that is fair, has integrity and is transparent is a social good of the highest order. Mr. Duffy is right to champion price discovery that has these qualities, even if he does talk his book while doing it.
Judges Consider What Defines Insider Trading
Federal prosecutors were peppered with tough questions Tuesday on the legal underpinnings of their near-perfect record in insider-trading cases, raising the prospect that some convictions could be overturned. In an hourlong hearing in Manhattan, judges of the U.S. Court of Appeals for the Second Circuit signaled that federal prosecutors may have taken too broad a view of insider trading, saying Wall Street needs more of a “bright line” about what constitutes a crime.
***** We all want a bright line in the midst of all this gray.
CME Group Revamps Grain Daily Price Limits for More Flexibility
CME Group Inc. is overhauling the way it calculates daily price limits for grains and oilseed trading. “The new methodology is a more flexible, transparent, and market based” mechanism, the exchange said in a report to clients that was posted on the website of the National Grain and Feed Association. “It would allow price limits to expand under high prices, but also allow price limits to retract when prices fall.”
***** Put the stone tablets in the archives, we need the whiteboard to record these new rules.
David Einhorn Distills The High-Frequency Trading Debate Into One Sentence That Everyone Can Understand
“These problems fall into the classic dilemma of concentrated benefit and diffuse harm,” wrote Einhorn in his new letter to clients. High frequency traders offer tons of liquidity to the markets which is actually great for investors. But in that process, they’re able to skim tiny amounts of money for themselves. It’s kind of like what Richard Pryor’s character does in “Superman 3.”
***** Except it is not.
Privatization of Water as an Owned Commodity Rather Than a Universal Human Right
Axis of Logic
There is no greater natural resource on this earth than water. As the sustenance of all life, water keeps every living and breathing organism, every plant, every animal and every human being on this planet alive. In the same way that without air to breathe, without water we humans cannot sustain life for more than a few days.
***** Private is one thing, appropriation is another.
WFE-IOMA Annual Derivatives Conference
The 31st annual World Federation of Exchanges (WFE) – International Options Market Association (IOMA) Derivatives Conference will be held on Monday, May 26 – Wednesday, May 28, 2014 in Moscow, Russia. The annual conference brings together the leaders of the world’s futures and options markets and derivatives clearing houses to discuss market and regulatory issues affecting the world’s derivatives landscape.
***** I wonder how the security will be different from how it was in Mexico City in 2013?
Wedbush Announces Strategic Transaction with Crossland to Expand Equities, Options and Futures Services
Wedbush Securities, one of the nation’s leading financial services providers, today announced the signing of an agreement to acquire select assets of Crossland LLC including its futures execution and clearing operations. The transaction will provide a more expansive range of
centralized services across the equities, fixed income, options and futures markets for the firms’ combined client base.
***** Is there more to this story, or did Wedbush just notice futures, options and securities are much closer now?
Don’t Fret About Those ‘Flash Boys,’ Cautious Investors
U.S. News & World Report
Cautious investors need not overreact to recent headlines by not investing in the stock and bond markets. There are two reasons why investors should continue to maintain a balanced portfolio that includes stocks and bonds
***** Don’t fret, be happy!
Should high-frequency trading be banned?
Is the use of algorithms to execute trading strategies destabilising markets? With an FBI investigation on the cards, the stakes are high, says Simon Wilson.
****** There have always been algorithms to execute orders, even when they were done by humans. Humans used their brains to construct strategies to best execute orders. Human algorithms. Get over it.
E-trading pulls gold into forex units as commodity desks shrink
The increasing use of technology on financial trading floors is driving a trend for banks to roll precious metals operations into their forex businesses as a separate unit from other commodities activities.
****** There goes the gold is not a currency argument.
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Slow start to swaps trading revolution
A revolution in swaps trading mandated by US regulators has had a slow start. However, the pace should quicken from next month when new rules expand trading opportunities.
Settlement time for U.S. trades closer to being shortened
The Depository Trust & Clearing Corporation, which processes all U.S. stock and fixed income trades, said on Wednesday it supports shortening the settlement cycle for U.S. equities, corporate and municipal bonds, and unit investment trust trades.
Why Canada’s stock market is among the best in the world
The Globe and Mail
The last time you purchased or sold shares on the stock market, did you think of the price of milk? Probably not, unless you were buying shares in a dairy company.
HFTs Rough Couple of Weeks… Are Regulations Next?
It would come as no surprise that high-frequency traders (HFTs) are feeling a bit under siege since the publication of Michael Lewis’s Flash Boys at the beginning of April, however, if the industry is waiting for the other shoe to drop, this week it was raining patent leather. http://jlne.ws/1ieI0Nu
Goldman Sachs Stands Firm as Banks Exit Commodity Trading
Goldman Sachs Group Inc., whose three top executives began their careers at the firm in the commodity-trading unit, is poised to gain market share as pressure from regulators drives competitors to scale back.
Barclays Plans to Exit Most Commodities Activities
Barclays Plc, the U.K.’s second-biggest bank, will withdraw from most of its global commodities activities, joining JPMorgan Chase & Co. to Morgan Stanley in pulling back as revenue drops. http://jlne.ws/1foMgnY
OptionsCity Software Expands Algo Store to Metro Customers
OptionsCity Software, a global provider of electronic trading solutions for professional futures and options traders, today announced that users of its flagship Metro trading platform will now have direct access to the OptionsCity Algo Store. The Algo Store was created to provide customers with a marketplace to buy and sell algorithms for trading futures and options. OptionsCity offers this enhancement through Metro Link, a tool that allows traders to run algorithms purchased in the Algo Store within Metro.
LME Seeks to Lure Dinner Guests to Metal Trading Market
The London Metal Exchange is attracting a growing crowd to its Asian gala dinner this year, with about 60 percent more attendees. The biggest metals bourse is finding it harder to replicate those gains in trading in the region.
Deutsche Boerse’s Clearstream buys hedge fund custody business
Deutsche Boerse’s settlement arm Clearstream has expanded its post-trade services for hedge funds by acquiring an Ireland-based business from fund administration provider Citco.
MarketAxess Reports First Quarter 2014 Revenues
NEW YORK, April 23, 2014 (GLOBE NEWSWIRE) — MarketAxess Holdings Inc. (Nasdaq:MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced results for the first quarter ended March 31, 2014 – first quarter revenue $63.4 million, pre-tax income of $27.7 million and diluted EPS of $0.46.
Warren Pushes Regulators to Get Tougher on Banks
Sen. Elizabeth Warren has spent the past year pushing top regulators, in public and in private, to get tougher on the nation’s largest banks. Last week, she notched a key victory. The Federal Reserve’s board discussed an “enforcement matter” regarding a bank for the first time since November 2010, examining an issue that in previous years might have been worked out by the central bank’s staff without any discussion at a board meeting.
Canada’s Oliver says common securities regulator a priority
Canada’s new finance minister said on Tuesday the creation of a national securities regulator will be a priority under his watch as he draws on his experience in banking and as a provincial capital markets watchdog.
Recordkeeping Requirement Irks OTC Industry
The derivatives industry is pushing back against a proposal by the Commodity Futures Trading Commission that would require all participants on a swap execution facility or a derivatives exchange to record all pre-execution trade information. The requirement serves as a large surtax on exchange transactions and causes end users to take transactions away from SEFs or designated contract markets, according to an April 17 comment letter submitted by IntercontinentalExchange (ICE).
New crowdfunding rules: implications for small businesses
SMEs are increasingly looking at crowdfunding as a way of raising finance without dealing with bureaucratic banks and fickle investors. However, new rules by the Financial Conduct Authority (FCA), which came into force recently, regulate certain types of crowdfunding.
UK’s Financial Conduct Authority Appoints Two New Senior Advisers Focused On Competition And Investment Banking
David Saunders and Gunner Burkhart have been appointed as senior advisers at the Financial Conduct Authority (FCA).
Democrats urge U.S. SEC to press ahead on conflict minerals rule
Twelve lawmakers are urging U.S. regulators to implement a new rule requiring companies to disclose if their products contain “conflict minerals” from Africa’s Democratic Republic of Congo, even though part of the rule was struck down by a U.S. appeals court last week.
Exchanges & Trading Facilities
CME said to have shelved inflation futures plan
Dealer resource constraints and an apparent lack of demand from the buy side have derailed CME Group’s efforts to launch two new US inflation futures contracts, according to market participants
CME Group Named ‘North America Exchange of the Year’ and ‘Clearinghouse of the Year’ by Global Capital
CME Group, the world’s leading and most diverse derivatives marketplace, today announced the company was named ‘North America Exchange of the Year’ and ‘Clearinghouse of the Year’ by Global Capital, a new Euromoney Institutional Investor publication incorporating the former Derivatives Week and EuroWeek.
SGX Posts Third-Quarter Net Profit Of $76 Million
Magnus Bocker, CEO of Singapore Exchange, said, “We recorded third-quarter net profit of $76 million on revenue of $166 million following a challenging quarter for our securities business. For the nine-month period, revenue was unchanged at $514 million while net profit was 2% lower at $243 million.
Deutsche Börse picks trading exec for Bombay mix
Deutsche Börse has hired senior exchange executive Javier Tordable to lead its cooperation with the Bombay Stock Exchange as it continues efforts to expand in Asia.
Taiwan Bourse Chief Seeks Global Trading Links via Singapore
Taiwan’s stock exchange is seeking to create a cross-border stock trading platform with Singapore by this year to boost overseas access to the island’s listed shares, Chairman Lee Sush-der said in an interview.
Direct Edge Expands Attributed Quote Program
BATS Global Markets’ Direct Edge Exchange is expanding its attributed trading program to allow participating firms to show their order flow as being comprised of retail orders, rather than revealing their identity.
NSE ready to extend currency trading hours; awaits SEBI nod
The largest bourse National Stock Exchange (NSE) today said it is ready to extend trading hours for currency traders and is awaiting a nod from market regulator SEBI.
Hedge Funds & Managed Futures
Be prepared for lower returns, says Jack Bogle
As the Dow Jones industrial average and S&P 500 index flirted with all-time highs on Tuesday, investing legend Jack Bogle told CNBC stocks are a little expensive at current levels—but investors should brace for lower returns.
Hedge funds still love Japan despite losses
Hedge fund managers are still bullish on Japan despite a painful start to the year. After large gains in 2013, the Nikkei 225 stock index is down nearly 11 percent this year. The Japanese yen, which many investors were betting against, has also appreciated almost 3 percent versus the U.S. dollar.
Hedge fund manager Ackman promised ex-Herbalife exec as much as $3.6 mln -report
Hedge fund manager William Ackman secretly promised a former Herbalife executive-turned-whistleblower as much as $3.6 million in case he lost the job he took after leaving Herbalife, ABC News reported on Tuesday on its website.
Ex-Soros Team Starts Asia Hedge Fund Backed By HS Group
by Clayton Browne – ValueWalk
New Asia-based hedge fund Pleiad Investment Advisers will begin operations with $150 million in capital
Ninety per cent of hedge funds using social media, says Agecroft Partners
The use of social media has increased significantly within the hedge fund industry over the past couple of years, according to a paper from Agecroft Partners.
Einhorn Shorting Tech as ‘Cool Kid’ Stocks Show Bubble
Greenlight Capital Inc., the $10.3 billion hedge-fund firm run by David Einhorn, said it was betting against a group of technology stocks as evidence grows of a bubble.
Indexes & Products
Exclusive: CIBC, buyout firms circle Russell Investments – sources
Canadian Imperial Bank of Commerce (CM.TO) (CIBC), the fifth largest bank in Canada, and two private equity consortia are exploring offers for global asset manager Russell Investments, according to several people familiar with the matter.
JSE chooses integrated clearing technology from Cinnober
The JSE, among the world’s top 20 exchanges in terms of market capitalization, currently uses different clearing technologies for different asset classes. The new multi-asset platform, based on Cinnober’s high-performance and well-proven TRADExpress RealTime Clearing system , will phase out the current clearing technology at the JSE in support of the JSE’s strategic focus on integrated clearing and settlement.
Quincy Extreme Data Now Fastest To London And Frankfurt – Aurora-Slough LD4 In 35.39 Ms And Aurora-Frankfurt In 37.79 Ms – More UK Colos To Follow
Quincy Data, LLC announced that its Quincy Extreme Data service is distributing Aurora-sourced data to London’s Slough-LD4 data center in 35.39 milliseconds (ms) and to Frankfurt’s FR2 data center in 37.79 ms. Both routes offer the lowest known latency for any commercially available service and will receive substantial upgrades over the next several months to ensure that the QED service remains the fastest.
FINCAD Releases F3 Platform for Enterprise Valuation and Risk
FINCAD, the leading provider of OTC derivatives pricing and risk management solutions, today announced the availability of its F3 Platform, designed for enterprise valuation and risk analytics solutions. Overcoming the silos of information that plague the financial industry, F3 Platform provides enterprise-wide views of risk, margin, and collateral requirements. With this advanced platform, organizations can effectively manage risk and comply with new regulations, while optimizing trading venues and capitalizing on investment opportunities.
HK regulator reprimands, fines RBS over emerging-markets rates trades
The SFC said in a statement RBS failed to detect and prevent unauthorized trades in its emerging markets rates business in the city in 2011, following the discovery of unauthorized trades by former trader Shirlina Tsang.
Environmental & Energy
Navy Celebrates Earth Day through “Global Reach, Local Action”
Navy commands across the globe are celebrating Earth Day today and throughout the month of April by participating in local activities that showcase their ongoing commitment to the environment as they support the Navy’s national security mission.
Maximpact Deals Invites New Impact and Sustainability Projects to Its Portal
Bellevue Business Journal
Maximpact, a philanthropic, impact-investing network, invites new registrants in the impact and sustainability sectors to list projects using its global reaching, deal-listing portal.
Dubai Index Climbs The 5,000 Peak as MSCI Upgrade Looms
Dubai’s stock market climbed the 5,000 peak this week – its highest level since the global financial crisis in 2008 crippled the emirate’s economy – leaving both its key real estate and equity markets in tatters.