Flex Time: Object Trading’s Dan Hubscher on Shedding Operational Complexity
From a flurry of new regulations and rapid changes in market structure to constant updates from exchanges, simple, flexible infrastructure has never been more important in the trading world. John Lothian News spoke with Dan Hubscher of Object Trading on the topic of shedding operational complexity and what they found from their most recent research.
New Subscription Prices for 2014
By John J. Lothian
We are raising the price of an individual subscription of the John Lothian Newsletter to $150 per year, a $10 jump from the last couple of years. We are also raising the enterprise subscription price by $10 to $100 per reader per year for all firms that are not John Lothian News sponsors. We are also raising prices for sponsorships of our newsletters, which have gained greater traffic as a result of the launch of JohnLothianNews.com and the new front pages on MarketsWiki and MarketsReformWiki.
(To read the rest of the article, visit the John Lothian Newsletter blog at jlne.ws/1hlxkfv
New Subscription Policy for New Readers in 2014
By John J. Lothian
It is time for a new subscription format for 2014. In 2003 when I started charging a fee to subscribers of the John Lothian Newsletter, I introduced the concept of voluntary pay subscriptions. Since then the John Lothian Newsletter has been offered in this unusual manner. But what exactly does “voluntary pay” mean?
(To read the rest of the article, visit the John Lothian Newsletter blog at jlne.ws/Kmd7b5 )
I Still Believe in the Futures Industry Model
By John J. Lothian
I still believe in the futures industry segregated funds model. In fact as strange as it may seem, my own experience, or that of my former firm with Refco and MF Global, has only strengthened my belief in the structure and wisdom of the model. However, there is a flaw to the model which has weakened faith in the futures markets and the model. That flaw is the lack of stewardship from our regulators and bankers and the lack of what I will call a customer fund dislocation scheme.
(To read the rest of the essay, visit the John Lothian Newsletter blog at jlne.ws/KmeKWc )
CFTC Loses a Chairman, Gains a Comment Period
Andrew Ackerman – MoneyBeat – WSJ
U.S. commodity regulators took the unusual step of seeking public comment Friday on a November staff “advisory” aimed at expanding the reach of their rules overseas.
***DA: Looks like an attempt to right some of the wrongs that led to ISDA/SIFMA’s recent lawsuit, and in response to some of Commissioner O’Malia’s criticisms regarding proper procedure. Too little, too late if you ask me.
Big Board Bests Nasdaq in Tech IPOs
For the first time in at least 19 years, the New York Stock Exchange in 2013 landed more initial public offerings of technology and Internet companies than the Nasdaq Stock Market, the home of Apple Inc., Google Inc. and Amazon.com Inc.
***** I first learned this fact from a Facebook post.
Long-Term Thinking: 1800-2013
Morgan Housel | Motley Fool
Long-Term Thinking lived an illustrious life since the start of the Industrial Revolution, when for the first time, people could think about more than their next meal. But poor incentives and the rise of 24/7 media chipped away at his health. The final blow came Monday, when a trader on CNBC warned that a 10% market pullback — which has occurred on average every 11 months over the last century — could be “devastating” for investors.
***** The conclusion of this excellent article is to turn off CNBC. What a great New Year’s resolution.
High-Speed Traders Form Trade Group to Press Case
High-frequency traders are going on defense. To counter what they say is the industry’s unfair reputation as a disruptive force in the markets, a group of high-frequency trading firms have hired a pair of heavy-hitting political strategists and formed a trade group to press their case with regulators and lawmakers.
***** Former Allston Trading’s Peter Nabicht is the group’s new spokesman.
Gary DeWaal’s Bridging the Week: December 23, 2013 to January 3 and 6, 2014 (Recordkeeping and Soft Dollar Violations; The Wolf of Wall Street)
Santa Claus may have left presents for many during the holiday season, but a few financial services’ industry registrants received only coal in their stockings during the past two weeks. These matters, a flurry of year-end no action letters issued by the US Commodity Futures Trading Commission, and helpful advisories issued by a number of regulatory entities highlight the first Bridging the Week for 2014.
Finding Our Differences: FOA’s Anthony Belchambers Says Regulation Has Long Way to Go
European regulatory changes continue to move forward, but there are significant differences between the US and EU, and also between the European states themselves. The Futures & Options Association’s Anthony Belchambers spoke with John Lothian News about where Europe stands in the rulemaking process and the challenges that still remain. Belchambers said that the issue of extraterritoriality continues to concern EU regulators and market participants.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
46,318,855 pages viewed, 7,733 articles, 171,424 edits
Stuart Sloan and Catherine Lester join LME
The London Metal Exchange (LME) is pleased to announce two appointments to its senior management team. Stuart Sloan and Catherine Lester have joined the LME as Chief Operating Officer and Head of Strategy, and Chief Financial Officer respectively.
U.S. regulators temper overseas swaps guidance as lawsuit looms
U.S. regulators said Friday they will provide temporary relief to swap dealers affected by a November staff memo that expanded the scope of their power to regulate derivatives overseas.
U.K. Struggles in Fight Against Insider Trading
David Enrich and Harriet Agnew – WSJ.com
Carl Linderum was getting ready for work one morning at his London home when he heard a pounding on his door. He figured the group of men outside were employees of his gas provider, there to badger him over a disputed bill.
JPMorgan Chase Nears a $2 Billion Deal in a Case Tied to Madoff
JESSICA SILVER-GREENBERG and BEN PROTESS – NYTimes.com
Working through a long list of legal problems, JPMorgan Chase is starting the new year with another steep payout to the government.
It will be a big year for: the trading and tech chiefs
Anna Irrera and Michelle Price – Financial News
Financial News profiles the executives who will shape the agenda in the trading industry this year.
Two Who Got 2013 Right See 2014 as Much the Same
JAMES B. STEWART – NYTimes.com
After a banner year for stocks and a rocky one for bonds, market forecasters are remarkably consistent in their forecasts for 2014: more of the same.
Big changes ahead for financial benchmarks
Michelle Price – Financial News
Since the Libor scandal first erupted in June 2012, policymakers have been scrambling to restore confidence in the global benchmark industry.
Who Needs Bitcoin? Venezuela Has Its ‘Sucre’
Satoshi Nakamoto and Hugo Chávez had at least one thing in common: Both created virtual currencies whose popularity is growing but which are also raising alarms among law-enforcement officials.
With Crisis Behind Him, S.E.C.’s Co-Chief of Enforcement Is Leaving
BEN PROTESS – NYTimes.com
The Wall Street regulator who oversaw and closed some of the most prominent investigations into the financial crisis announced his departure from the Securities and Exchange Commission on Friday, a move that could portend a subtle shift in the agency’s enforcement agenda.
Dealers braced for reporting revolution
Tim Cave – Financial News
The first three months of the year are busy ones for investment banks, trading is brisk and it’s traditionally a good time for initial public offerings. But this year, it could be more hectic than ever, as dealers grapple with the implementation of a key piece of post-crisis reform.
New rules keep fund managers on their toes
Sarah Krouse – Financial News
European fund managers face a dual challenge in 2014 of implementing regulations and keeping a watch on rules that are still being crafted.
CFTC Acting Chairman Mark Wetjen Names Joseph Cisewski And Scott Reinhart As Co-Chiefs Of Staff And Co-Chief Operating Officers
Swaps regulator Gensler: banker turned Wall Street scourge
As Gary Gensler wraps up his last day as the head of the U.S. Commodity Futures Trading Commission on Friday, he leaves behind a long list of ardent admirers of his tough-nosed reforms and passionate critics who believe he has injured well-functioning markets.
One Last Note To CFTC Staff From CFTC Chairman Gary Gensler
A Roadblock to Brawny Bank Reform
GRETCHEN MORGENSON – NYTimes.com
Regulators made some real progress last year attacking the risks of too-big-to-fail banks. The Volcker Rule and other Dodd-Frank reforms were completed, and, perhaps even more important, three big regulators devised a proposal for tougher capital rules intended to ensure that banks would never require a government bailout when their risky bets went bad.
Enforcement Co-Director George Canellos to Leave SEC
CSA Announces Service Transition Cutover Date for Information Management Services [CSA]
Exchanges & Trading Facilities
CME Group Volume Averaged 10.9 Million Contracts per Day in December 2013, Up 13 Percent from December 2012
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that December 2013 volume averaged 10.9 million contracts per day, up 13 percent compared with December 2012. Total volume for December 2013 was more than 228 million contracts, of which 85 percent was traded electronically. Full-year volume averaged 12.5 million contracts, up 10 percent from full-year 2012.
ICE Reports Record Futures Volume In 2013; December ADV Up 16%
IntercontinentalExchange Group (NYSE:ICE), the leading global network of exchanges and clearing houses, today reported increases in daily futures volume for December 2013, the fourth quarter of 2013 and the full year of 2013. ICE’s December 2013 and fourth quarter of 2013 average daily volume (ADV) increased 16% and 6% compared toDecember 2012 and the fourth quarter of 2012, respectively. Total contract volume in 2013 reached a record 852 million contracts, up 1% from 2012.
Record Volume in 2013: VIX Futures Up 67%, and SPX Options Up 19%
Matt Moran | VIX Views
Average daily volume for three key index contracts – options on the S&P 500 Index (SPX), and futures and options on the CBOE Volatility Index (VIX) — all rose to new record levels in 2013.
SGX derivatives trading reaches new highs in 2013
Singapore Exchange (SGX) today said derivatives trading reached new highs in 2013. It also saw growth in clearing activities while securities trading declined.
Tokyo Financial Exchange Trading Volume In December 2013
The trading volume of Three-month Euroyen futures in December was 334,588 ( +28.9% MoM / +1.1% YoY) and its average daily volume was 16,729
EEX Trading Results In December
Eurex confirms plan to buy 5% stake in Taifex for $47m
Philip Stafford in London – FT.com
Eurex said on Friday it would pay $47m for the 5 per cent stake it plans to take in Taifex, a purchase that deepens its ties with the Taiwanese futures exchange as Europe’s largest futures bourse builds its presence in Asia.
How Will a Nasdaq Dark Pool For Treasuries Work?
Phil Albinus – Traders Magazine Online News
The exchange plans to launch a new dark pool for US treasuries in 2014. Traders spoke with Michael Chuang, CEO of fixed income IT provider iTB Holdings and a former fixed income trader himself, for the implications of Nasdaq’s move into the dark pool for fixed income space.
Program Trading Averaged 24.9 Percent Of NYSE Volume During Dec. 23-27
TOM MTF Statistics Week 1 – 31% Market Share
Hedge Funds & Managed Futures
Small is beautiful for world’s big mutual funds
Robin Wigglesworth and Stephen Foley – FT.com
Small was beautiful for the world’s biggest mutual funds last year. While emerging markets and bonds wrongfooted some big-name money managers, equity funds – especially those dedicated to small companies – enjoyed a sterling 2013.
Pimco Total Return has record $41.1 billion outflow in 2013: Morningstar
The Pimco Total Return Fund, the world’s largest bond fund, saw its assets sink by a record $41.1 billion last year after a mistaken bet on U.S. Treasuries resulted in the fund’s worst annual performance in nearly two decades.
George Goodman, Who Demystified the World of Money, Dies at 83
DOUGLAS MARTIN – NYTimes.com
George J. W. Goodman, who demystified financial complexities in best-selling books and on a long-running public television program under the name of one of history’s most famous economists, Adam Smith, died on Friday in Miami. He was 83.
Winklevoss Twins Backing New Hedge Fund
The Winklevoss twins are rowing their way into hedge funds. Cameron and Tyler Winklevoss, the 32-year-old brothers famous for their legal tangle with Mark Zuckerberg and Facebook Inc., are backing a new hedge fund run by fellow Harvard College graduate Aalap Mahadevia, according to people with direct knowledge of the plans.
Billionaire Dan Och’s Hedge Fund Firm Is Doing Great As His Funds Trail The Market
For billionaire Daniel Och’s hedge fund firm, Och-Ziff Capital Management, 2013 was a pretty good year. The publicly-traded hedge fund firm saw its assets under management balloon to $40.6 billion from $31.9 billion a year ago. Helped by rich performance fees, an increase in assets under management, and a decrease in reorganization costs, in the first nine months of 2013, Och-Ziff Capital Management earned $470.6 million after losing $881.9 million in the first nine months of 2012.
Marshall Wace partner Simon Goodman departs
Anna Irrera – Financial News
A partner who played a central role in developing Marshall Wace’s renowned proprietary trading platform has left the hedge fund firm, according to company filings.
No bonanza yet for big funds from new rules to cut risk
If pension funds, insurers and sovereign wealth funds were hoping to cash in on lending “high quality” assets to those scrambling to meet tougher collateral requirements in 2014, they are likely to be disappointed.
Smart enough to avoid a zombie bite?
Dan McCrum | FT Alphaville
Check out a moment of honesty from sartorial legend and hedge fund veteran Michael Novogratz of Fortress. One paragraph from Institutional Investor captures both the central contradiction of hedge funds and the misguided attempt by institutions to pretend it doesn’t exist
Equities boost UK council pension schemes
Mike Foster – Financial News
UK local authority pension schemes returned 15% last year, as big bets on equities paid off, but corporate schemes struggled amid growing deficits, according to data from State Street Investment Analytics and consultancy Mercer.
Guggenheim Partners wins bond investors, looks to Europe next
Financial services firm Guggenheim Partners has attracted attention recently for its involvement in high profile deals: it led a group of investors in buying the Los Angeles Dodgers baseball team and helped engineer Verizon’s $130 billion acquisition of Verizon Wireless.
Fund managers begin to pass on overly hyped flotations
Richard Partington – Financial News
Some equity fund managers are choosing to skip large initial public offerings because of heavy oversubscription, ahead of an expected surge in new issuance in the coming months.
Searching high and low for a good return
Investors have been on something of a treasure hunt for returns in the past year. Financial News asks where the hidden gems lie.
Banks & Brokers
Swiss National Bank Takes Hefty Gold Hit
Katie Martin – MoneyBeat – WSJ
The Swiss National Bank—effectively one of Europe’s premier investment houses as well as a Very Serious Central Bank–offered a reminder Monday that it’s not only wild-eyed gold bugs that have been stung by the rout in the shiny stuff.
Watchdog slams Deutsche Bank for Libor probe response: report
German banking watchdog BaFin criticized Deutsche Bank’s management for the way it responded to a probe into manipulation of the Libor benchmark interest rate, according to German magazine Der Spiegel.
It will be a big year for: the investment bankers
Matt Turner and Richard Partington – Financial News
Financial News profiles five executives who will shape the agenda for investment banking this year
Clearing & Settlement
OTC Clear Welcomes The Bank of East Asia as Clearing Member
OTC Clearing Hong Kong Limited (OTC Clear), a subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), today (Monday) welcomes The Bank of East Asia, Limited (BEA) as a clearing member.
Indexes & Products
Leveraged ETFs Create Demand for Tax Analysis Software
Ivy Schmerken – Wall Street & Technology
The growing popularity of “leveraged ETFs” among mutual funds is causing fund administrators to look for software that can automate the tax analysis rather than rely on public audit firms.
Periodic Table of ETFs: What Popped and What Dropped in 2013
Stoyan Bojinov | ETF Database
For most investors, 2013 was a very good year; stocks charged steadily ahead and a few bumps in the road did very little to derail the impressive momentum. The predictors of “doom and gloom” who foresaw a big decline in equities likely ended up eating big losses, as did commodity and bond bulls. Before turning our attention firmly to 2014, we’re offering up one more visual analysis of 2013, showing what worked and what didn’t for the past year.
Former SAC manager resolute as trial poised to start
Kara Scannell in New York – FT.com
When prosecutors open their trial this week against Mathew Martoma, a former SAC Capital portfolio manager accused of insider trading, the invisible presence in the courtroom will be Steven Cohen.
Is Hedge Fund Trader Julian Rifat’s Legal Limbo About to End?
David Enrich – MoneyBeat – WSJ
Remember Julian Rifat? In March 2010, Mr. Rifat was one of six men arrested by agents from the U.K.’s Financial Services Authority and the Serious Organised Crime Agency in a series of dawn raids across Greater London.
Detroit manager sought SEC probe of banks over interest rate swaps
Detroit asked a U.S. regulator to consider bringing charges against two banks for costly interest-rate swaps that factored in the city’s record-setting municipal bankruptcy case, Detroit Emergency Manager Kevyn Orr testified on Friday.
NY Fed moves to dismiss suit brought by former Goldman examiner | Reuters
The New York Federal Reserve Bank filed a motion on Friday to dismiss a lawsuit brought by a former employee who claimed she was fired after refusing to alter a critical examination of Goldman Sachs Group Inc.
Environmental & Energy
Quebec-California partnership blazes trail for carbon trading
The Globe and Mail
The province of Quebec formally linked its cap-and-trade system with California’s market on Thursday, as the two jurisdictions plow ahead with ambitious plans to put an escalating price on carbon in order to reduce emissions.
Carbon trading is booming in North America, no thanks to U.S. or Canadian governments
In most of the carbon-trading world, it has been getting cheaper in recent years to buy the rights to pollute the atmosphere with climate-changing carbon dioxide. That’s largely because recession-afflicted Europe is awash with too many carbon allowances for its trading scheme to have any real bite, and because demand for U.N.-issued allowances has crashed along with hopes of a meaningful international climate agreement to replace the Kyoto Protocol.
U.S. EPA unlikely to step up fracking enforcement efforts for now -analysts
Federal regulators are unlikely to step up enforcement of potential water contamination cases linked to natural gas drilling – despite new concerns about water safety – given a lack of political will and limited resources to pursue such cases, analysts said.
China’s Cabinet Drafts Shadow-Banking Plan
China’s cabinet has drafted a new framework for beefing up regulation of shadow-banking activities, in a sign that the Chinese leadership is seeking to slow the growth of debt and bolster the country’s economic stability.
PSE to pursue merger of stock, capital markets
Jenniffer B. Austria – Manila Standard Today
The Philippine Stock Exchange said it will pursue talks to merge the fixed-income and stock markets, despite a pending legal case.
Era of renminbi dawns as China’s influence grows
Patrick Zweifel – FT.com
“The Chinese currency, the renminbi, is not terribly well known at the moment, but over my lifetime it’s going to become almost as familiar as the US dollar.” So said George Osborne during a recent visit to Shanghai.
New year’s Message From Japan Exchange Group CEO Saito
New Year Speech By Liu Xingqiang, Dalian Commodity Exchange Party Chief, Chairman
2013 Dalian Commodity Exchange Self-Discipline And Supervision Work Report
Jakarta Stock Exchange Attempts to Suppress Volatility
Live Trading News
There is a new wave of anti-volatility regulations in Indonesia, a move that will hurt the profitability of market participants and may result in less local and foreign interest in the exchange.
Dubai Mercantile Exchange Delivers Best Ever Performance With A Record 36 % Increase In 2013 Trading Volumes
Marubeni Corporation becomes DME member
Marubeni Corporation has today become the latest major Asian energy company to become a Trading Member of the DME, the Middle East’s premier international energy futures and commodities exchange.
Board Meeting Of MCX-SX
Tehran Stock Exchange Weekly Digest – 1 January 2014