A Bit of Boca
Next week, the John Lothian Newsletter will be published from our remote headquarters in Boca Raton, Florida as we attend the 40th annual FIA International Futures Industry Conference. In addition to our daily “Boca Bits & Pieces” column, we will be filming a repeat of last year’s hit, our Exchange Leader video series, as well as a new video series on the state of margin and capital requirements. Between video and print interviews and other assorted meetings, at last count there are 41 items on our calendar over two and a half days. And that doesn’t even count the panels, nor the impromptu meetings from the early morning on the exhibit floor to late light at Luna Bar.
Though our dance cards are nearly full, we still have a few bits of time left if you would like to schedule a meeting. Interested parties should send an email to me at email@example.com
We will also be live tweeting during the conference, using the #FIABOCA hashtag.
In non-Boca news, just as we were hitting the “send” button this morning it was announced that, as of March 18, Apple will be replacing AT&T in the Dow Jones Industrial Average. The torch, or rather the flashlight app, has been passed.
International Women’s Day
Euronext celebrates International Women’s Day 2015 by hosting events across all its markets.
The 2015 celebrations at Euronext illustrate the theme “Make it Happen”, encouraging effective action for advancing and recognising women in the finance industry.
***DA: Below is a photo taken this morning at Euronext Brussels, as a group of ladies rings the opening bell, led by Arlene McCarthy, MEP and Vice President of the Committee on Economic and Monetary Affairs.
BAML departure fuels talk of SGX switch
Jeremy Grant, FT
Loh Boon Chye, Bank of America Merrill Lynch’s Singapore-based top banker in Southeast Asia, has resigned after saying he wanted to “take a break” before deciding what to do next.
***** The talented Mr. Jeremy Grant has given us something to speculate on as we head to Boca Raton for the FIA International Conference. Last year Singapore was the hot topic. We will see if it stays there considering the impending departure of Magnus Bocker.
NFA takes emergency enforcement action against Burnet, Texas firm McElhannon Group, Inc. and its principal, Philip Mack Worley
National Futures Association (NFA) announced today that it has taken an emergency enforcement action against McElhannon Group, Inc. (McElhannon), an NFA Member commodity trading advisor (CTA) located in Burnet, Texas, and Philip Mack Worley (Worley), a principal and associated person (AP) of McElhannon.
***** I did not know that lying in Texas was against the law.
Why Ken Griffin hated one of his first jobs
By Shia Kapos, Crain’s Chicago Business
One of Ken Griffin’s first jobs was in software development at a large company while he was in college. Though he liked the work, it went unrecognized. The corporate culture was stifling, and he vowed to take a different path. “It was compartmentalized. I was in one office of a global multinational, but my work wasn’t of interest to anyone outside that office,” he recalls. “It was a defining moment in my youth when I realized I wanted to be part of a team that liked to collaborate and work together.”…
***** It is a little-known fact that Ken Griffin’s first job was as the “Bratwurst” in the sausage races at Miller Park in Milwaukee during the Brewer’s game. He is right, to be frank, about it being the wurst job. See Ken’s Record Setting Klement’s Sausage Race at Miller Park
Tokyo looks at legalising noisy children; Tokyo’s children could find their voice if noise ban is reformed
Robin Harding in Tokyo, FT
By law they should be seen and not heard, but Tokyo children may soon find their voices as the city rethinks rules demanding library-like hush in residential areas.
***** I think I have found a way to make the CME trading floor louder.
The Pigeon King and the Ponzi Scheme That Shook Canada
By Jon Mooallem, NY Times
1. Heavy is the head that wears the crown
The Pigeon King delivered his closing statement to the jury dressed in his only suit. His name was Arlan Galbraith, and he was representing himself. He had abruptly fired his lawyer nearly two years earlier, during the long lead up to the trial, and then ignored the judges who advised him to hire another. He seemed adrift but also supremely confident. One of his former employees, who testified for the prosecution, speculated that he must have watched too much “Law & Order”: “I think he sat down one day and said, ‘Yeah, I can do this.’ “
***** Get ready for a long and interesting read.
MarketsWiki Page of the Day
The Shanghai-Hong Kong Stock Connect
MarketsWiki Recent Updates
Companies, Organizations and Groups
59,493,118 pages viewed, 8,157 articles, 190,204 edits
LSE hints at futures exchange launch
Futures & Options World
The London Stock Exchange has signed up to use the portfolio margining service announced by its clearing subsidiary LCH.Clearnet, sending its strongest hint yet that the British group is finally about to unveil its new futures exchange. The LSE does not currently support interest rate futures trading so Thursday’s announcement that it plans to use LCH’s planned interest rates futures clearing service is a clear indication it will move into rates trading in the near future.
LSE looks to the futures with open access offer
The London Stock Exchange is paving the way to launching a full market in futures instruments and derivatives that would compete head-on with Liffe, the London financial futures market. LCH.Clearnet, the clearing service that is 55 per cent owned by the LSE, is to launch an open access portfolio margining service
Yet Another Financial Rigging Scandal In The City Of London
By Tim Worstall, Forbes
They’re certainly coming thick and fast, aren’t they, accusations and findings of rate and market rigging in the financial markets? We’ve had foreign exchange, precious metals, at least two rigging scandals about Libor and here comes the next one. An investigation into whether the banks rigged the liquidity auctions back at the heart of the financial crisis itself.
How banks may have rigged the Bank of England scheme built to keep them alive; In 2007, the Bank of England introduced a liquidity programme to help the banks. The SFO is now investigating whether this was manipulated
By James Titcomb, The Telegraph
On Thursday September 13, 2007, 13 men and women were called to an emergency meeting at the Bank of England. The situation was delicate: interbank borrowing rates had shot up to a nine-year high, and the day before Northern Rock had applied for a level of support from the Bank of England that had not been seen for more than 30 years.
Watchdog’s Hunt Is Short on ‘Wolves’; Finra program hasn’t barred any brokers tied to Stratton Oakmont from ‘Wolf of Wall Street’ fame
By Jean Eaglesham And Rob Barry – WSJ
Christopher Veale started his career as a stockbroker at the notorious boiler room Stratton Oakmont Inc. depicted in the film “The Wolf of Wall Street.” In the 20 years since then, he has worked for 18 firms and racked up 25 red flags on his disciplinary record.
Fed tests point to $500bn risk for banks
Barney Jopson in Washington and Ben McLannahan in New York, FT
The biggest US banks would suffer combined losses of almost $500bn in the event of a financial crisis, according to stress tests carried out by the Federal Reserve, which rules next week on how much capital banks can return to shareholders.
China’s Stock Connect Falls Short on Bets Against Shares; Industry officials say short selling rules make it impossible to bet against stocks
By Gregor Stuart Hunter – WSJ
A week after China allowed foreign investors to bet against shares on the mainland, no one had taken up the challenge.
HKEx pins growth hopes on China trading link, to add new products
By Lawrence White, Reuters
2014 net profit of HK$5.17 billion
Net profit in line with expectations
Muted stock connect trading capped growth (Adds CEO comments, new products for the stock connect program)
Hong Kong’s stock exchange operator is betting that rising volumes from the trading link with China and the addition of new products such as equity derivatives and commodities to it will boost revenues despite the scheme’s subdued start.
Schwab’s Service for Investors Seeking Thrifty Advice Raises Eyebrows
by TARA SIEGEL BERNARD – NY Times
Charles Schwab is poised to introduce an investment service for consumers who crave low-cost personalized advice but do not have a lot of money to invest. And it is dangling an attractive lure in front of investors, in a way that its competitors have not: It says its service is free.
The currency wars have begun
By Joseph Adinolfi, MarketWatch
Central banks around the globe are rushing to ease monetary policy as looming deflation and still-weak commodity prices weigh on growth expectations.
Virtu hopes time can heal HFT furore
Philip Stafford and Arash Massoudi in London and Anna Nicolaou in New York, FT
For a proprietary trading firm that deals in microseconds, Virtu Financial is hoping the passage of time can work in its favour.
George Osborne admits RBS error and calls for early sale
George Parker and Laura Noonan, FT
George Osborne says he made a mistake in not radically restructuring state-controlled Royal Bank of Scotland in 2010, but says he would now like to proceed “as quickly as we can to get rid of it” after the general election.
Why RIA Advocates Still Fear FINRA Oversight
by Kenneth Corbin, Financial Planning
Even after repeated assurances from FINRA that it is no longer actively pursuing regulatory authority over investment advisors, some advisor advocates aren’t buying it.
Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
- NYSE Arca: Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 1, to Amend Rule 6.60 and to Adopt Rule 6.61,Which was Previously Reserved, to Provide Price Protection for Market Maker Quotes (Release No. 34-74441; File No. SR-NYSEArca-2014-150; March 4, 2015)
- NYSEMKT: Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 1, to Amend Rule 967NY and to Adopt Rule 967.1NY to Provide Price Protection for Market Maker Quotes (Release No. 34-74440; File No. SR-NYSEMKT-2014-116; March 4, 2015)
Isda calls for changes to derivatives transparency rules
By James Rundle, Financial News
Derivative markets run the risk of a liquidity shortage if impending European regulations are not refined, a leading trade body has warned.
Exchanges & Trading Facilities
LSE opens LCH door to ICE, Eurex, CME
Futures & Options World
The London Stock Exchange has underlined its commitment to “open access” by opening the door to its largest rivals and hinted again at its imminent futures exchange launch. Speaking after he announced 2014 revenue up a quarter on Thursday, LSE chief Xavier Rolet told FOW: “Our commitment to open access means portfolio margining is open to everyone. ICE, Eurex, CME or any other large exchange can apply to become customers.”
Euronext emerges as part of French HFT probe
By Tim Cave, Financial News
An investigation into one of Europe’s largest high-frequency trading firms appears to have spread to pan-European exchange operator Euronext.
Announcement of Preliminary results for the period ended 31 December 2014
London Stock Exchange
Unless stated otherwise, all figures in the highlights below relate to performance for 12 months to 31 December 2014 and comparisons with the prior 12 month period
NYSE AMEX OPTIONS, NYSE ARCA OPTIONS
As previously announced, NYSE Amex Options and NYSE Arca Options have each been approved to release a Price Protection Filter applicable to Market Maker quotes. The Filter is currently available for testing in Enhanced Cert and will be live in production on a date to be announced, which will be no earlier than April 5, 2015.
- Limit Up/Limit Down Halts
- NYSE Additions to the List of Traded Bonds
- NYSE Redemption – Full Call
CME Group Notices
- UPDATE Credit Event Advisory ? Auction Results for RadioShack Corporation Credit Event 05 Mar 2015
- Performance Bond Requirements: Crude Oil, Electricity, Equity Index, NGLs, and Refined Products Outrights; Interest Rates Intra-Commodity Spread Charges; Refined Products Inter-Commodity Spread Credits; FX Volatility Scans – March 6, 2015 05 Mar 2015
- Interest charge for Euro (EUR) deposits – March 9, 2015 05 Mar 2015
- Interest charge for Swedish Krona (SEK) deposits – March 16, 2015 05 Mar 2015
- Application for Ethanol Regularity
Annual Supervision-Related Reporting Pursuant to CBOE/C2 Rules 4.24 and 9.8
Publication of Expected Opening Price/Size and Imbalance Information on Volatility Index Options and Futures Settlement Days
CME Delivers Record Volumes For February Driven By Interest Rate Derivatives
Trefis Team, Forbes
Global exchange operator CME Group recently reported its monthly trading metrics for the month of February. After a solid end to 2014 with high trade volumes in Q4, CME has sustained growth in its trading metrics in 2015 thus far. CME’s trade volumes in Q4 stood at 14.8 million contracts traded per day, with October volumes (17.6 million contracts per day) contributing significantly to the high quarterly average. As a result, CME witnessed a 24% annual growth in clearing and transaction fee revenues to $713 million in the December quarter. The growth spree has continued in Q1’15 thus far, with combined volumes in January and February averaging 15.7 million contracts per day, respectively, which is about 17% higher than the comparable prior year period. Interest rate derivatives and energy derivatives drove much of the growth in these two months. Below we take a look at CME’s February performance across key asset classes.
ASX Consults On Further Changes To Guidance Note On Continuous Disclosure
ASX has today published a consultation paper seeking comments from listed entities and other stakeholders on proposed changes to ASX Listing Rules Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 – 3.1B.
TMX Group Equity Financing Statistics – February 2015
TMX Group today announced its financing activity on Toronto Stock Exchange and TSX Venture Exchange for February 2015.
LME paid $2 mln by Rusal after court case; profit up 1 pct
By Eric Onstad and Melanie Burton, Reuters
The London Metal Exchange (LME) was paid around $2 million by Russia’s Rusal after the aluminium producer lost a lawsuit over warehouse reform, the LME’s owner said on Thursday.
Hedge Funds & Managed Futures
BlueCrest Trader Gets Fired for Sharing Information with Steve Cohen’s Firm
by Saijel Kishan, Jesse Westbrook, Bloomberg
BlueCrest Capital Management fired one of its money managers last year after asserting he improperly divulged information about his stock trading to an employee at Steven Cohen’s investment firm, according to three people familiar with the circumstances.
Today’s high valuations affect only the rich
By Cullen Roche
There’s a lot of talk about investment bubbles these days. Today I’ll touch on three instances of bubble fever. Before we begin, it’s helpful to understand what a bubble actually is. A bubble is an environment in which the market price of an asset has deviated from the underlying asset’s fundamentals to an extent that renders the current market price unstable relative to the underlying asset’s ability to deliver the expected result.
Banks & Brokers
Goldman Shareholders’ Hope for Bigger Payout Dashed by Fed
by Michael J Moore, Bloomberg
Goldman Sachs Group Inc.’s cushion of extra capital in the latest Federal Reserve stress test isn’t enough for the firm to match the dividends and share repurchases it rewarded investors with last year.
Putting an End to Broker Cockroaching
by Joshua M Brown, The Reformed Broker
In my 2012 book, Backstage Wall Street, I spend about a quarter of my word count talking about the stuff I’d seen at some of the brokerage firms I’d worked at. I even reprinted the scripts they were teaching us, in the hopes that the reader would be better prepared for the next incoming cold call (yes, they still cold call). Anyway, in a Wall Street Journal story today about some of the worst brokers from the…
Clearing & Settlement
Britain’s FX & clearing industry saved from mandatory relocation to eurozone as ECB loses court case
Europe’s central bank has lost a court case which would have mandated relocation of firms managing financial trades in euros from London to the Eurozone. With London a strong world financial center, this ruling marks a milestone victory which ensures the continued presence of the electronic trading sector in its de facto home
Solving The Mass Payments Problem
Something as complicated as multi-currency, international mass payments seems impossible to simplify. But that’s been the focus of hyperWALLET over the last several months, says its CEO and President Lisa Shields. Shields recently caught up with MPD CEO Karen Webster to offer her perspective on just how hard (or not so hard) it is to simplify mass payments for businesses and global financial services – and the biggest barrier hyperWALLET eliminates for the customers who need them most.
Reforms must be country-tailored – FSB
The Manila Times Online
Members of the Financial Stability Board Regional Consultative Group for Asia (FSB-RCGA) on Thursday stressed the need to consider individual national circumstances in the implementation of agreed international reforms in over-the-counter (OTC) derivatives markets. In a two-day workshop here on OTC derivatives, members of the FSB-RCGA focused on the impact on Asia of the implementation of reforms in the US and Europe, cross-border implementation issues more generally, and market infrastructure that supports derivatives trading in Asia.
PEGAS to offer STP registration service for all gas derivatives contracts
Powernext members will have the opportunity from 19 March to directly register their over-the-counter (OTC) transactions as exchange transactions for subsequent clearing with European Commodity Clearing (ECC).
Kenya bourse chief says banks sign up to clear derivatives
The Nairobi Securities Exchange (NSE.NR) will work with three banks to set up a clearing house for its planned offering of derivative instruments from the second quarter of this year, its chief executive said on Friday.
Indexes & Products
Miners lose out in S&P rebalance
The West Australian
The quarterly rebalance of S&P Dow Jones indices on the Australian sharemarket has highlighted the sagging fortunes of mining companies in a low commodity price environment.
Eurex TA-25 Index Futures: pricing and hedging the Israeli market during U.S. trading hours
Eurex TA-25 Index Futures offer direct exposure to the Israeli market, both during European and U.S. trading hours. In this article, our Chicago based product specialist Axel Vischer investigates what references for pricing and hedging exist during U.S. hours, when the Israeli home market is closed. In particular he reviews dual-listed stocks as well as ETFs as potential references for pricing Eurex TA-25 Index Futures during U.S. hours. His analysis shows to what extent these products or baskets of these products can be used for valuation purposes, but also indicates what information is missing to obtain a robust pricing picture.
New UBS ETF launched on Xetra; ETF provides access with currency hedging to MSCI Canada index
Xetra/Börse Frankfurt: A new equity index fund from the UBS Global Asset Management product family has been tradable on Xetra in Deutsche Börse’s XTF segment since Friday.
SecondMarket Among Bidders in Third Silk Road Bitcoin Auction
by Olga Kharif, Bloomberg
SecondMarket Inc. said it participated in the U.S. government’s third bitcoin auction to dispose of virtual currency seized by authorities when the illicit Silk Road online marketplace was shut down in 2013.
Apple Pay stung in transactions using data stolen from retailers: WSJ
Apple Inc’s (AAPL.O) mobile payment system Apple Pay has been hit by a wave of fraudulent transactions using stolen credit-card data from a spate of breaches at retailers, the Wall Street Journal reported, citing people familiar with the matter
#PreviewTT: Automated Trading
by Andrew Renalds, Product Manager, TT Trade Talk
The new TT platform takes automated trading to a new level. Of course if you follow @Trading_Tech on Twitter, you already know that because we’ve been previewing some of the standout functionality there at #PreviewTT.
MCELHANNON GROUP INC
Notice of Member Responsibility Action and Associate Responsibility Action:
Environmental & Energy
Businesses push to combat California drought
Pilita Clark, Environment Correspondent, FT
General Mills and Coca-Cola, makers of some of the world’s best known snacks and drinks, have called for bold measures to conserve California’s water supplies as the state enters its fourth year of drought.
UN: African Robin Hood tax could fund climate adaptation efforts
By Ed King – RTCC (Responding to Climate Change) .
Africa will be hit hard by climate change even if warming is limited to levels deemed safe by governments, says a new UN report released on Tuesday.
Industrial carbon credits could help Louisiana restore its coastline, report says
By Amy Wold – The New Orleans Advocate
The ability of coastal wetlands to absorb, and retain, carbon dioxide and other greenhouse gases could be a means to help restore parts of Louisiana’s disappearing coastline, according to a new report released Thursday.
PJM analysis of EPA Clean Power Plan puts price on carbon
By Rod Kuckro – E&E
A new analysis of the economic impacts of U.S. EPA’s Clean Power Plan by the nation’s largest grid operator places a price on carbon dioxide emissions and concludes that under nearly 40 compliance scenarios, a regional solution is less costly than a state-by-state approach.
China newspaper suspends leaker of smog film propaganda directive
Gabriel Wildau in Shanghai, FT
A prominent Shanghai newspaper has suspended an employee who leaked a secret propaganda directive instructing media to stop covering the hard-hitting air pollution documentary that has captivated the Chinese internet this week.
Louis Dreyfus ships big U.S. ethanol cargo to Middle East -traders
By Chris Prentice, Reuters
Louis Dreyfus Commodities has shipped a large cargo of U.S. ethanol worth over $17 million to the Middle East, traders said, stoking hopes among U.S. producers of renewed appetite from some buyers overseas.
Presentation by HKEx Chief Executive Charles Li and Group Chief Financial Officer Paul Kennedy on 2014 Final Results Announcement
HKEX Final 2014 Results
As World’s Hottest Economy Unravels, Nigerians Feel the Squeeze; Boko Haram and the oil collapse prove a nasty mix for a rising African power
by Gavin Serkin, Chris Kay, Bloomberg
In a four-day sweep through Nigeria early last year, Aberdeen Asset Management’s Kevin Daly detected trouble. Yes, the country was a rising African power and yes, it had become the world’s fastest-growing major economy, but things weren’t quite right. An Islamic insurgency was heating up in the north and there were early signs that a nasty presidential campaign was brewing.
Securities and Exchange Board of India Notices
- Order in the matter of ICore E-Services Limited and its directors
- PR – Order in the matter of M/s Target People Social Security Scheme Micro Finance Limited
- PR – Order in the matter of M/s Fishermen Development Micro Finance Limited
- PR – Order in respect of Vaibhav Gandhi and Others
- PR – Order in the matter of MCX Biz Solutions and its proprietor Mr. Syed Sadaq
In respect of Promotech Infratech Limited, its Directors Mr.Anukul Maiti, Smt.Kanika Maiti, Mr.Swapan Roy, Mr.Samar Mustafi and Mr.Atanu Halder and its Debenture Trustee Mr.Pulak Roy
In respect of Mega Mould India Limited, its Directors, Mr.Anukul Maiti, Smt.Kanika Maiti and Mr.Swapan Roy and its Debenture Trustees, namely, I Core E-Services Limited and Mega Mould Debenture Trust
- Reliance MSCL India Domestic ETF
JSE Set to Almost Double Spending to Speed Up Settlement System
by Neo Khanyile, Bloomberg
JSE Ltd., which operates Africa’s largest debt and equity markets, plans to increase capital spending by more than 80 percent as it speeds up systems to deliver and pay for securities transactions.