First Read

With a little help from my friends
Jeremie Bacon – Orc Group
I recently completed my first ultra marathon with a good friend: 47 miles and over 18,000 feet of ascent and descent across jeep, single track, and game trails in the mountains near Moab, Utah. It was really hard.

I set out running all alone because I wanted run ‘my race’ and not be an impediment to my friend or other runners. The first seven mile climb up the side of a mountain sapped more leg strength than I could afford to have sapped. Then, I took a wrong turn around mile 10 and got lost for a while. After that I sprained my ankle on steep downhill around mile 12. By the time I hit the aid station at mile 17 I was starting to feel defeated.

As I was preparing to head back out on the trail my friend came running down the path and into the transition zone. He had dirt and blood smeared across his face and knees and looked as bad as I felt! He had somehow managed to trip and fly head first into a large aspen tree. Ouch. Needless to say, after tending to his wounds we decided to team up and run together the rest of the way. So, for the next 30 miles we paced each other through the mountains then down into the desert, where, as the soles of our shoes literally melted off, we finally crossed the finish line.

As I sat in the recovery tent reflecting on what we’d just accomplished I couldn’t help but draw a comparison between the run and the real world. Whether at work or at home, everything is a little easier and – more often than not – turns out a little better when done with a friend.

So, with that, I want to say a special thank you to my new friends at JLN for allowing me the pleasure of working with them on the newsletter this week. It would have been a disaster without your guidance. Thank you as well to Jessica Titlebaum, Orc’s illustrious marketing director for keeping me in line. Thanks also to friends – old and new – across the industry who reached out to share your stories and comments with me this week.

Have a safe and restful weekend!


As Grain Prices Cool Down, Options Volume Heats Up
Doug Ashburn – John Lothian News
When the USDA released its quarterly grain stocks numbers on June 30, corn and soybean markets took a nasty tumble that lasted several days and sent prices to their lowest levels since 2010. When the USDA released its world supply and demand report two weeks later, grain markets eroded further as acreage and yield predictions, combined with current carryover stocks, are pointing to a possible storage glut next year – a phenomenon not seen in the U.S. for a number of years.

As corn and soybean prices retreat from the lofty levels of the past few years – corn down over 50 percent from the 2012 drought and soybeans about 45 percent off the highs, one metric has ticked up considerably – options trading. Volume and open interest on CME Group’s flagship agricultural contracts – corn, wheat and the soy complex (soybeans, meal and oil), are up double digits versus last year. Average daily volume in options on soy products are up over 70 percent year-on-year.

Many of the highest volume days, not surprisingly, coincide with big releases such as planting, acreage and supply and demand reports.

For the rest of the commentary, visit the JLN blog at


World Of Opportunity Chicago 2014: Chris Hehmeyer (Promo)
Our MarketsWiki World of Opportunity Summer Intern Education Series in Chicago is quickly approaching. Chris Hehmeyer, CEO HTG Capital Partners, will be discussing the future of pricing, and how it will be more accessible to the public. For more information on the event and how to register, click here.

Watch the video »


High-Frequency Traders Find Microwaves Suit Their Need for Speed
Jesse Westbrook, Sam Mamudi, Saijel Kishan, and Matthew Leising –
An 800-foot microwave tower in a Belgian cow pasture transmitted messages for the U.S. armed forces during the Cold War. Now it has been enlisted in financial combat, as high-frequency traders fight to shave microseconds off transmission times. Jump Trading, a Chicago-based high-frequency firm, bought the tower last year through a U.K. affiliate called Toren Navo Aansluiting, according to documents filed in the U.K. and Belgium. The company’s name is Dutch for “NATO connection tower.”

***JB: Nothing like an almost-open box to endlessly fascinate the cats…


Thank a High-Frequency Trader for That Dip in Volatility – MoneyBeat
Michael Driscoll – MoneyBeat – WSJ
New data out from Credit Suisse points to some of the salutary effects of high-frequency trading. Researchers at the Swiss bank’s New York offices posit that HFT activity has helped inoculate large-caps from the effects of macroeconomic market stresses.


Clearing houses should be nationalised – expert
Joe Parsons – Futures & Options World
A leading academic has argued the US government should be prepared to nationalise clearing houses in the event that a large provider collapses and threatens to disrupt the market. Clearing houses, or central counterparties (CCPs), have become the centrepiece for the US Dodd-Frank Act to bring transparency to the previously uncleared over-the-counter derivatives market.


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Barclays Thinks Its Dark Pool Is Fine
Matt Levine – Bloomberg
A while back I used a Barclays presentation to teach a lesson in the grammar of financial presentations. That presentation featured this chart of “Sample liquidity landscape by category,” with a bunch of bubbles showing the various sorts of traders that traded on Barclays’s LX dark pool. Except it didn’t show that.

***JB – Everyone thinks their own baby is the cutest.


The Mainframe Innovation Drag
Adam Honoré – Wall Street & Technology
It may be time for a consortium of firms motivated around the objective of eliminating the mainframe. What if every self-clearing firm decided to participate in building a modern, back-office system as an open-source, cloud-based project?

**JK – Could this industry collaborate?


A look back and a look forward with Richard Sandor: Computers and Commodity Trading
Daniel P. Collins – Futures Magazine
Next week Futures will go live with our July/August issue, the 500th issue of Futures dating back to when we launched as Commodities magazine. As part of the 500th issues we take a look back at some of the stories that made Futures the go to source for traders and Futures industry professionals.

***JM: From 1972. Computers haven’t saved the financial world yet, but I’m sure it’ll happen any minute now.


Lead Stories

Nasdaq NLX looks to court buy-side flow
Joe Parsons – Futures & Options World
The chief executive of Nasdaq OMX has said its London-based interest rates platform NLX will target the buy-side in an attempt to boost the liquidity on the nascent exchange. Speaking on an earnings call Bob Greifeld, CEO of Nasdaq OMX, said the exchange will continue to find ways to develop and on-board a broader range of customers on to the fledgling platform.

Lloyds in ‘Late-Stage’ Discussions to Resolve Libor Investigations
CHAD BRAY – Dealbook – NY Times
The British lender Lloyds Banking Group said on Friday that it was in “late-stage” discussions to resolve regulatory inquiries into its role in setting global benchmark interest rates, including the London interbank offered rate, or Libor.

BNP Paribas to pay $80 million for defrauding U.S. Agriculture Department
Julia Edwards – Reuters
The U.S. Justice Department announced on Thursday that a Federal court entered judgment against French bank BNP Paribas for $80 million for defrauding a program designed to encourage American exports.

Morgan Stanley to pay $275 million penalty for misleading RMBS investors
Emily Flitter and Sarah N. Lynch – Reuters
The U.S. Securities and Exchange Commission said on Thursday it had charged Morgan Stanley with misleading investors about two residential mortgage-backed securities it issued before the 2008 financial crisis, and that the bank would pay $275 million to settle the case, according to a press release.

Bank of America to pay $16.6 million to resolve U.S. sanctions violations
Aruna Viswanatha – Reuters
Bank of America Corp’s banking unit agreed to pay $16.6 million to resolve allegations that it processed several hundred transactions for drug traffickers who are subject to U.S. sanctions, the U.S. Treasury Department sa

***JM: Truly, a Cavalcade of Regret for you here on a Friday morning. Any behavioral changes taking place? Well… give ’em more time, maybe…

Argentina to choose default next week: NML Spokesperson
Paul Kilby – Reuters
Argentine representatives have made it clear that the South American country plans to default next week, a spokesperson for Elliott Management subsidiary NML Capital said late Thursday.

The Dodd-Frank Regulatory Marathon – Pacing Toward Effective and Efficient Financial Reform
Larry Thompson – TABB Forum
While Congress may have sprinted to enact Dodd-Frank, over the past 1,460-plus days since the legislation became law, regulators have altered their pace and focused on simply crossing the finish line.


Rules for Money Market Funds Arrive, Finally
Neil Irwin – NY Times
Six years ago, a huge chunk of the financial system nearly imploded, and it took an enormous federal bailout to prevent it from bringing down the whole system. That would be money market mutual funds, which millions of American individuals and businesses use to park $2.6 trillion in savings.

US mistakes give Europe a clearer picture
Jon Watkins – The Trade
The extra time given to European buy-side firms having to comply with central clearing rules could have stemmed from regulators learning lessons from issues with the rollout in the US, according to an industry expert.

Volcker rule forces trading desk rethink
Peter Madigan –
When the US ban on bank proprietary trading was published last year, it was full of hazy concepts, which lawyers said would be fleshed out by supervisors. One has now issued guidance to its staff – and banks are starting to gather data for their first reports – but lawyers say even the basics are unclear.

ESMA Securities And Markets Stakeholder Group Seeks New Member To Represent Users Of Financial Services
The European Securities and Markets Authority (ESMA) is seeking a new member to represent the users of financial services in its Securities and Markets Stakeholder Group (SMSG).

EBA, ESMA And EIOPA Consult On Technical Standards For Financial Conglomerates Risk Concentration And Intra-Group Transactions

UK’s Prudential Regulation Authority Consults On Implementing The Bank Recovery And Resolution Directive

UK’s Financial Conduct Authority: Less Than Five Weeks Remaining For CPP Customers To Claim Compensation On Mis-Sold Card And Identity Protection Insurance

Exchanges & Trading Facilities

Deutsche Börse Net Profit Falls
Ulrike Dauer – WSJ
German exchange operator Deutsche Börse AG net profit fell 6.8% in the second quarter, reflecting subdued trading activity amid continuing low interest rates and a small, planned rise in operating costs.

Deutsche Boerse Half-Yearly Financial Report – Quarter 2/2014

Nasdaq earnings boosted by acquisitions
Nicole Bullock in New York – Financial Times
Nasdaq OMX reported double-digit earnings and revenue growth for the second quarter in spite of low trading volumes as acquisitions helped boost its results.

Global Cloud Xchange Announces Successful Debut In The International Capital Markets
Global Cloud Xchange (GCX Limited, the “Company”), a subsidiary of Reliance Communications, today announced its successful debut in the international capital markets, pricing USD 350 million in 5 non-call 2 years Senior Secured Regulation S / Rule 144A Fixed Rate Notes maturing in 2019 (the “Notes”).

Eris Exchange: July News
7th Quarterly Open Interest Record; Trade Off-The-Run Eris Standards; GlobalCapital Award Nomination; Eris Markets on UBS Neo; Equinix Video Interview; New Chicago Headquarters

NASDAQ Announces Mid-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date July 15, 2014

Hedge Funds & Managed Futures

Calpers Pulls Back From Hedge Funds
Dan Fitzpatrick – WSJ
Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns. Those having second thoughts include officials at the largest public pension fund in the U.S., the California Public Employees’ Retirement System, or Calpers.

Asset Sales Bolster Earnings at K.K.R.
WILLIAM ALDEN – Dealbook – NY Times
The private equity company Kohlberg Kravis Roberts is taking full advantage of robust financial markets by selling its holdings.

Legg Mason to acquire Martin Currie in Q4
Nick Paler – Investment Week
Legg Mason has announced it intends to buy Martin Currie in the last quarter of the year for an undisclosed sum.

Legg Mason’s Acquisition Fills A Major Gap, But A Bigger Problem Still Looms
Halah Touryalai, Forbes Staff – Forbes
With the acquisition of UK-based Martin Currie, Legg Mason’s CEO just gave his sales force what it’s been waiting a very long time for. The Baltimore-based asset management firm said today it bought Martin Currie, a $9.8 billion active international equities manager.

Funds top $200bn at Lazard
Sarah Krouse – Financial News
The asset management arm of Lazard, the independent investment bank best known for its M&A business, toasted the passing of another milestone in the second quarter.

Winners announced in Hedge Funds Review Americas Awards 2014
Hedge Funds Review editorial –
Whitebox named ‘Best overall hedge fund group’ and Millennium wins ‘Hedge fund of the year’. Harvard Management Company is recognised for its ‘Outstanding contribution to the industry’ and Bill Michaelcheck of Mariner Investment Group is honoured with the ‘Lifetime achievement’ award

Attain launches Family of Alternative Investment Funds
Attain Portfolio Advisors, a subsidiary of Attain Capital Management, announces the launch of its new wealth advisor focused Alternative Investment Family of Funds, providing single platform access to several top ranked commodities based alternative investment managers.

MOVES-Schroders appoints analysts to commodities team
Schroders Plc, a global asset management company, appointed James Luke as commodity fund manager and metals analyst and Dravasp Jhabvala as commodity quantitative analyst.

MOVES-Jon Weiss to join hedge fund Candlewood Investment
Former Royal Bank of Scotland Group Plc executive Jon Weiss will join hedge fund Candlewood Investment Group LP, Bloomberg reported, citing a person familiar with the matter.

BUYOUTS-Blackstone leaning toward IPO for residential portfolio
The Blackstone Group will likely exit its large portfolio of single-family rental properties through a public offering, the asset management firm’s Global Head of Real Estate Jonathan Gray said this week.

Parmenion sees profits double as AUM breaks through £1bn
Nick Paler – Investment Week
Platform Parmenion has reported a surge in profits of more than 100% in the last year, after its assets under management rose above £1bn.

Miton posts H1 outflows from Gray’s former multi-asset funds
Laura Dew – Investment Week
Miton saw significant outflows from its multi-asset range in H1, before it handed the funds over to David Jane.

Client relationships drive success of Bridgewater model
Margie Lindsay –
Ray Dalio’s commitment to discovering and sharing how the world works has inspired Bridgewater’s commercial success, a by-product of its commitment to forge deep and lasting client relationships

Banks & Brokers

It’s the Bean-Counters’ Turn to Bash the Banks
Paul J. Davies – MoneyBeat – WSJ
Forebearance is a dirty word – at least among the bean-counters who set accounting standards for roughly half the world’s economy, but not the U.S. and China. Banks will be forced to recognize losses from bad or dubious loans much sooner under a new rule, which could lead them to increase provisions by 50%, according to experts.

New Rule Gives Banks Discretion on Early Loan Write-Downs, but Attracts Skeptics
FLOYD NORRIS – Dealbook – NY Times
A new accounting rule will give banks much more leeway to write down the value of loans, something that both regulators and bankers demanded in the wake of the financial crisis. Yet the rule could also make it less attractive for banks to make loans in the first place because every loan will lead to an immediate reported loss.

Goldman, HSBC Count on Supreme-Court Help on Mortgage Case
Justin Baer – MoneyBeat – WSJ
Goldman Sachs Group Inc.GS -0.32%, HSBC HSBA.LN +0.58% North America Holdings Inc. and two other financial firms argued Wednesday that a recent Supreme Court decision made clear a U.S. housing regulator’s claims against them over mortgage bonds that soured during the financial crisis came too late.

Latest version of RBS trading arm starts with a sputter
Giles Turner – Financial News
Second-quarter revenues fell at Royal Bank of Scotland’s trading unit, recently subsumed by the bank’s larger corporate division, as it continues a long walk into obscurity.

RBS to post £2.7bn profit for H1 but warns of ‘bumps in the road’
Hannah Smith – Investment Week
The Royal Bank of Scotland (RBS) expects profits to jump in the first half of the year, although its CEO has warned litigation issues could still hit future revenues.

Citigroup names James Boyle as global head of equity derivatives
Citigroup Inc has named James Boyle as global head of equity derivatives, according to an internal memo, replacing Simon Yates who left for New York hedge fund Two Sigma Investments LLC in early July.

Rivals on watch as Barclays’ traders seek new homes
Sarah Krouse – Financial News
Two senior members of Barclays’ large-scale markets business have left to join rivals in the US, in moves that highlight the efforts now being made by some of its traders to seek out banks with stronger commitments to FICC.

Broker RP Martin up for sale – sources
Luke Jeffs – Futures & Options World
RP Martin, the broker fined for Libor rigging, has held secret talks with rivals over a possible sale, underlining the plight of inter-dealer brokers struggling with low volumes and tough regulation.

James J. Schiro Retires from the Board of Directors of Goldman Sachs

Goldman Sachs Reports 2014 Second Quarter Earnings Per Common Share of $4.10

Statement From BGC Partners Regarding Recent Stock Transactions

Clearing & Settlement

ASIC Consults On Technical Changes To Trade Reporting Obligations For OTC Derivatives
ASIC is seeking feedback on proposed revisions to the rules that require the mandatory trade reporting of over-the-counter (OTC) derivatives such as interest rate swaps.

ISDA: Revisiting Cross-Border Fragmentation Of Global OTC Derivatives: Mid-Year 2014 Update

Indexes & Products

Options Show Rising Concern Over High-Yield Bond ETFs
Chris Dieterich – MoneyBeat – WSJ
The options market is flashing concern about high-yield bond exchange-traded funds. Demand for protective “put” options in the market’s largest high-yield bond ETF versus bullish options this month crept up to its highest level since May 2013’s “taper tantrum,” when hints from the Federal Reserve on changes to its bond-buying program sent high-yield bonds, and other rate-sensitive assets, reeling.

Hard times for commodity and currency ETFs
Rob Daly – The Trade
The year-over-year growth numbers for US exchange-traded funds (ETFs) are up approximately 19%, but their average daily volumes (ADV) has fallen 15% over the same period, according to recent finding published by Société Générale. Adds ETF, Mutual Funds Data, Bows Mobile Apps
Max Bowie – WatersTechnology
New York-based low-cost market data display vendor has added new content to its datasets and has rolled out native mobile apps to accompany its data desktop and web-based terminals, and is planning significant analytics enhancements for future releases later this year.


IOSCO Surveys Use Of Social Media And Automated Advice By Intermediaries
The International Organization of Securities Commissions (IOSCO) today published its Report on the IOSCO Social Media and Automation of Advice Tools Surveys. The paper presents the results of four surveys on the use of social media and automated advice tools in capital markets, and how regulators oversee the use of these tools.

News Brief: SunGard Named Best Market Risk Solution Provider and Best Network Provider in 2014 Waters Rankings
SunGard has been named as “Best Market Risk Solution Provider” and “Best Network Provider” in the 2014 Waters Technology Rankings for its Adaptiv and SunGard Global Network (SGN) solutions, respectively. Readers of Waters Technology magazine and industry participants vote in the Waters Rankings, which recognize excellence among providers to the financial industry.


SEC Charges Florida-Based Transfer Agent and Owner with Defrauding Investors
The Securities and Exchange Commission today announced it has charged a Florida-based transfer agent and its owner with defrauding investors by using aggressive boiler room tactics to peddle worthless securities with promises of high returns or discounted prices.

SEC Announces Additional Charges in Football-Related Boiler Room Scheme
The Securities and Exchange Commission today announced a second round of charges against individuals behind a boiler room scheme that hyped a company whose new technology was purportedly Super Bowl-bound.

Barclays Asks Court to Dismiss New York Suit Over Its ‘Dark Pool’
WILLIAM ALDEN – Dealbook – NY Times
Barclays filed a motion on Thursday to dismiss a lawsuit brought by New York State’s attorney general that accused the bank of lying to customers of its private stock market.

Environmental & Energy

SEC Charges Florida-Based Transfer Agent and Owner with Defrauding Investors
The Securities and Exchange Commission today announced it has charged a Florida-based transfer agent and its owner with defrauding investors by using aggressive boiler room tactics to peddle worthless securities with promises of high returns or discounted prices.

SEC Announces Additional Charges in Football-Related Boiler Room Scheme
The Securities and Exchange Commission today announced a second round of charges against individuals behind a boiler room scheme that hyped a company whose new technology was purportedly Super Bowl-bound.

Barclays Asks Court to Dismiss New York Suit Over Its ‘Dark Pool’
WILLIAM ALDEN – Dealbook – NY Times
Barclays filed a motion on Thursday to dismiss a lawsuit brought by New York State’s attorney general that accused the bank of lying to customers of its private stock market.


Thai derivatives and stock turnover leaps
Simon Osborne – The Trade
Derivatives volume rose 38% at the Thailand Futures Exchange PCL (TFEX) to 93,834 contracts per day from a year earlier, underpinned by newly launched mini SET50 futures and stock futures. Stock futures business in Thailand now ranks at the 7th biggest in the world and rose in volume by 41% in the first half.

SGX Welcomes Alliance Mineral Assets To Catalist

Japan Exchange Group, Inc. And Consolidated Subsidiaries Consolidated Financial Results For Three Months Ended June 30, 2014

Frontier Markets

Unafraid of Liquidity Squeeze, Investors Turn to Emerging Currencies
James Ramage – MoneyBeat – WSJ
Even though currency investors have been preparing for higher interest rates for some time, many aren’t ready for an upward jolt in U.S. rates.

A Secret in Cyprus Bank Bailout Stirs Resentment
LANDON THOMAS JR. – Dealbook – NY Times
Of all the financial implosions in the eurozone, few matched last year’s collapse of tiny Cyprus in terms of drama and chaos. Now, the foundation of the bailout, an analysis by bond giant Pimco, is being challenged by economists, lawyers and politicians in Cyprus.

Egyptian Exchange Market Holiday – Eid El Fitr

Malawi Stock Exchange Weekly Trading Report- 25th July, 2014

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