First Read

Open for Business: Competition Heating Up in the New Market Structure
JohnLothianNews.com
Swap execution facilities (SEFs) were given life by the Dodd-Frank Act, which requires over-the counter (OTC) swaps to be cleared and traded on this new type of regulated platform. The CFTC published its final SEF rules in mid-2013 and trading commenced on 18 registered SEFs. John Lothian News interviewed a dozen of the leading SEF operators, regulators and other participants and put together a three part series on SEF regulation, the changing market structure and the new technology required to make it all happen. Part II looks at the changes to the overall market structure brought about by new regulation. Though the swap execution facility is a new entity as defined by Dodd-Frank, an ecosystem of platforms and processes for the trading OTC derivatives has been in place for decades. The introduction of new requirements for quoting, clearing and data transmission significantly altered the competitive landscape among inter-dealer brokerage firms (IDBs) and dealer-to-client platforms.

Watch the video »

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National Futures Association floats new rules for futures firms – Finance News
Lynne Marek – Crain’s Chicago Business
The National Futures Association, a trade group charged with policing its members’ businesses, said today it may boost regulations for firms that invest in futures contracts on behalf of clients. Specifically, the NFA said it may require the firms to hold minimum levels of capital to back their business operations and be subject to independent oversight of disbursement of funds, in addition to reporting on customer funds and performance results.
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***** Is this the AlpahMetrix Rule?

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US NFA Seeks Comments on Possible New CPO/CTA Capital Requirements and Customer Protection Measures
Gary DeWaal and Associates LLC
On January 23, 2014, the US National Futures Association announced that it is seeking comment regarding a possible new requirement that registered commodity trading advisors and commodity pool operators maintain a minimum amount of capital, much like futures commission merchants and non-guaranteed introducing brokers currently are required. Currently CPOs and CTAs are not subject to any capital requirement.
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Sponsored Content
Derivatives trade reporting comes to Europe
The Depository Trust & Clearing Corporation (DTCC) has been at the forefront of the development of trade repositories, building global capabilities across the spectrum of asset classes. Today, our Global Trade Repository (GTR) operates, through locally-licensed DTCC subsidiaries, in three continents enabling users to meet their local regulatory reporting obligations in an open and cost effective manner. 45 regulators around the world use DTCC’s GTR as a tool to monitor the build-up of systemic risk in a timely and accurate manner.

Our European repository was approved by ESMA to collect data from entities with a reporting obligation in Europe on 7 November 2013, paving the way for the mandatory reporting of derivatives contracts beginning on 12 February 2014.

Timing is of the essence
The start of a reporting regime for all derivatives contracts across five asset classes, both OTC and ETD, in one single day will be a huge undertaking for the industry and its scale and implementation is unprecedented. It is important that firms that have experience of reporting in other jurisdictions as well as those that find themselves with a reporting obligation for the very first time, take into account the specific reporting requirements under EMIR and make provisions now in preparation for the trade reporting deadline.

When choosing which derivatives repository to report to, firms need to understand the business models of each, ensure their trade repository has knowledge of the local regulatory requirements and experience dealing with regulators. It is important to consider the economies of scale, the cost structure and the flexibility and choice of reporting and connectivity options available.

Our European repository provides a flexible and open platform supporting direct and delegated reporting. For further information about our services please contact: GTR-EMEA@dtcc.com or + 44 207 650 1545

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content from:
NYSE Liffe US

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NYSE’s Niederauer on Sprecher, Twitter and maker-taker
MarketWatch
The CEO of New York Stock Exchange and now the president of the IntercontinentalExchange says he is confident the retail investor has returned — but the market gains over the last year may have left investors overconfident.
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***** I am not overconfident, but my animal spirits returning.

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Thomson Reuters IFR Awards Dinner Raises Over 1m For Save The Children
At the 19th annual Thomson Reuters International Financing Review (IFR) awards gala dinner on Wednesday, 22 January L1,066,729 was pledged to Save the Children, the global charitable organisation providing relief to some of the world’s most vulnerable children.
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***** A hat tip to my friends at Thomson Reuters.

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One Man Team
Jim Kharouf – John Lothian News
News of Mohamed El-Erian’s announced departure from PIMCO yesterday sent shockwaves through that organization and was a surprise to many in the markets. The question it brings for PIMCO’s co-founder Bill Gross is: Can PIMCO thrive without him?
jlne.ws/1asVDpU

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American Vitality Depends on Whether You Believe Harvard or Yale
Jeanna Smialek – Bloomberg
The American consumer’s readiness to kick the economy into high gear comes down to a question of who’s right: Yale’s Stephen Roach or Harvard’s Martin Feldstein.
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***** I prefer to look to Purdue, my alma mater. As I have said many times, quoting the late management consultant Peter Drucker, “Business is about two things, innovation and marketing.” An engineering and technology school like Purdue, or the University of Illinois, is going to produce a lot of innovation.

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What Was Goldman Sachs Doing With Libya’s Options Bets?
Matt Levine – Bloomberg
If a dicey oil-fueled sovereign wealth fund can’t make nutty leveraged currency and equity bets that lose them all their money, who can? Someone should be able to take silly risks — someone has to be the sink for the risk that the rest of the financial system wants to offload — and I guess the Qaddafi-era LIA was reasonably high up the list of who it should be.2 Better them than AIG.
jlne.ws/M3kA0e

***** This is a “WOW” story. Worth the read.

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Carlyle Co-Founder’s Formula for Success: Study the Humanities
NYTimes.com
David M. Rubenstein, the co-founder of the Carlyle Group, believes American students have lost a valuable skill that can help them succeed in business and life: critical thinking.
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***** One of the reasons I wanted a humanities degree and a business degree is just that. You have to think for yourself.

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OIC Announces New Seminar Series For 2014
The Options Industry Council (OIC) announced today its evening seminar schedule for the first half of 2014, including the introduction of a new three-part series offered in various cities throughout the U.S.
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***** This series is the OIC’s new reality show? You are dropped on an island (Manhattan) and all you get is a put or a call.

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MarketsWiki

MarketsWiki Page of the Day
European Energy Exchange AG (EEX)
jlne.ws/cXH2LE

MarketsWiki Recent Updates

People

Peter Reitz; Marianne Brown; Mohamed A. El-Erian

Companies, Organizations and Groups

European Energy Exchange AG; Nomura Group; FIA Principal Traders Group

Products

KCBT Hard Red Winter Wheat futures

Statistics

46,718,181 pages viewed, 7,778 articles, 177,211 edits
MarketsWiki Statistics

Lead Stories

NYSE Files to Allow ‘Nontransparent’ ETFs to List, Trade
Murray Coleman – WSJ.com
Exchange-traded fund managers got a boost to their efforts to capture a bigger part of the $7 trillion market for stock mutual funds. The operator of the New York Stock Exchange filed a request with the Securities and Exchange Commission on Thursday to adopt a new rule that would permit “nontransparent” ETFs to list and trade on its platform.
jlne.ws/M3kCoS

CLS Bank seeks to increase forex settlement membership
FT.com via euro2day.gr
The operator of the largest foreign exchange settlement system is working on bringing the renminbi, rouble and clearing houses within its network, seeking to plug potential systemic risks emerging in the fast-growing forex market.
jlne.ws/M3kCF8

SEC auditor ban could hit US companies in China
Gina Chon in Washington – FT.com
US public companies operating in China could be hit by a ruling that bans the Chinese units of the Big Four global auditing firms from working on US-listed companies for six months.
jlne.ws/M3kAgB

Quantifying Europe’s ‘Too Big to Fail’ Problem
PETER EAVIS – NYTimes.com
Blistering complaints that banks are too big to fail are usually heard from the Occupy Wall Street side of the barricades. But on Thursday, some bank analysts in the City of London weighed in with their own hard look at the threats posed by Europe’s largest lenders.
jlne.ws/M3kCFe

UBS at Davos: ‘We’ve swapped global imbalances for domestic disequilibrium’
FT Alphaville
According to a white paper released by UBS for this week’s World Economic Forum in Davos, the world economy remains as unbalanced today as it has been over the past quarter century – with big implications for the global economic recovery.
jlne.ws/M3kCFj

Contagion Spreads in Emerging Markets as Crises Grow
Ye Xie and John Detrixhe – Bloomberg
The worst selloff in emerging-market currencies in five years is beginning to reveal the extent of the fallout from the Federal Reserve’s tapering of monetary stimulus, compounded by growing political and financial instability.
jlne.ws/M3kAgJ

Germany, France attack EU plan to curb big banks
Reuters
Germany and France have attacked European Union plans to curb banks’ ability to take market bets with their own money, warning that this could jeopardize a delicate economic recovery, a paper seen by Reuters showed.
jlne.ws/1ej9HO4

Jack Lew and Jamie Dimon warn of Bitcoin dangers
Martin Arnold in Davos – FT.com
Bitcoin has been tossed into the virtual gutter at the World Economic Forum in Davos this week, as top US financial leaders warned the vitrual currency could be used to fund terrorism and predicted that regulation would put it out of business.
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Regulatory

Many Regulations Stifle Innovations, Panelists Contend
CHAD BRAY – NYTimes.com
Government efforts to protect the investing public have had the unanticipated consequence of making it prohibitive for start-ups to seek a public offering, said Bill Gross, chairman of the technology incubator Idealab.
jlne.ws/M3kA08

The Commodity Futures Trading Commission’s Division of Market Oversight Announces Trade Execution Mandate for Additional Interest Rate Swaps
The Commodity Futures Trading Commission’s (CFTC or Commission) Division of Market Oversight (Division) today announced that trueEX, LLC’s (trueEX) self-certification of available-to-trade determinations (MAT Determinations) for certain interest rate swap contracts is deemed certified.
jlne.ws/M3kAgK

China Regulator in Talks With U.S. Counterpart After Ruling on Auditors
WSJ.com
China’s securities regulator said Friday it is in discussions with its U.S. counterpart after a judge at the U.S. agency ruled that Chinese units of the Big Four accounting firms should be suspended from auditing U.S.-traded companies.
jlne.ws/M3kAx0

Bankers assess once-in-generation reform
Martin Arnold in Davos – FT.com
Depending on who you believe, banks have either put the crisis behind them and are about to embark on a long-overdue recovery, or they have been seriously scarred and will limp along for several more years.
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G-Sifis must improve their use of risk data – SFC
Aaron Woolner – Risk.net
Global systemically important financial institutions (G-Sifis) need to create a cohesive data management approach which will enable senior management to properly understand the level of risk contained within in their business at an enterprise-wide level, according to Bénédicte Nolens who heads up the risk and strategy unit at the Securities and Futures Commission (SFC) in Hong Kong.
jlne.ws/M3kCVE

Pre-LEI Waiting Times Range From 24 Hours to Three Weeks as EMIR Looms
Nicholas Hamilton – WatersTechnology
With implementation of EMIR weeks away, the production time for mandatory pre-legal entity identifiers varies between the pre-local operating units that issue the codes and depends on a number of factors
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FINRA Issues New Investor Alert: The IRA Rollover: 10 Tips to Making a Sound Decision – FINRA
jlne.ws/M3kCVF

Canadian securities regulators propose changes to the prospectus-exempt distribution of short-term debt and short-term securitized products
jlne.ws/M3kAxa

Exchanges & Trading Facilities

Private Market Joint Venture by Nasdaq, SharesPost Not Yet Ready to Launch
WSJ
Nasdaq Private Market, a joint venture between Nasdaq and SharesPost Inc. that was originally due to launch by the end of 2013, isn’t yet ready. The platform is supposed to help loosen the market for private shares that has changed dramatically in the past two years.
jlne.ws/KTEObR

NASDAQ CEO Greifeld Tells Peres: ‘Israeli Companies Success
Algemeiner.com
Robert Greifeld, CEO of the Nasdaq-OMX Stock Market, recently met with Israeli President Shimon Peres, and praised Israel’s technological success and innovativeness.
jlne.ws/1jsmcOD

Euronext launches Multicurrency Trading Service for ETFs
Euronext, a wholly owned subsidiary of IntercontinentalExchange Group (NYSE: ICE), today announced the launch of a multicurrency trading service for Exchange Traded Funds (ETFs), including for the first time on a U.S. or European exchange, the Chinese Yuan Renminbi (CNY) and the Hong Kong Dollar (HKD), subject to approval of relevant clearing authorities.
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Exchanges Round Off 2013 – FTSE Mondo Visione Exchanges Index Up 31.9 Percent In 2013 – Japan Exchange Group Is The Best Overall Performer In 2013
The global exchange sector rounded off 2013 on an even keel as the FTSE Mondo Visione Exchanges Index experienced a marginal increase in December 2013, but the sector finished a busy year with the Index experiencing a 31.9 per cent high.
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Warsaw Stock Exchange Derivatives Market In Europe In 2013
jlne.ws/M3kCVM

NYSE MKT Issues Short Interest Report
jlne.ws/1hmiWRq

NYSE to Suspend Trading in The Dolan Company and Commence Delisting Proceedings
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Hedge Funds & Managed Futures

Brevan Howard, Europe’s Largest Hedge Fund, Apologizes for Poor Results
JENNY ANDERSON – NYTimes.com
For at least one hedge fund, sorry does not seem to be the hardest word. Alan Howard, co-founder of Europe’s largest hedge fund, Brevan Howard Capital Management, apologized to investors in his year-end letter, calling its 2.6 percent return for 2013 “somewhat disappointing.”
jlne.ws/M3kCVV

Lessons From Blackstone for BlackRock
JEFFREY GOLDFARB – NYTimes.com
Is it time for BlackRock to revisit its Blackstone heritage?
jlne.ws/M3kDcb

Artemis hunts Threadneedle analysts
Mike Foster – Financial News
Artemis has hired head of US equities Cormac Weldon and portfolio manager Stephen Moore from Threadneedle Investments, and is hoping to add five equity analysts from the fund manager, according to two people close to the situation.
jlne.ws/M3kDci

Few hedge funds applying for AIFMD authorisation
Luke Clancy – Risk.net
Research from BNY Mellon has found that, with less than six months to go until full implementation of the alternative investment fund managers directive (AIFMD) on July 22, fewer than a fifth of alternative investment fund managers (AIFMs) have submitted an application to their local regulator for authorisation to continue managing funds affected by the directive.
jlne.ws/M3kDJc

Bottleneck in buy-side reporting feared
Luke Clancy – Risk.net
With the deadline for reporting derivatives trades for some hedge funds only a matter of weeks away under the European Market Infrastructure Regulation (Emir), there are serious concerns that hedge funds have taken too long to decide whether to delegate reporting and this will be compounded by the ability of trade repositories to onboard new clients in time.
jlne.ws/M3kDJe

The Truth About Momentum and Calendar Year Returns
The Reformed Broker
“Does a great year for stocks in 2013 bode well for 2014? History says yes! Or no! It depends!” This is one of the most common types of stories we read on the financial web each January. Every author uses a different data series of years or indices or whatever to make their case. Derek Tomczyk tackled the topic a week ago and looked at the market’s tendency to keep rallying after an exceptionally strong year.
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Banks & Brokers

Fined Billions, JPMorgan Chase Will Give Dimon a Raise
JESSICA SILVER-GREENBERG and SUSANNE CRAIG – NYTimes.com
A year after an embarrassing trading blowup led to millions of dollars being docked from Jamie Dimon’s paycheck, the chairman and chief executive of JPMorgan Chase is getting a raise.
jlne.ws/M3kDJl

Saxo Bank Launches Social Trading Floor
Timothy Bourgaize Murray – WatersTechnology
Copenhagen-based Saxo Bank has launched the beta version of its new social media-style trading floor.
jlne.ws/M3kDJm

Morgan Stanley CEO Gorman gets $4.9 million stock award -filing
Reuters
Morgan Stanley Chief Executive James Gorman received a $4.9 million stock bonus for his performance in 2013, according to a regulatory filing and based on the bank’s closing share price on Thursday.
jlne.ws/M3kDJp

Goldman weighs ban on message services
Camilla Hall in New York – FT.com
Goldman Sachs is considering imposing a ban on traders using some third-party computer-messaging services, in a move to reduce the risk of proprietary information leaking to others outside of the bank.
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Clearing & Settlement

TeraExchange Offers SEF Trading Agreement to Multiple IDBs
Ivy Schmerken – Wall Street & Technology
TeraExchange, a CFTC-registered swap execution facility (SEF), will provide interdealer brokers in Europe and Asia with SEF trading and reporting services that are compliant with US regulations.
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CME Group Margins: Performance Bond Requirements: Crude Oil Spreads, Electricity, FX, Natural Gas, NGL/Petrochemicals, and Petroleum Cracks and Spreads Outrights- Effective Friday, January 24, 2014
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CME Group Clearing: CME Group Delivery Dates for February 2014
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Technology

Reconciliation Technology in 2014: Check Yourself Before You Rec Yourself
Aite Group
Once a technology largely applied to the task of matching cash accounts, reconciliation technology has become essential to the support of numerous other processes within financial institutions, and its uses are about to increase.
jlne.ws/M3kDsI

Equinix Readies Sixth London Datacenter
Faye Kilburn – WatersTechnology
Datacenter provider Equinix plans to build a new datacenter, dubbed LD6, at its Slough datacenter campus outside central London, to meet demand for rackspace from financial services customers.
jlne.ws/M3kDsL

SunGard to Announce Fourth Quarter 2013 Results on February 4
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Enforcement

Key Witness Says Cohen of SAC Was F.B.I. Target
NYTimes.com
The man whose shadow has been hanging over the insider trading trial of Mathew Martoma, the former SAC Capital Advisors trader, took center stage on Thursday when the prosecution’s top witness said F.B.I. agents told him the government’s true target was Steven A. Cohen, SAC’s billionaire founder.
jlne.ws/M3kDsP

NY man in SEC fraud probe arrested over subpoena response
Reuters
A man suspected of fraudulently collecting money from investors to buy shares in big-name private companies was arrested on Thursday after failing to respond to subpoenas, the U.S. Securities and Exchange Commission said.
jlne.ws/M3kDsT

Environmental & Energy

China approves controversial nitrous dioxide carbon offsets
Reuters
China will allow big emitters to use offset credits from nitrous dioxide (N2O) destruction to meet domestic climate targets, giving its nod to a type of project that has been banned in other carbon markets.
jlne.ws/1ehvLZt

China’s solar industry rebounds, but will boom-bust cycle repeat?
Reuters
China’s solar panel industry is showing signs of booming again after a prolonged downturn – raising fears of another bust when the splurge of public money that is driving a spike in demand dries up.
jlne.ws/1fg1pbV

EU sets out ‘walk now, sprint later’ 2030 clean energy vision
EurActiv.com
The European Commission set out its goal Wednesday (22 January) of a Europe which, by 2030, emits 40% less carbon dioxide than it did in 1990, uses renewables for 27% of its energy, and employs a reserve mechanism to regulate its carbon market.
jlne.ws/1c8z5cy

Asia-Pacific

HK exchange, SFC to discuss new shareholding structures in Q1
Reuters
Hong Kong Exchanges and Clearing Ltd (HKEx) and the Securities and Futures Commission (SFC) will discuss a paper on new shareholding structures for publicly traded companies in the first quarter before putting it up for public consultation, a top exchange official said on Friday.
jlne.ws/M3kDZQ

KKR, BlackRock, funds in talks to buy stake in China Huarong: sources
Reuters
KKR & Co and BlackRock Inc are among leading global investors in talks to buy a stake in China Huarong Asset Management Co Ltd as the bad debt manager seeks to raise more than $2 billion, people familiar with the matter told Reuters.
jlne.ws/M3kDZU

Yuan Continues Its Rise as a Global Payments Currency
Erin McCarthy – MoneyBeat – WSJ
China’s yuan spent its second consecutive month as one of the 10 most-used currencies for global payments in December, according to data from the Society for Worldwide Interbank Financial Telecommunication, or Swift.
jlne.ws/M3kDsV

U.S. Audit Ruling Weighs on China Firms’ IPO Plans
Kathy Chu – MoneyBeat – WSJ
A U.S. ruling to temporarily bar the Big Four’s Chinese affiliates from auditing U.S.-traded companies could throw a chill on a pipeline of Chinese companies looking to IPO in the U.S.
jlne.ws/M3kDsX

Exclusive: Japan government forecasts show Abe missing budget-balance promise
Reuters
Japanese government calculations indicate that Prime Minister Shinzo Abe cannot meet his budget-balancing promise in coming years on the current course, suggesting he may come under greater pressure from fiscal hawks for future tax increases.
jlne.ws/M3kDZX

China becomes top gold consumer in 2013
Xan Rice – FT.com
China has overtaken India as the world’s largest gold consumer thanks to soaring purchases of jewellery, minted Panda coins and small gold bars.
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HKFE Announces Revised Margins For CNOOC Futures
jlne.ws/M3kEgd

Successful Delivery Of Dalian Commodity Exchange Coking Coal 1401 Contract
jlne.ws/M3kGon

SGX welcomes Kim Heng Offshore and Marine Holdings to Catalist
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Frontier Markets

New Fundsmith emerging markets trust
Jonathan Eley – FT.com
Fundsmith, the fund management group founded by Terry Smith, chief executive of broker Tullett Prebon, is to launch an emerging markets investment trust later this year.
jlne.ws/M3kEgp

Investors Flee Developing Countries
WSJ.com
Investors dumped currencies in emerging markets, underscoring growing anxiety about the ability of developing nations to prop up their economies as they face uneven growth.
jlne.ws/M3kEgt

Nigerian Bourse Facilitates Capacity Building For Market Makers
jlne.ws/M3kGES

Malawi Stock Exchange Weekly Trading Report – 24th January, 2014
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MCX Weekly Market Report January 17, 2014 – January 23, 2014
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