John Lothian Newsletter: NYSE’s Leibowitz Said to Plan Departure Given ICE Takeover; Rolet targets Asia for LSE growth; Transaction Tax at Odds With French Euronext Call

Nov 14, 2013

First Read

Water Under the Bridge
John Lothian
I was trying to think about a cliche I could use to talk about ICE closing the deal for NYSE Euronext, but it is just water under the bridge. I want to congratulate Jeff Sprecher and his ICE team for the audacious deal to buy NYSE Euronext and to NYSE Euronext Duncan Niederauer for his vision to sell this storied institution to such a great organization.

I have always had a great relationship with all the organizations, NYSE, Euronext, Liffe and ICE. It was the NYSE Liffe US people who prompted us to start our metals newsletter, as well as MarketsReformWiki.

It has always been the case that Liffe was the jewel in the company, and something many other exchanges sought to buy. Now, ICE has NYSE, Euronext and Liffe. And they have the terrific technology that makes them all work. And they have some great brands, an epic history. Now the challenge is to convert the whole company to the ICE entrepreneurial culture.

Yesterday ICE published a video with Jeff Sprecher telling the story of his writing the check from his own checkbook to start ICE 13 years ago. Jeff wants NYSE Euronext employees to act and think like a start up. That may be a challenge for the over 200 year old NYSE, but should not be a problem for the enterprising Liffe folks. It was only 15 years ago when Liffe was hit with a near-death experience and they had to reinvent themselves as an electronic exchange in order to survive. Not only did they survive, but they became the most sought after exchange property in the derivatives space.

I have always had great appreciation for the Liffe people. Back when they were Euronext.Liffe I remember saying to their then-CEO Hugh Freedberg that I could not remember writing anything negative about the firm. I said their people were just so good, professional and on subject, it was difficult to come up with any negative criticism. However, later I do remember making one French guy’s day difficult when I took them to task for their handling of the change from Liffe.com to Euronextliffe.com.

My relationship with NYSE started when they had just one executive dedicated to following what was happening in the futures markets. And I first met Jeff Sprecher in the lobby of the NYMEX Building when he saw me and came over and introduced himself. He is that same humble, regular guy today, though a little richer and even more accomplished.

Mr. Sprecher and ICE have the greatest challenge in the exchange space since Liffe went through that near-death experience. They have the opportunity to change the way equities trade and make it a more friendly experience for all investors. He has a chance to put a charge into the capital markets that will mark his place in the history books forever.

Right now, all that history of these exchanges is just water under the bridge and a new day has dawned for an even brighter future. Go to work, people.

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Supporting the Chicago Council of Boy Scouts of America
John Lothian
The LaSalle Street After Hours event is a continuation of a long history of the Chicago financial district supporting the Boys Scouts of America and the Chicago Council. Joe Guinan, a former Scoutmaster, is chairman of this year’s event. We talked to two of his former scouts, who are now employees of Advantage Futures, about their experiences in Scouting and that that means for them today.
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***** Not too late to buy a ticket and attend the event tonight, assuming you are in Chicago.

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NYSE’s Leibowitz Said to Plan Departure Given ICE Takeover
Sam Mamudi – Bloomberg
Larry Leibowitz, who was the chief operating officer at the New York Stock Exchange’s parent, plans to leave IntercontinentalExchange Group Inc. by the end of 2013 now that the takeover of the company is complete, according to two people with knowledge of his plans.
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***** Word is Larry is taking some time off to direct a movie. No, wait. That was his brother.

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Did You Forget About the Volcker Rule?
George Bollenbacher – TabbFORUM
It has been more than two years since the proposed Volcker Rule was published by a consortium of US regulators. With little said publicly about the rule over the ensuing period, and all the public attention paid to derivatives reform worldwide, one might be forgiven if one took one’s eye off that particular ball. As it turns out, that would have been a mistake.
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***** What rule?

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ICE CEO on NYSE Takeover, What’s Next
FOX Business
ICE completed its monumental takeover of the NYSE Wednesday, and the CEO of the combined new company says in the long run the merger will make it easier for the average investor to participate in global markets.
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***** Jeff Sprecher is going to leave a legacy on the equity markets and how they trade that will put him in the history books as one of the greatest entrepreneurs and exchange leaders of all time. That is just my guess. And hope. And expectation.

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CME Group Approves China Merchants Futures as New Clearing Member
CME Group, the world’s leading and most diverse derivatives marketplace, today announced China Merchants Futures (HK) Co. Limited, a wholly-owned unit of China Merchant Securities Company Limited, has been approved as a CME, CBOT, NYMEX and COMEX Clearing Member, effective 21 October 2013.
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***** We first reported their buying the memberships to gain this status. There are more to come, stay tuned.

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Hector Sants’s Exit Shows Deep Ramifications of Stress
Phillipa Leighton-Jones – MoneyBeat – WSJ
Hector Sants, who has been head of compliance at Barclays since January this year, has quit. Having gone on leave last month due to stress and exhaustion, the bank said today that he wouldn’t be returning.
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***** There is a name for this disease. He has been Dodd-Franked.

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How the NSA and GCHQ Spied on OPEC
SPIEGEL ONLINE
America’s NSA and Britain’s GCHQ are both spying on the OPEC oil cartel, documents from whistleblower Edward Snowden reveal. The security of the global energy supply is one of the most important issues for the intelligence agencies.
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***** This story is really funny. It exposes OPEC plans to blame speculators for high oil prices. Thank you to Mr. Snowden for this chuckle.

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After Twitter #Fail, JPMorgan Calls Off Q. and A.
MICHAEL J. DE LA MERCED – NYTimes.com
JPMorgan Chase helped take Twitter public last week. But on Wednesday evening, the banking giant got a taste of the social network’s power — in a very negative way. The firm called off a question-and-answer session with James B. Lee Jr., its vice chairman and top deal maker, after Twitter users complied with its request for queries with a stream of ribald questions and hostile jokes.
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***JM: Seems to me they got precisely what they were asking for… what lacked precision was what they asked to get.

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MarketsWiki

MarketsWiki Page of the Day
IntercontinentalExchange Inc.
jlne.ws/cnzIb7

MarketsWiki Recent Updates

Statistics

45,194,894 pages viewed, 7,706 articles, 168,554 edits
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Lead Stories

Rolet targets Asia for LSE growth
Anish Puaar – Financial News
The chief executive of the London Stock Exchange said today that Asia represented a “big opportunity” for its future plans, but admitted that regulatory restrictions would limit opportunities to partnerships, rather than acquisitions.
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Transaction Tax at Odds With French Euronext Call, Perol Says
Mark Deen & Fabio Benedetti-Valentini – Bloomberg
Groupe BPCE Chairman Francois Perol said he sees a contradiction between French Finance Minister Pierre Moscovici’s call for support for the Paris stock exchange and Europe’s planned financial transaction tax.
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LSE earns more from profit-sharing deal at clearing house
Philip Stafford – FT.com
The London Stock Exchange Group is to earn more from LCH.Clearnet, its transatlantic clearing house, after renegotiating a profit-sharing agreement with the banks that are big users of the risk manager and have a say in its governance.
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Obama Nominee for Swaps Agency Draws Skepticism Over Experience
Silla Brush – Bloomberg
Timothy Massad, a little-known Treasury official who oversaw the U.S. rescue of Wall Street, faces skepticism about his qualifications from lawmakers who will vote on his nomination to lead the country’s top derivatives regulator.
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Yellen Says Economy Performing ‘Far Short’ of Potential
Joshua Zumbrun & Jeff Kearns – Bloomberg
Janet Yellen, nominated to be the next chairman of the Federal Reserve, signaled she will carry on the central bank’s unprecedented stimulus until she sees improvement in an economy that’s operating well below potential.
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Waking Shark II Shakes Firms in London
Zarna Patel – Wall Street & Technology
Banks and stock exchanges in London have participated in Waking Shark II, a cyber exercise with simulated attacks on financial markets from foreign governments, on Tuesday, according to Reuters. Bank of England, HM Treasury and Financial Conduct Authority, the UK financial institution regulator, oversaw the simulation.
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JPMorgan’s Fruitful Ties to a Member of China’s Elite
DAVID BARBOZA, JESSICA SILVER-GREENBERG and BEN PROTESS – NYTimes.com
To promote its standing in China, JPMorgan Chase turned to a seemingly obscure consulting firm run by a 32-year-old executive named Lily Chang.
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Moscow Exchange Halts Derivatives Trading for Almost an Hour
Ksenia Galouchko – Bloomberg
OAO Moscow Exchange halted derivatives trading between 1 p.m. and 1:58 p.m. today.
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***JM: Looks like Moscow’s moving up to be just like the major exchanges…

ECB: Negative Interest Rates Are an Option
Steven Russolillo – MoneyBeat – WSJ
The European Central Bank says it could adopt negative interest rates or purchase assets from banks if needed to lift inflation closer to its target, rebutting concerns that the central bank is running out of tools or is unwilling to use them.
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EU antitrust regulators monitoring metals warehousing
Reuters
European Union antitrust regulators are monitoring metals warehousing, a spokesman said, stopping short of following U.S. counterparts in conducting inquiries into access and cost problems caused by storage backlogs.
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Regulatory

SEC Announces Agenda and Panelists for Small Business Forum
The Securities and Exchange Commission today announced the agenda and panelists for next week’s Government-Business Forum on Small Business Capital Formation.
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The Race is On to Create Common Reference for EMIR Compliance
Becca Lipman – Wall Street & Technology
With three months before regulation is in place, the swap community is faced with the interesting challenge of developing a common and unique trading identifier.
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Competing on integrity
Speech by Martin Wheatley, Chief Executive of the FCA, at the CFA European Investment Conference.
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Improving the consumer experience
Speech by Christopher Woolard, Director of Policy, Risk & Research at the FCA, to the Tax Incentivised Savings Association (TISA) Annual Conference, London.
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ESMA Response To Maystadt Report
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New Zealand’s Financial Markets Authority: We Are Now Consulting On Standards And Conditions For New Licenses
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SIFMA Promotes Ira Hammerman To Executive Vice President
SIFMA today announced it has appointed Ira D. Hammerman as Executive Vice President and General Counsel. Mr. Hammerman has served as Senior Managing Director and General Counsel at SIFMA since 2004.
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Exchanges & Trading Facilities

New York Stock Exchange to host 2013 NYSE Russia Day on Monday, November 18, 2013.
Leading business executives, investors and government officials led by Sergey Belyakov, Deputy Minister for Economic Development of the Russian Federation, will visit the New York Stock Exchange on Monday, November 18, 2013 for the 2013 NYSE Russia Day.
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A promising future
Stephen Cottrell, NYSE Liffe – Risk.net
Euro Swapnote – an on-exchange futures contract referenced to the European interbank curve – promises hedge fund managers a cost-effective solution that meets regulatory requirements and enhances a fund’s strategy.
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No overnight solution to LME metal queues – LME executive
Reuters
The London Metal Exchange’s rules overhaul will not solve its four-year warehousing crisis overnight, an LME executive warned, while an analyst said the measures could increase volatility and hurt liquidity in the exchange’s top-volume contract aluminum.
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LME lists Scale Distribution warehouse for Panama City
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India’s leading Bollywood studio, Eros International, Celebrates Initial Public Offering on the New York Stock Exchange
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Royal Bank Of Canada To Issue Structured Products With Scoach Switzerland
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Moscow Exchange Hosts Forum In New York
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Hedge Funds & Managed Futures

Paulson to Taconic Frozen in Iceland Bet Five Years After
Katherine Burton, Kelly Bit & Omar R. Valdimarsson – Bloomberg
When Iceland’s banks failed in 2008 under $85 billion of debt, dozens of hedge funds flocked to the island betting they could make money buying up creditor claims. Five years later, they’re still waiting.
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Pimco’s Bill Gross Bets Treasury Yields Won’t Rise Despite Fed Tapering
Min Zeng – MoneyBeat – WSJ
Bill Gross, who runs the world’s biggest bond fund, has boosted Treasury bond holdings for two straight months through October, betting that Treasury yields won’t rise even if the Federal Reserve pares back monetary stimulus.
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DoubleLine’s Gundlach says U.S. equities ‘only game in town’
Reuters
Jeffrey Gundlach, co-founder of DoubleLine Capital, said the U.S. stock market is the “only game in town” as the Dow and the S&P 500 closed at record highs on Wednesday, though he would be hesitant to add new money because “I don’t like buying high.”
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Fairholme Offers to Buy Parts of Fannie, Freddie
Nick Timiraos – WSJ.com
Fairholme Capital Management LLC said Wednesday it would like to buy parts of bailed-out mortgage-finance giants Fannie Mae and Freddie Mac from the government in a recapitalization valued at $52 billion.
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The pros and cons of aiming for the stars
Mike Foster – Financial News
The pulling power of star managers was demonstrated at Old Mutual Global Investors last week, where UK fund sales leaped in the third quarter by 79% to £2 billion compared with a year ago. OMGI benefited from inflows into funds managed by Richard Buxton, who joined from Schroders in June, in contrast to its less fortunate rivals.
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Market Taker Mentoring, Inc. Launches State-of-the-Art Online Trader Community
Options education firm Market Taker Mentoring, Inc. today launched the MTM Elite Trader Community, a state-of-the-art online community for option traders built using the same technology and look and feel as a social networking site.
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Deutsche Boerse: Subscription Launch Of PORR Bond
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Banks & Brokers

Big banks’ nine-month commodities revenue drops 18 pct – report
Reuters
Commodities revenue slid by 18 percent in the first nine months of the year at the top 10 investment banks, partly because of poor performance in investor products and power and gas, a consultancy said on Thursday.
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The Strain Shows at Barclays
Andrew Peaple – MoneyBeat – WSJ
Life is never simple at Barclays. Its compliance officer Hector Sants quit the bank Wednesday, citing stress and exhaustion. Mr. Sants has been at Barclays less than a year, having previously run U.K. regulator the Financial Services Authority.
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JPMorgan continues work on final deal with regulators, executive says
Reuters
A top executive at JPMorgan Chase & Co (JPM.N) said on Wednesday that the bank continues to seek a final agreement with the government on a tentative settlement over liabilities for mortgage securities sold before the financial crisis.
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Goldman Sachs’s New Managing Directors: The Full List
MoneyBeat – WSJ
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On Wall Street, No Place Like Hom
Justin Baer and Julie Steinberge – WSJ.com
On Wall Street, greener pastures are disappearing. At least, that is the message coming from Goldman Sachs Group Inc. The average tenure for senior employees at the company stands at more than nine years. In 2001, those with the rank of vice president or higher had worked for the firm for an average 7.6 years.
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Capital markets take to the cloud
Anna Irrera – Financial News
Demand for cloud computing services from financial firms is on the rise as they seek to outsource costly back-office functions while dealing with a slew of new regulatory requirements.
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Icap boosted by electronic trading and cost-cutting
Anna Irrera – Financial News
Growth in Icap’s electronic division and cost-cutting helped lift profits at the London-based broker in the first half of the year, despite the firm dealing with continued regulatory scrutiny and subdued activity in euro markets.
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Joint Press Release Of The Belgian Government And BNP Paribas: BN Paribas To Buy Belgian State Fortis Stake For EUR 3.25Bn
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Clearing & Settlement

Mandatory clearing in Korea slated for June 2014
Viren Vaghela – Risk.net
Korea’s twice delayed over-the-counter derivatives clearing service will officially begin life in the first quarter of next year on a voluntary basis, with mandatory clearing deferred until June 30, 2014 to allow European banks to participate.
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Collateral conundrum still poses multiple challenges
FOW
At the heart of the financial crisis was the crippling impact of counterparty risk, the apparently simple antidote to which was a regulatory requirement for more collateral. However, as market participants prepare for central clearing, and higher levels of collateralisation, they face a bewildering array of choices and an eye-watering increase in costs.
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Indexes & Products

FTSE plots China fixed-income push
Michelle Price
The FTSE brand may be synonymous with the UK stock market, but the index provider is steadily diversifying into the international fixed-income market.
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RBI mulling pros & cons of Indian bonds joining global indices
The Economic Times
Finance Ministry today said the Reserve Bank is looking into the feasibility of joining global indices for bonds with a view to attract foreign funds.
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NASDAQ OMX Launches Fourteen New Indexes In The NASDAQ Newfound Index Family
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BATS Chi-X Europe Welcomes Lyxor ETFs
Lyxor Becomes Second ETF Provider To List On BATS Chi-X Europe – Two Etfs To Commence Trading On 25th November 2013
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S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices
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Technology

SuperDerivatives Hires David Taban, Ex-JP Morgan Head of Energy Options, to Lead Commodities and Energy Business
SuperDerivatives, a global provider of financial information, derivatives technology and trade execution, has appointed David Taban to manage its Commodities and Energy business. David joins SuperDerivatives from JP Morgan, where he was recently Head of Oil Options.
jlne.ws/1bGoySS

Fixnetix Begins Asia-Pac Push with Equinix Global Partnership Deal
Faye Kilburn – WatersTechnology
UK-based low-latency data and trading infrastructure provider Fixnetix and datacenter provider Equinix have signed a global partnership agreement to “promote and extend” the availability of Fixnetix’s datafeeds within Equinix’s global financial services ecosystem.
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SunGard’s Market Data, Trading Network And Cloud Services Chosen To Support ETRE Financial’s New Commercial Real Estate Platform
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Enforcement

Federal Court in California Orders Thomas B. Breen, a Principal of National Equity Holdings, Inc., to Pay $1.75 million to Settle Fraud Charges in CFTC Action
The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court Order against a principal of National Equity Holdings, Inc. (National Equity), Thomas B. Breen, of Orange County, California, requiring Breen to jointly pay restitution to defrauded customers in accordance with a restitution Order set in a related criminal action of $1,059,096, and imposes a civil monetary penalty of $700,000 against Breen, as well as permanent trading and registration bans.
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SEC asks Goldman for compensation of ex-VP Tourre following fraud verdict
Reuters
The U.S. Securities and Exchange Commission has asked Goldman Sachs Group Inc to disclose the salary and bonus of a former bank vice president who was found liable of securities fraud.
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Environmental & Energy

UN Climate Panel Amends CO2 Estimates for Policy Makers
Bloomberg
A United Nations climate panel that was criticized after a 2007 study overstated the rate of glacial melting backtracked on global carbon-emissions estimates.
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Nations Need Renewables, Efficiency and Carbon Targets, IEA Says
Bloomberg
Maria van der Hoeven, International Energy Agency Executive Director, comments on nations’ efforts to transform their energy industries to reduce dependency on fossil fuels. She commented yesterday in an interview in London.
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World Heads for Seventh Warmest Year as CO2 Hits Record
Bloomberg
The world is heading for its seventh warmest year on record with temperatures that were unprecedented two decades ago, the United Nations said.
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Asia-Pacific

Traiana Opens Singapore Office As It Expands In Asia-Pacific
Traiana, the leading provider of pre-trade risk and post-trade processing solutions, announces that it has created a hub for its Asia Pacific business by opening a new office in Singapore.
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Korean securities firms to provide alternative to banks in domestic OTC forex trades
Garima Chitkara – Risk.net
The Korean Ministry of Finance’s move to allow securities firms to trade currencies among themselves will see that sector provide a challenge to the banks in the domestic over-the-counter foreign exchange derivatives market.
jlne.ws/1bGoxOR

Not so happy birthday: Abenomics ages, challenges remain
Reuters
A year after Prime Minister Shinzo Abe took financial markets by storm with promises to revive the moribund Japanese economy, data showed growth slowed sharply and that his “Abenomics” policy mix is yet to secure a durable recovery.
jlne.ws/1bGoxOU

FTSE plots China fixed-income push
Michelle Price
The FTSE brand may be synonymous with the UK stock market, but the index provider is steadily diversifying into the international fixed-income market.
jlne.ws/1bGoyCw

Thai Bourse Donates Funds For Typhoon Victims In The Philippines
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Frontier Markets

India’s retail brokers miss out on equities party
James Crabtree in Mumbai and Ben McLannahan in Tokyo – FT.com
India’s stock market has been rallying to new highs, but far from joining the party the country’s nearly 10,000 retail brokers are facing their toughest trading conditions in more than a decade.
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Who You Calling a BRIC?
Jim O’Neill – Bloomberg
I spent last week in Indonesia, working on a series for BBC Radio about four of the world’s most populous non-BRIC emerging economies. The BRIC countries — Brazil, Russia, India and China — are already closely watched. The group I’m studying for this project — let’s call them the MINT economies — deserve no less attention. Mexico, Indonesia, Nigeria and Turkey all have very favorable demographics for at least the next 20 years, and their economic prospects are interesting.
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