Boca Bits and Pieces
The latest installment of our occasional JLN series “Bits and Pieces” comes to you via Boca Raton, FL, where several of us are hiding from this year’s winter-that-won’t-quit. We hear that Chicago was again slammed with a storm and the nasty weather will reach New York by Thursday. By the way, John is with us in Florida, despite the mistaken byline that made people think we left him in breezy Chicago.
The FIA kicked off this year’s conference by introducing the new FIA Global brand and structure at a morning press briefing. We were offered a first look at the affiliation between FIA, FOA and FIA Asia, and also met Simon Puleston-Jones, the new head of FOA (renamed FIA Europe under the new structure). The new logo, which features the letters F, I and A takes the “Futures” out of FIA, reflecting its global presence and inclusion of OTC markets. The new organization will also battle hard to differentiate itself from the former FOA, as well as the former FSA, which is now the FCA.
FIA President Walt Lukken loves the Beatles and has a very old Apple iPod, or so we all learned as he introduced the new FIA logo.
With the new FIA structure comes anew FIA board. Mike Dawley is now chairman of FIA Global; Barclays’ Michael Yarian was elected chairman of FIA U.S. The full election results can be found below.
SGX elaborated a bit on the two announcements it made this week, namely the introduction of futures on several new currency pairs including Chinese renminbi (RMB) and the new collaboration with Dalian Commodity Exchange. This comes on the heels of last week’s approval by the CFTC of futures contracts based on three MSCI indexes, Thailand, Philippines and India. According to SGX CEO Magnus Bocker, 4.2 billion people live within a six hour radius of Singapore, and the emerging middle classes in these emerging markets have put Singapore in a nice position as it celebrates its 30th anniversary in 2014. Bocker said Singapore was on a path to become the “London of Asia.”
Online equity and options platform tradeMONSTER announced its entry into futures trading with a low cost structure and full integration of analysis between futures and equity accounts. Is this a continuation of the commission wars that defined the early 2000s?
Eurex is set to launch TAIFEX products, including Taiex futures, options and weekly options, beginning May 15th. Under the agreement, Eurex will list products during European and North American trading hours, initially clearing and settling thought Eurex Clearing, and then consolidating at TAIFEX.
There is some serious news coverage at the conference with representatives from Reuters, FT, WSJ, Futures Industry Magazine, Bloomberg, Markets Media, Futures Magazine and five members of the John Lothian News team.
More to come tomorrow.
Trading Technologies Introduces Next-Generation Trading Platform and Unveils New Brand Identity
Trading Technologies International, Inc. (TT), the independent provider of high-performance trading software to a wide spectrum of end users, unveiled its new software-as-a-service trading platform, which TT is calling Nextrader, and new brand identity at a press event at the 39th Annual International Futures Industry Conference.
CBOE Gets Its Tradelegs
CBOE announced an investment this morning, into a firm called Tradelegs, a software firm that specializes in portfolio trading functionality.
CBOE, which did not disclose the dollar investment in New York-based Tradelegs, said that the browser-based, cloud-based technology will allow users to enter a view on the securities and options markets for an entire portfolio. The new product, which is live now, provides institutional clients such as hedge funds, family offices and others. The software can calculate the result of options and underlying stock positions – including maximum profit or loss scenarios.
Ed Tilly, CEO of CBOE, said that the software will allow firms to “hedge risk inherent in their portfolio.”
Tilly categorized the investment as “small” but exchange officials said it is another tool that could help spread the use of options given its ease of use. CBOE has other investments such as stake in Pulse, an order entry system and IPXI, the intellectual property exchange.
CBOE also announced plans to launch weekly options on the Short-term Volatility Index beginning April 10, pending regulatory approval.
FIA Global Elects Directors
FIA Global today announced the election of directors for the board of FIA Global, the organizational structure established to unite FIA, FIA Asia and FIA Europe.
***JM: “Tomorrow, the galaxy.” You can use that for free, Mike.
Boca Bits Day One
Chuck Mackie – Maven Wave Partners
Today was day one of the 39th annual trek to someplace warmer than New York or Chicago, otherwise known as FIA Boca. Like most conferences, it started somewhat slowly but had its share of highlights and some promise of more interesting things to come in day two.
Acting head warns of CFTC underfunding
Neil Munshi in Boca Raton – FT.com
Mark Wetjen, acting head of the Commodity Futures Trading Commission, has warned that a lack of funding and staffing for his agency poses big risks to financial markets.
***JM: Tying reduced capability to reduced budget: sensible. Implying that lots more money would result in full preventive control over markets? Not so much.
Many active managers cannot justify fees
John Authers – FT.com
How active is your fund manager, and what chance do they really have of beating the market? These questions are linked.
***JM: If we’re talking obligatory payments like taxes, I can understand the ongoing discussion. But investment fees are pretty optional, last I checked, and I don’t understand why folks are so indignant about something so avoidable.
Hedge funds guard data more, give clients new reason to grumble
After years of complaining about high fees and lackluster returns, hedge fund investors have something new to grumble about: It is getting harder to see even the most basic data about what’s happening with their money.
***JM: For me, this is way more important than fees. “You needn’t concern yourself about what we’re doing with your money”? Oh, I think I rather should.
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
47,573,843 pages viewed, 7,847 articles, 180,445 edits
OCC eyes rebate cuts for members
Philip Stafford in Boca Raton – FT.com
The Options Clearing Corporation, which clears for all US options exchanges, is considering reducing the rebates it pays members as it examines ways to raise its working capital requirements to meet new rules.
SGX Introduces RMB FX futures
Singapore Exchange (SGX) will introduce a new set of Asian currency futures to expand its current suite of foreign exchange (FX) futures in the third quarter of 2014, subject to regulatory approval. The new Asian FX suite includes currency futures contracts on Chinese renminbi (RMB), Japanese yen and Thai baht follows closely after the initial launch of six FX futures contracts in November 2013, which have seen over US$1 billion in notional value traded in the four months since it began trading.
ICE to Create Credit-Swap Futures Within Weeks, Exec Says
Matthew Leising – Bloomberg
Will be based on most-recent series of swaps, such as the Markit CDX North American Investment Grade Index, ICE SVP Chris Edmonds says at FIA conference in Boca Raton, Fla. Product “will have CDS characteristics,” Edmonds says. NOTE: Previous ICE credit-swap futures failed to win market share.
Futures Options Markets: Ready, Set, Grow
Matt Simon – TabbFORUM
Futures options volumes are poised for steady growth as volatility, rising interest rates, and regulation drive demand for the products and electronification streamlines access to the market.
Derivatives trade reporting rules suffer a rocky start
Liz Salecka – Financial News
The reporting of derivative trades under the European Market Infrastructure Regulation is proving anything but a clear-cut exercise and, as issues persist, many industry players believe it could take up to six months longer to get things right.
Inquiries to Change Dynamics of Currency Trading
SWAHA PATTANAIK – NYTimes.com
Around the world, investigators are trying to find out if the largely unregulated foreign exchange market was manipulated. Even before the investigations are completed, the pace of change will pick up in the $5 trillion-a-day market, in both what moves currencies and the way business is done.
Bank of England Governor Pledges More Integrity After Currency Inquiry
The Bank of England’s reputation is at stake as its independent directors conduct a review into whether bank officials knew of or condoned potential manipulation of the currency markets, Mark J. Carney, the bank’s governor, told lawmakers on Tuesday.
Lawsky’s Office Starts Taking Applications for the ‘BitLicense’
Paul Vigna – MoneyBeat – WSJ
The New York Department of Financial Services on Tuesday announced it is accepting proposals and applications for what is expected to become the “BitLicense,” a certificate allowing bitcoin-related exchanges to operate in the state. It expects to issue the licenses at some point later this year, marking the first official government oversight of digital-currency businesses.
Chilton Says He’ll Leave U.S. Swaps Overseer Next Week
Silla Brush – Bloomberg
Bart Chilton says he’ll leave the U.S. Commodity Futures Trading Commission next week after almost seven years of pushing for limits on oil and natural gas speculation, as well as curbs on algorithmic and high-frequency trading.
CFTC Staff to Host a Public Roundtable to Discuss Risk Management Practices by Commodity Pool Operators
The Commodity Futures Trading Commission (CFTC) today announced that staff will hold a public roundtable on Tuesday, March 18, 2014, from 9:30 a.m. to 3:00 p.m., to discuss risk management practices by Commodity Pool Operators.
CFTC Studying Jurisdiction Over Bitcoin
MoneyBeat – WSJ
The Commodity Futures Trading Commission is looking at whether the agency has jurisdiction over bitcoin and other virtual currencies, the agency’s top official said.
Even open capital needs a watchdog
Andrew Hill – FT.com
Denigrate, imitate, eliminate are the three steps that incumbents typically take to see off challengers using an unconventional business model. But there is a fourth – regulate.
U.S. court OKs part of DTCC lawsuit against CFTC
Parts of a lawsuit filed by the Depository Trust & Clearing Corp against the top U.S. derivatives regulator in a fight over swaps data will be allowed to proceed, a U.S. federal judge ruled.
Keynote Address Of Acting CFTC Chairman Mark Wetjen To 39th Annual International Futures Industry Conference
ESMA Sees Improved Securities Market Conditions, Although Risks Remain Elevated
Overall, ESMA’s report finds that EU securities markets and investment conditions in the EU improved in the second half of 2013, based on better macro-economic prospects, which also contributed to reduced systemic risk in that period. However, overall risks remained at high levels for EU securities markets as reflected in by the rapid propagation of uncertainty from emerging markets (EM) countries to EU markets early 2014.
FINRA Issues New Investor Alert, Bitcoin: More than a Bit Risky
The Financial Industry Regulatory Authority (FINRA) issued a new investor alert called Bitcoin: More than a Bit Risky to caution investors that buying and using digital currency such as Bitcoin carry risks. While speculative trading in bitcoins carries significant risk, there is also the risk of fraud related to companies claiming to offer Bitcoin payment platforms and other Bitcoin-related products and services.
[AMF Canada] March is Fraud Prevention Month – Caution regarding offers related to WCM777
The Autorité des marchés financiers (the “AMF”) is warning Québec consumers about an investment scheme marketed under the name “WCM777.” The scheme originated in California and is offered mainly as part of hotel presentations and through Internet ads and webinars.
FCA says general insurance add-on industry must make changes
Exchanges & Trading Facilities
Prague Stock Exchange Preps Dividends Index Data
The Prague Stock Exchange is preparing to launch a new index that reflects the payment of dividends by its individual constituent stocks, in a move to provide investors with a more accurate picture of return levels and to boost the allocation of the Czech market in regional portfolios.
Bucharest Stock Exchange Dials up Mobile Data App
Giulia Lasagni – WatersTechnology
The Bucharest Stock Exchange announced it has launched a new mobile app that allows investors to access market data information more efficiently anywhere, anytime via Apple and Android smartphones.
Madrid Stock Exchange 2013 Ombudsman Report
Rise In Requests For Information Filed By Issuers, Which Become The 3rd Main Type Of ApplicanT
Deactivation Of Bovespa FIX And Soma FIX
The BOVESPA FIX and SOMA FIX platforms will be deactivated in the second quarter of 2014.
NYSE MKT Issues Short Interest Report
NYSE Group Inc. Issues Short Interest Report
NASDAQ Announces End-Of-Month Open Short Interest Positions In NASDAQ Stocks As Of Settlement Date February 28, 2014
Hedge Funds & Managed Futures
Pimco Trustee Bashes Bill Gross’s $200 Million Salary
Steven Russolillo – MoneyBeat – WSJ
The knocks against the bond king keep coming. The latest critique against Bill Gross, co-founder of bond behemoth Pacific Investment Management Co., comes from a longtime trustee to the firm, who lashed out at Mr. Gross’s reported $200 million annual salary.
Pimco’s Gross set to soften style after investor criticism
Stephen Foley in New York – FT.com
Bill Gross, the embattled head of Pimco, has promised to give his portfolio managers more freedom to express dissent, as he faces mounting questions and criticism from investors, analysts and even a member of his own board of trustees.
***JM: Folks don’t change so easily; if it were that simple, wouldn’t he have shifted his approach the first X number of times El-Erian said, “Cut it out”?
Virtu admits weakness on expense accounting
Arash Massoudi in New York – FT.com
Virtu Financial, the trading firm that this week revealed plans for a US public listing, has suffered from material weaknesses in how it accounts for and reports its expenses, according to a person familiar with the matter.
Virtu IPO Poised to Make a (Multi-) Billionaire of Vinnie Viola
Bradley Hope and Telis Demos – MoneyBeat – WSJ
High-frequency trading could soon officially mint its first billionaire. Vincent “Vinnie” Viola, the founder of Virtu Financial Inc., could have his stake valued at around $2 billion once the company sells shares to the public, according to two people familiar with the matter.
Morningstar Names Charlson to Head Alternatives Research
Chicago-based data and investment research provider Morningstar has appointed Josh Charlson director of alternative funds research, responsible for the vendor’s alternative investment research analyst team and for editing the vendor’s Alternative Investments Observer quarterly newsletter.
Steven A. Cohen’s SAC picks new name: Point72
Steven A. Cohen, whose hedge fund SAC Capital Advisors pleaded guilty to insider trading, is changing the name of his firm to Point72 Asset Management as it shifts focus to managing his own assets from serving as a hedge fund for wealthy investors following an agreement with the U.S. government.
***JM: Hm, and I was sure he’d choose “Nothing Amiss Here LLC”
Investors eye golden returns from water rights
A state-run system giving farmers fixed allocations for river water flowing into the country’s agricultural heartland is tempting speculators to buy up those rights in anticipation of higher prices.
***JM: Soon as I see somebody take a controlling interest in the rain, I’m on the first rocket to Mars.
Nominations Open for the 14th Annual European Single Manager Awards 2014
The Hedge Funds Review European Single Manager Awards 2014, now in its fourteenth year, recognizes the best of Europe’s hedge fund managers. Held exclusively for the European hedge fund industry, the event continues to attract the top names and remains the most prestigious in its category.
Banks & Brokers
BofA’s Head of Global Prime Brokerage in Talks to Leave — Update
Julie Steinberg – WSJ.com
Bank of America Corp.’s head of global prime brokerage is in discussions to leave the firm, people familiar with the matter said. Stuart Hendel, who has held the position since 2011, talked with bank officials in recent days about leaving in the next few months, the people said.
Fixed-income veteran Michele Foresti exits Deutsche Bank
Matt Turner – Financial News
One of the top European executives in Deutsche Bank’s giant fixed-income sales and trading operations is leaving – the second senior departure from the bank’s markets business to come to light this week.
Cyprus Names Its Top Auditor to Lead Central Bank
Cyprus on Tuesday appointed Chrystalla Georghadji, an anticorruption watchdog, to replace its central banker, who resigned abruptly a day earlier in the face of tensions with the government.
Top Citigroup executives take lead on Banamex probe: WSJ
Top Citigroup Inc executives Manuel Medina-Mora and Brian Leach are taking the lead on an internal probe into alleged fraud at the U.S. bank’s Mexican unit Banamex, the Wall Street Journal reported, citing people familiar with the matter.
Regulatory firestorm rocks leveraged finance
Louise Bowman – Euromoney magazine
The leveraged finance market enjoyed a record year worldwide in 2013. As the number-one destination in the search for yield it attracted seemingly insatiable investor demand and corporates only too willing to take advantage of financing terms very much in their favour.
Clearing & Settlement
Catastrophe Prevention Drives Insurance Pitch to Clearinghouses
Matthew Leising – Bloomberg
A group of insurers is for the first time offering to shoulder risk for clearinghouses backing hundreds of millions of derivatives trades, proposing more protection in markets where a collapse could cripple the global financial system.
CCP Insurance for Armageddon Time
Matt Leising has an interesting story in Bloomberg about a consortium of insurance companies that will offer an insurance policy to clearinghouses that will address one of the most troublesome issues CCPs face: what to do when the waterfall runs dry. That is, who bears any remaining losses after the defaulters’ margins, defaulters’ default fund contributions, CCP capital, and non-defaulters’ default fund contributions (including any top-up obligation) are all exhausted.
LCH.Clearnet Introduces EGCPlus Central Clearing Service for the Tri-Party Repo Market in Collaboration with Euroclear and the Banque de France
LCH.Clearnet SA has launched EGCPlus, a central clearing service for the tri-party repo market, in collaboration with Euroclear and the Banque de France. The new service will enable fixed income trading desks, treasurers and other market participants to efficiently manage Eurosystem eligible collateral and to generate liquidity in a cleared environment, while benefitting from balance sheet netting and capital efficiencies.
European Commodity Clearing: Trade Reporting Services Successfully Launched
In mid-February, the European Commodity Clearing (ECC) successfully expanded its offering with reporting services required under EMIR (European Market Infrastructure Regulation). In the context of the clearing regulation, all market participants are obliged to forward data on concluded derivatives market transactions to a Trade Repository. The ECC customers can now delegate this task which, in part, includes high administrative efforts to the clearing house.
Industry Study Finds Need For Improved Post-Trade Automation in Exchange-Traded Derivatives Market
The push toward an exchange-traded derivatives (ETDs, also known as cleared derivative) market has exposed gaps in the post-trade process used by market participants to clear and settle these transactions, according to the new study from Greenwich Associates, a leading research based consulting firm, sponsored by Omgeo, the global standard for institutional post-trade efficiency.
No CDS spread spillover from Ukraine crisis
Joe Rennison – Risk.net
Russia and Ukraine’s CDS spreads have jumped 20% as the political crisis continues, but neighbouring countries remain unaffected
CME Group Clearing: NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (A) Effective Wednesday, March 12, 2014
Indexes & Products
SGX to launch options on China A50 futures
Singapore Exchange (SGX) aims to launch SGX FTSE China A50 Index options in the third quarter of 2014 to cater to the risk management needs of global investors, and in response to supportive industry feedback. Subject to final regulatory approval, the new contract will be listed as options on the SGX FTSE China A50 Index futures (SGX China A50 futures).
Platinum ETF holdings hit record high
Platinum holdings in physically backed exchange-traded funds have hit a record high after fresh inflows into funds listed in London and Johannesburg, and are set to rise further as a strike in major producer South Africa grinds on.
JSE Lists New Range Of ETNs
Today, BNP Paribas, one of the world’s largest banking groups, lists a range of Exchange Traded Notes (ETNs) on the JSE. These ETNs will offer South African investors greater opportunities to diversify their investment portfolios through offshore exposure.
New db X-Trackers Equity Index ETF Launched On Xetra – ETF Is Based On The Performance Of Asian Stock Corporations With Currency Hedging
STOXX Asean-Five Select Dividend 50 Index Licensed to Nomura to Underlie Exchange-Traded Note
Charity-Run HFT Shop Picks IPC for Connectivity
Jake Thomases – WatersTechnology
Vivienne Court, a high-frequency arbitrage firm based in Sydney, has selected the Financial Markets Network from New York-based IPC to cover its voice and electronic trading network connectivity requirements.
RLPC: SunGard spinoff SunGard Availability preps $1.275B in debt
SunGard Availability Services is coming to market with a $1.275 billion credit in connection with its spinoff from SunGard Data Systems as the underperforming division is sold off, sources told Thomson Reuters LPC.
Perseus Offers Bitcoin Trading On ATLAS ATS
Perseus Telecom, a leading provider of high-speed global connectivity, High Precision Time and Market-to-Market networks announced today trading Bitcoin on ATLAS ATS in New York, Hong Kong and Singapore. ATLAS ATS is a Wall Street proven digital currency exchange platform, securely designed, compliance driven and deployed for maximum liquidity. Perseus will be the exclusive Network Service Provider (NSP) for ATLAS ATS and has the ability to offer trading of any asset class worldwide on the Perseus high precision network of fibre and microwave access.
SEC Charges Animal Feed Company and Top Executives in China and U.S. With Accounting Fraud
The Securities and Exchange Commission today charged an animal feed company and top executives with conducting a massive accounting fraud in which they repeatedly reported fake revenues from their China operations in order to meet financial targets and prop up the stock price.
Environmental & Energy
Reducing Europe’s carbon: set bold targets and aim for the impossible
Rob Boogaard – The Guardian
There has been much discussion and debate since the EU Commission recently unveiled its proposed 2030 carbon targets. While the energy lobbies argue the targets are too ambitious, the green lobbies assert they’re not ambitious enough.
**JB: Just talking about carbon targets is probably too ambitious a goal for the energy lobbies.
Coal to the Rescue, but Maybe Not Next Winter
Matthew L. Wald – The New York Times
As the end of the harshest winter in recent memory approaches, the bill is coming due for millions of consumers who are not only using more electricity and natural gas but also paying more for whatever they use. And there might not be relief in future winters, as the coal-fired power plants that utilities have relied on to meet the surge in demand are shuttered for environmental reasons.
Emissions Pioneer Losing Clout as EU Ban Looms: Carbon & Climate
Alessandro Vitelli – Bloomberg
Thirteen years after the United Nations set up the first carbon emissions market, the global trading system’s influence is waning as it gives way to local and regional plans to combat climate change.
Singapore Broker Exodus Seen Quickening: Southeast Asia
Jonathan Burgos – Bloomberg
Singapore’s shrinking brokerage industry is set to get even smaller as trading restrictions planned by regulators dent profits, according to a body that represents individual brokers.
Exclusive: China central bank ready to cut bank reserves if growth falters – sources
China’s central bank is prepared to take its strongest action since 2012 to loosen monetary policy if economic growth slows further, by cutting the amount of cash that banks must keep as reserves, sources involved in internal policy discussions say.
HKEx: Admission of HK Electric Investments and HK Electric Investments Ltd to List of Designated Securities for Short Selling
Thai Bourse Market Report For February
Dalian Commodity Exchange: Notice On Adjusting The Designated LLDPE And PVC Delivery Warehouses
Ice grips LatAm’s equity markets
Rob Dwyer – Euromoney magazine
The data is misleading, say analysts; the region’s markets are fundamentally fine. Institutional investors are sticking around, but local companies are finding that they need a convincing story to attract international money.
Malaysian Capital Market Grew By 10.5% To RM2.7 Trillion – Resilient Amid Global Volatility