Tough Nut: RCM Finds New Ways to Get Managed Futures to RIAs
By Jim Kharouf, JLN
Starting a new financial asset management company in the midst of a financial crisis does not seem like a great idea, particularly one focused on managed futures.
But Bobby Schwartz saw an opportunity to move into the space and created RCM Asset Management in 2010. The former CME floor trader also saw potential where others saw disaster when MF Global collapsed in October 2011.
“We started to look at the amount of money allocated to managed futures versus hedge funds, and thought there was an opportunity there,” said Schwartz, RCM’s CEO and managing partner.
Schwartz along with principal Ed Sweeney were able to bring the MF Global broker team that worked in the managed futures space after the firm collapsed in 2011. RCM also created a futures brokerage, RCM Futures and RCM Alternatives, to expand its menu of commodity trading advisors and commodity pool operators.
“Soon after MF Global happened, that really enabled us to grow pretty quick,” he said. “We knew it was going to be a challenge because it was going to shake a lot of people out of the space, and allow us to come in and build something,” Schwartz said.
Where some see a woeful disparity between managed futures and hedge fund investment flows, Schwartz sees growth potential. In the third quarter 2014, assets under management in the managed futures were $312 billion versus $2.25 trillion in hedge funds, according to BarclayHedge data. The managed futures space also posted dismal returns since it shined in 2009 posting returns of -3.09 percent in 2011, -1.70 percent in 2012 and -1.42 percent in 2013. Last year’s turnaround has helped, with a 7.7 percent return.
Ex-Sentinel CEO gets 14 years prison for $666 mln fraud
By Jonathan Stempel, Reuters
The former chief executive of Sentinel Management Group Inc in suburban Chicago was sentenced on Friday to 14 years in prison, after been convicted of running what federal prosecutors called a roughly $666 million fraud.
***** Fourteen years is a devil of a sentence.
GFI Urges Shareholders to Wait on BGC Offer, Seeks Alternatives
by Steven Dickson, Bloomberg
GFI Group Inc. urged its shareholders to take no action on a bid by BGC Partners Inc. to acquire the company.
***** Mawage is wot bwings us togeder tooday. Mawage, that bwessed awangment, that dweam wifin a dweam.
LME North America Update Forum – Chicago
The LME is returning to Chicago on Thursday 5 March to give a market update on current activities and initiatives at the Exchange. The sessions will give LME stakeholders a chance to hear and discuss developments since our last update in 2014.
***** Are you a LME stakeholder in Chicago? Then you should be there. Tell them I sent you.
FINRA Investor Education Foundation and the American Library Association Announce $1.8 Million in Grants to Public Libraries to Support Financial Literacy
The Financial Industry Regulatory Authority (FINRA) Investor Education Foundation and the American Library Association (ALA) have announced $1.8 million in grants to 21 recipients as part of the Smart investing@your library initiative.
***** FINRA spending more of the Wall Street fine money on something positive.
It’s Pork Over Beef in America for First Time Since 1952
By Megan Durisin – Bloomberg
In the U.S., the country that made the hamburger a global icon of American fast-food cuisine, beef is about to fall another spot on the meat scale.
***** Will Hamburgers finally be made of pork?
Videogame Firms Power Up Networks for Online Players; Companies Spend Millions of Dollars to Attract Web Gamers
By Sarah E. Needleman and Drew FitzGerald
High-speed traders, make room for high-speed gamers. Videogame companies are spending millions of dollars to build faster networks for online games that attract tens of millions of players apiece. Gameplay slowdowns—often called lag or latency—can result in the early death of characters, a frustration that causes some players to lash out at fellow gamers, bad-mouth games on public message boards or simply quit playing.
***** If you build an algo to play games for you, are you really having fun?
MarketsWiki Page of the Day
MarketsWiki Recent Updates
Companies, Organizations and Groups
58,149,510 pages viewed, 8,146 articles, 189,202 edits
Rise and fall of a commodities powerhouse
Gregory Meyer in New York, FT
The trading house’s business will be wound down in the first quarter, owner Occidental Petroleum said last week. Occidental had bought the former Philipp Brothers in 2009 from Citigroup.
How the NYSE Mid-Day Auctions Would Work
by Bradley Hope, WSJ
The New York Stock Exchange is planning to introduce a five-minute midday auction to their markets, according to a new filing.
ICAP to face EU fine over yen cartels
Alex Barker in Brussels and Philip Stafford in London, FT
ICAP faces an EU fine this week for allegedly facilitating cartels on yen-denominated inter-rate benchmarks, as Brussels tackles the holdouts in rate-rigging probes that have already resulted in about EUR1.7bn in penalties.
Sugar traders have informal talks about euro-based contract
By David Brough, Reuters
European beet farmers back European contract
Dismantling of EU quotas to boost liquidity in ICE futures
Euronext looks at sugar in commodities push
Sugar traders have held several meetings to discuss the possible launch of a European euro-denominated futures contract following lobbying from both beet growers and industrial users.
ICE Benchmark Administration to Administer the LBMA Gold Price from March 2015; LBMA Gold Price to replace the London Gold Fix
Intercontinental Exchange (NYSE:ICE), the leading global network of exchanges and clearing houses, and the London Bullion Market Association (LBMA), have today announced that the new LBMA Gold Price, which replaces the long established London Gold Fix, is expected to be launched in March 2015. As announced by the LBMA in November 2014, ICE Benchmark Administration (IBA) will officially become the administrator of the new pricing mechanism.
Swiss Trader Mercuria Hires Andrew Good as CFO for North America
By Andy Good – Bloomberg
Mercuria Energy Group Ltd., the fourth largest oil trader, appointed Andrew Good chief financial officer for North America as the Swiss firm increases staff and operations in the U.S., Canada and Mexico.
Michael Masters on speculation, oil, and investment
by Izabella Kaminska, FT
Back in May 2008, nobody — especially regulators — had a clue about what was causing crude oil prices to spike to $100-per-barrel-levels, and mostly everyone was inclined to either blame “China” or “speculators” or some combination of the two.
Small Banks Score Gains in Lifting Regulation; ‘We’re Not Wall Street,’ Community Lenders Tell Washington, Targeting Dodd-Frank
By Victoria McGrane And Ryan Tracy
Small banks are scoring big victories in their efforts to relax postcrisis rules by delivering a consistent message to lawmakers and policy makers: We’re not Wall Street.
MBAs Are Shunning Industries That Create Jobs; Industries that treat American workers relatively well tend to get short shrift from MBAs, who seek higher salaries in sexier fields
By Natalie Kitroeff – Bloomberg
Manufacturing is like the boyfriend America will finally settle down with: It may not be the sexiest industry, but it sure is dependable.
The fattest paychecks were awarded to MBAs headed for hedge funds which on average paid $200,000 out of school, and those hired by private-equity or venture capital firms, which paid $160,000.
Billionaire Steve Cohen eyes college graduates for his firm
By Svea Herbst-Bayliss, Reuters
Billionaire Steven A. Cohen, who oversees only his personal fortune after decades of running one of the world’s biggest hedge funds, wants to recruit newly minted college graduates into his army of hundreds of investment professionals.
Blackstone’s CEO says this is the biggest mistake he sees people make in their Wall Street careers
By Stephanie Yang, Business Insider
According to Blackstone Group co-founder Steve Schwarzman, young Wall Streeters should not be following in his footsteps. Schwarzman co-founded his own firm in 1985 at age 37, which now has more than $290 billion under management. At the 21st Annual Venture Capital and Private Equity Conference, Schwarzman told Harvard Business School students that launching their own firms too early could ruin their careers, the New York Times reported Monday.
Archer-Daniels profit beats, but revenue misses
By Michael Calia, MarketWatch
Archer Daniels Midland Co. reported a surge in profit as costs declined, but the company’s revenue fell.
Obama Seeks More Money for Agencies Enforcing Dodd-Frank Rules
by Silla Brush, Dave Michaels, Bloomberg
President Barack Obama is making a renewed push to boost funding for Wall Street’s top cops after regulators said budget constraints were keeping them from enforcing rules put in place after the financial crisis.
EU says pension funds should have two year exemption from central clearing
FTSE Global Markets
The European Commission has today published a report that recommends granting pension funds a two-year exemption from central clearing requirements for their over-the-counter (OTC) derivative transactions. The report, which is based on an extensive study requested by the European Commission, concludes that central counterparties (CCPs) need this time to find solutions for pension funds.
ESMA advises EC on MAR implementation
ESMA was tasked by the European Commission to provide the implementing details which will make MAR applicable to market participants and investors. These measures consist of technical advice and technical standards, the first of which are published today.
MAR defines activities and behaviours that constitute market abuses, e.g. insider dealing or market manipulation.
How the Justice Department, S&P Came to Terms; Pact With Justice Department Would Be for More Than $1.37 Billion
By Timothy W. Martin and Andrew Grossman
A record settlement expected Tuesday between the Justice Department and Standard & Poor’s Ratings Services came together over two days in mid-January when the two sides agreed to move past a feud triggered by a surprise downgrade of U.S. debt, according to people familiar with the talks.
White House Seeks More Money for Wall Street Oversight; SEC Budget Would Increase to $1.72 Billion Under Obama’s Proposed Spending Plan
By Andrew Ackerman, WSJ
Markets regulators charged with implementing and policing post-financial-crisis rules would get significant bumps to their funding levels under the White House’s proposed $4 trillion spending plan that was unveiled Monday.
Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans
BOX: Notice of Filing of Proposed Rule Change to Amend its Rules for the Listing and Trading on the Exchange of Options Settling to the RealVol SPY Index (“Index”) (Release No. 34-74178; File No. SR-BOX-2015-06; January 30, 2015); see also Exhibit 5
BOX: Exhibit 3 (Release No. 34-74178; File No. SR-BOX-2015-06; January 30, 2015)
CME: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Enhancements to its Risk Model for Credit Default Swaps (Release No. 34-74179; File No. SR-CME-2015-002; January 30, 2015)
FICC: Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Modify the Fee Schedule in the Mortgage-Backed Securities Division Clearing Rules (“Release No. 34-74033; File No. SR-FICC-2014-12; January 12, 2015”)
NYSE: Notice of Designation of Longer Period for Commission Action on Proposed Rule Change Amending Its Continued Listing Requirements In Relation to the Late Filing of a Company’s Annual Report with the Securities and Exchange Commission As Set Forth in Section 802.01E of the Exchange’s Listed Company Manual (Release No. 34-74184; File No. SR-NYSE-2014-65; January 30, 2015)
NYSEMKT: Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex Options Fee Schedule to Make a Change to the Amex Customer Engagement Program in Section I.E. of the Fee Schedule (Release No. 34-74180; File No. SR-NYSEMKT-2015-07; January 30, 2015); see also Exhibit 5
Exchanges & Trading Facilities
All change for derivatives
London Stock Exchange Group
The dominant four derivatives exchanges – CME, Eurex, ICE and its recently acquired rival LIFFE – have faced little competition over the last decade. Some have offered a one-stop shop with cost incentives to keep clients loyal. Others have kept a tight grip on intellectual property rights, making it hard for rivals to cut in on popular products. Now, however, the environment is changing.
CME Group Volume Averaged 15.6 Million Contracts per Day in January 2015, Up 21 Percent from January 2014
Delivered highest January average daily volume since 2008
Achieved double-digit year-over-year average daily volume growth across all product lines
Reached record energy average daily volume of 2.2 million contracts, supported by records in crude oil, Brent (BZ), and refined products
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that January 2015 volume averaged 15.6 million contracts per day, up 21 percent from January 2014. Total volume for January 2015 was more than 312 million contracts, of which 87 percent was traded electronically. Options volume in January averaged 3.1 million contracts per day, up 22 percent versus January 2014, with electronic options growing 35 percent over the same period.
Average daily volume of 8.9 million contracts at Eurex Group in January
An average daily volume of 8.9 million contracts (January 2014: 8.5 million) was recorded at the international derivatives markets of Eurex Group in January 2015. Of those, 6.7 million were Eurex Exchange contracts (January 2014: 5.5 million), and 2.2 million contracts (January 2014: 3.0 million) were traded at the U.S.-based International Securities Exchange (ISE).
CBOE Holdings Reports January 2015 Trading Volume
ADV of 5.4 Million Contacts Up 5% Over December
CBOE, C2 and CFE ADV Increase From Previous Month
Total Volume of 107.2 Million Contracts Traded
CBOE Holdings, Inc. (NASDAQ: CBOE) reported today that average daily volume (ADV) during January for options contracts on Chicago Board Options Exchange® (CBOE) and C2 Options ExchangeSM (C2SM) and futures contracts on CBOE Futures Exchange (CFE® was 5.4 million contracts, an increase of five percent from December 2014 and a decrease of seven percent from January 2014. Monthly ADV at CBOE, C2 and CFE each posted increases over December.
CBOE Futures Exchange Reports January 2015 Trading Volume
4.6 Million VIX Futures Contracts Traded
VIX Futures ADV Up 9% Over Year Ago
CBOE Futures Exchange, LLC (CFE) today reported that January 2015 monthly average daily volume (ADV) and monthly total volume, both for exchange-wide at CFE and futures on the CBOE Volatility Index® (VIX® Index), rose from year-ago levels.
DFM profits skyrocket after MSCI inclusion
Dubai’s stock exchange reported a 167 per cent surge in net profit for last year amid higher trading activity after local stocks were incorporated into MSCI’s Emerging Markets Index and new listings boosted investor appetite.
Delisting Two (2) Brent Crude Oil CFD Futures Contracts
Key figures SIX Swiss Exchange
SIX Group Ltd
UNILEVER N.V. LISTS EUR 750 MILLION BOND ON EURONEXT AMSTERDAM
Press Release Point
Unilever has announced EUR750,000,000 0.5% per cent Fixed Rate Notes due 3 February 2022, issued by Unilever NV and guaranteed by Unilever PLC and Unilever United States, Inc. The anticipated closing date of the offering is February 3rd 2015.
Turnover in the region of EUR 9.7 billion recorded by Boerse Stuttgart in January
2015 kicks off with a significant increase in trading activity // All asset classes post strong gains // Record month for equities and ETP trading
Hedge Funds & Managed Futures
Draghi’s Negative-Yield Vortex Draws in Corporate Bonds
By Alastair Marsh and Sally Bakewell – Bloomberg
Credit markets are being so distorted by the European Central Bank’s record stimulus that investors are poised to pay for the privilege of parking their cash with Nestle SA.
Switzerland Rejoins Currency Wars
By Mark Gilbert – Bloomberg
Two weeks after Switzerland stunned currency traders by abandoning the franc’s peg to the euro, it seems that the central bank is quietly getting back in the market. With central banks from Denmark to Singapore to Canada easing monetary policy in recent weeks, the Swiss authorities face an even bigger battle trying to restrain their strengthening currency.
Mac McQuown Is Reinventing the Corporate Bond. Is He Solving a Big Problem or Creating an Even Larger One?
by Edward Robinson, Bloomberg
John “Mac” McQuown yanks on a chain and hoists open a metal roll-up door with a clang. In a flowery aloha shirt, shorts and sandals, he looks like a retiree with little more on his mind than sipping a mai tai by the pool. But McQuown is actually one of the architects of the modern investing system, and he’s far from retiring, Bloomberg Markets magazine will report in its March issue.
Banks & Brokers
Nomura Said to Shrink U.S. High-Grade Debt Unit Amid Turmoil
by Lisa Abramowicz, Bloomberg
Nomura Holdings Inc. is retreating from U.S. investment-grade corporate credit trading after last year’s bout of volatility in fixed-income markets, according to two people with knowledge of the decision.
GFI Group Board Comments on BGC Tender Offer; Urges Shareholders to Take No Action on BGC Tender Offer
Says Board Is Actively Exploring Strategic Alternatives with Any and All Interested Parties to Maximize Value for All Shareholders
GFI Group Inc. (“GFI Group”, “GFI” or the “Company”), a leading intermediary and provider of trading technologies and support services to the global OTC and listed markets, issued the following statement from the Board of Directors in response to BGC Partners, Inc. (“BGC”) tender offer to acquire the outstanding shares of GFI, which is set to expire on February 3, 2015:
BGC Partners Urges Shareholders To Disregard GFI’s Odd Claim That It “Will Explore Strategic Alternatives” And Promptly Tender Into The Best And Only Offer Available
BGC’s Tender Offer Provides GFI Shareholders with Significant Value, Certainty and Speed to Closing
BGC Urges GFI Shareholders to Tender Their Shares Into BGC’s $6.10 Per Share Offer by the February 3 Deadline
BGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners,” “the Company,” or “BGC”), a leading global brokerage company primarily servicing the financial and real estate markets, today responded to the odd announcement by GFI Group Inc. (NYSE: GFIG) (“GFI Group” or “GFI”) that it “will explore strategic alternatives.”
Clearing & Settlement
Tradition hires ahead of Euro swap clearing launch
Futures & Options World
Interdealer broker Tradition has made three hires to expand its hybrid and electronic business as the firm continues work on its new European clearing service. The broker has hired veterans John Wilson, Dan Torrey and Rob Mountain to work in various roles focused on clearing and electronic trading.
CME fears futures clearing retreat
by Joe Rennison, Risk.net
At least three firms have already abandoned their swaps clearing plans, and CME worries the leverage ratio could see futures clearers avoiding certain contracts, reducing client numbers or exiting the business altogether
Italian banks go global as Europe prepares for T2S
Italian banks are preparing for Target2-Securities as Europe seeks to reform its cross-border trading infrastructure and bring down barriers between EU countries. The preparations are driving smaller regional banks to make deals with larger global banks as they prepare for implementation in June.
Indexes & Products
S&P Said to Settle Calpers Ratings Lawsuit for $125 Million
by Matthew Robinson, Joel Rosenblatt, Bloomberg
Standard & Poor’s reached a $125 million lawsuit settlement with the largest U.S. state pension fund over inflated ratings on residential-mortgage bond deals, two people familiar with the matter said.
The Danger of Indices
We’re surrounded by investment products that track indices. S&P 500 index funds seek to replicate the performance of the S&P 500 index – easily accomplished by simply buying the constituent stocks in designated weights. Other indices are more difficult to track – for example when the product invests in futures to approximate spot market returns (GSCI) or acquires only a subsample of index constituents (Barclays Ag).
S&P Dow Jones Indices Announces Changes to the S&P/TSX Canadian Indices
S&P Dow Jones Canadian Index Services will make the following change in the S&P/TSX Canadian Indices:
Exclusive: Google Is Developing Its Own Uber Competitor
The two companies are going to war over self-driving taxis
by Brad Stone
Uber faces an ever-growing cast of adversaries that includes dubious regulators, litigious drivers, hostile members of the press, and some well-funded rivals. But the most significant threat to the app-based transportation company may be much closer to home: one of its biggest investors, Google.
London is home to Europe’s hottest fintech startups as 24 of the FinTech50 come from the capital
London once again dominates in a new list of the hottest European FinTech startups as the capital continues to put its backing behind the sector’s growth. Businesses from the capital represent almost half of those chosen as the FinTech companies to watch in 2015 by a panel of senior executives from across the world of finance, investment and technology.
Foreign fintech firms shut out by Chinese regulations
Tech companies are showing concern over regulations requiring firms selling computer equipment to Chinese banks to reveal secret source code and build back doors into their products. The new rules, which also require companies to submit to invasive audits, are part of an attempt to strengthen cybersecurity in critical Chinese industries, the Chinese government has said. But companies are concerned that Beijing is trying to force them out of one of the industry’s largest and fastest growing markets.
News Corp avoids US charges on phone hacking
Matthew Garrahan in New York, FT
The US Department of Justice has told Rupert Murdoch’s News Corp and 21st Century Fox that they will not face US charges over phone hacking.
Environmental & Energy
Cash-Starved Oil Producers Trade Treasured Pipelines for Money
By Rebecca Penty – Bloomberg
Oil and natural gas producers confronting a cash drain are auctioning off the family silver: pipelines and processing plants.
California Creates Most Clean Tech Jobs Paying Investors
by Mark Chediak, Michael B Maroism – Bloomberg
California’s bet on green energy is paying off, with clean technology companies creating more jobs and investing more money than competitors in any other state.
Fields of Gold: GMO-Free Crops Prove Lucrative for Farmers; Non-Biotech Corn, Soybeans Fetch a Premium as Processors Respond to Rising Demand
By Jacob Bunge, WSJ
Last spring, for the first time in 20 years, Indiana farmer Jim Benham planted his fields entirely with soybean seeds that hadn’t been genetically modified to withstand herbicides.
Gas Traders Ignore Unrepentant Bull, Punxsutawney Phil
by Tim Puko, WSJ
Natural-gas traders are giving famed groundhog Punxsutawney Phil the cold shoulder.
China’s anti-corruption probe broadens into finance sector
Gabriel Wildau in Shanghai, FT
China’s anti-corruption campaign is spreading to the country’s financial sector following the arrest of two senior bank officials in recent days.
China is Turning Fecal Sludge Into ‘Black Gold’
by Natasha Khan, Bloomberg
Heinz-Peter Mang is obsessed with turning human waste into gold. As millions of Chinese move to cities, the German engineer is convinced the country is on the way to hitting the jackpot.
Securities and Exchange Board of India Notices
Interim Order in the matter of Garima Homes and Farmhouses Limited
Recovery against Shri. Benny Abraham
Recovery against M/s Coimbatore Flavors and Fragrance Limited
Adjudication Order in respect of Shri Rahul Jain and Others in the matter of FIEM Industries Ltd.
PR – Order in the matter of M/s Chakra Infrastructure Limited
PR – Order in the matter of M/s Megasys Medi Life Limited
New York Times Co. Profit Falls as Company Makes Strides in Digital Ads
By RAVI SOMAIYA, NY Times
The New York Times Company said on Tuesday that its annual operating profit declined in 2014 because of investments in digital journalism and severance costs from a round of layoffs. Revenue was flat as growth in digital advertising and circulation offset declines in its print business.
New Magazine Teaches Children Financial Lessons
By SYDNEY EMBER, NY Time
Jean Chatzky, the financial editor of NBC’s “Today” show, has made a career sharing personal finance tips with adults. Now, she is trying to reach a much younger audience.