First Read

Phupinder Gill, CME Group – A Look Into Your Future Employment

“As an employer, we need to understand you in a way that makes sense to us and a way that makes sense to the businesses not just as we currently run, but the businesses we want to continue to run as the world evolves.”

It’s not easy to predict much about the future. But Phupinder Gill, CEO of CME Group, is looking forward to see just where the next generation, the so-called Generation Y group, fits into his business.
Watch the video»

SFOA’s CEO Daniel Day-Robinson has a Mountain of a Challenge Rebuilding the Burgenstock Conference
By John J. Lothian

Daniel Day-Robinson has a big challenge in front of him. He wants the SFOA’s Burgenstock Conference to be relevant again. The new CEO of the Swiss Futures & Options Exchange took full control of the conference this year after partnering with the Futures Industry Association last year.

The SFOA has offered 15% off the cost of the attendee charge of the Burgenstock Conference to readers of this newsletter. Use the JLD15 code when signing up at

Of course the FIA is the 800-pound gorilla of international derivatives conferences, with major global events in London, Chicago, Boca Raton and Asia, and is fully merging with the former FOA in the UK (now FIA Europe) and FIA Asia.

Did I say Day-Robinson has a big challenge in front of him?

For the rest of the commentary, click here


CME Group Expands Base Metals Offering with New Aluminium European Premium Futures
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will expand its base metals offering with the introduction of a new Aluminium European Premium Duty-Unpaid (Metal Bulletin) futures contract to begin trading on 21 September, 2015. Pending relevant regulatory review periods, the new contract will be available for trading on CME Globex and for submission for clearing through CME ClearPort, and will be listed with and subject to the rules and regulations of COMEX.

****** CME Group should give away one of those new aluminum Ford F150 trucks, with the bed filled with cases of Coors Light cone top cans as a promotion. I know that would get my attention.


Opinion: Who will suffer most from climate change? Not you
By Bill Gates, MarketWatch
Exclusive: Bill Gates says we can help the world’s poorest farmers overcome floods, droughts and a warmer Earth
A few years ago, Melinda and I visited with a group of rice farmers in Bihar, India, one of the most flood-prone regions of the country. All of them were extremely poor and depended on the rice they grew to feed and support their families. When the monsoon rains arrived each year, the rivers would swell, threatening to flood their farms and ruin their crops.

***** Farmers are the ultimate speculators. Always have been. Always will be.


Deutsche Börse AG launches sale of treasury shares as part of financing of the 360T acquisition
Deutsche Börse AG
Deutsche Börse: Deutsche Börse AG launches the sale of treasury shares through an accelerated bookbuild offering. The offering is open to institutional investors, with the aim of generating proceeds of up to 200 million Euro. The entire proceeds of the offering will be used to partially finance the acquisition of 360T Beteiligungs GmbH. The offering has been sized to protect the rating of the company following the acquisition.

***** If you are in the U.S., please don’t read this, as Deutsche Boerse has put it on the Internet, but it is not for you. I am not sure how that works, but that is what they said.


Chicago Reporter ends print edition
By LYNNE MAREK, Crain’s Chicago Business
The Chicago Reporter, a magazine focused on “race, poverty and income inequality” that got its start in 1972, will publish its last print issue this year in a nod to the changing media landscape.

***** I applied for a job at the Chicago Reporter early in my career. They suggested I write a story about race dynamics of the futures markets as a way to get the job. I was a coward and decided that was not a good career move. I have always appreciated the courage it takes to do this kind of journalism. It also takes not-for-profits to support your organization.


We’ve Hit Peak Barbecue, and Steak Prices Are Partly to Blame
Lydia Mulvany, Shruti Singh, Bloomberg
Home grilling has dipped since ’09 after two decades of growth
Labor Day focus for retailers: `More pork and less beef’
If you’re planning to fire up your grill in the backyard on Labor Day weekend, spare a moment to consider that you’re partaking in a tradition in slow decline.

****** Enjoy the three day weekend in the U.S. The season of summer is not over, but the lifestyle is.


Lead Stories

Sarao allegedly wanted to ‘spoof’ markets
Gina Chon in Washington, FT
Navinder Singh Sarao, the UK futures trader who faces charges of contributing to the 2010 flash crash, discussed in emails his desire to “spoof” the markets and joked that everyone else was “breaking all the rules”, according to a US indictment unsealed on Thursday that provides new details about market manipulation allegations against him.

Flash Crash Trader E-Mails Show Spoofing Strategy, U.S. Says
Suzi Ring, Janan Hanna, Tom Schoenberg, Bloomberg
Failed orders are `costing me,’ Sarao said to tell programmer
New details outlined in 22-count indictment against Sarao
The British day trader accused of contributing to the 2010 flash crash enlisted a computer programmer to help him work out a system to manipulate stock prices, e-mailing pleas for help perfecting his “spoofing” efforts, U.S. prosecutors said in an indictment.

Cheniere Energy chief pushes for a global spot market in LNG
David Sheppard in London,FT
The former Wall Street banker behind plans to launch the first large-scale US natural gas exports to Europe and Asia believes he is not just bringing America’s shale bounty to world markets, but makes the bold claim that he will revolutionise the way the commodity is traded.

All-Night Push After Glitch Hit BNY Mellon; Problems with SunGard systems that delayed pricing led to weeklong crisis; cots and Chinese takeout
At the height of the market volatility on Aug. 24, executives at Bank of New York Mellon Corp. got the news they wanted to hear: A glitch affecting the system that keeps more than a thousand mutual funds running was likely to be fixed soon. BNY Mellon relayed the news to some clients. But the problem was far from over.

As volatility soars, this obscure trading strategy draws Wall Street’s ire
By William Watts, MarketWatch
When markets fall fast and hard, investors look for something to blame. This time around, a lot of the ire is focused on a trading strategy known as risk parity.
The most high-profile accusation came from Leon Cooperman, founder of hedge fund Omega Advisors. According to the Financial Times, Cooperman and his partner Steven Einhorn told investors in a Sept. 1 letter that fundamental factors, including turmoil in China and jitters over the Federal Reserve interest-rate outlook can’t fully explain the magnitude and velocity of the stock market’s drop in August.

Hedge Funds Faced a Test in August, and Faltered
A surge in volatility. Plunging global stock markets. A surprise Chinese currency devaluation. That was August, among the more eventful months for world markets since the collapse of Lehman Brothers and the 2008 financial crisis. In theory, that’s exactly the environment that hedge fund managers have been waiting for. After all, many hedge funds are marketed as helping to smooth out volatility while delivering superior risk-adjusted returns.

Market woes prompt regulator to warn on securities-based loans
Ben McLannahan and Joe Rennison, FT
A US financial regulator has warned about the rapid growth of personal loans backed by securities, as market wobbles highlight the risks of forced sales.

Philip Falcone, Former Head of Vast Fund, Tries a 3rd Act
Philip A. Falcone, the brash hedge fund titan who once managed $26 billion before stumbling and running afoul of regulators, is pressing ahead on a new comeback effort, his second.

Stephen Schwarzman of Blackstone Feels the Agony of Victory
Stephen A. Schwarzman ought to be a satisfied man.
The Blackstone Group, the investment firm he helped found 30 years ago, is hauling in cash at a dizzying pace. His name graces the New York Public Library building at 42nd Street and Fifth Avenue as well as a new complex to be built at Yale. And last year he made $690 million, one of the biggest paydays ever for a chief executive of a public company.

Accused Fraudster Spent His Money on Other Frauds
By Matt Levine, Bloomberg
You can’t fool an honest man, but here’s how often you could apparently fool James Louks and his company FiberPoP Solutions:


EU regulators consult on compromise in derivatives spat with U.S.
The European Union has signaled that one of its key rules for regulating financial derivatives could be aligned with U.S. practice to help to end a lengthy dispute that risks fragmenting the $630 trillion market. The dispute revolves around a rule that would require European market players to hold far more capital than U.S. counterparts for clearing trades, with the disparity holding up a broader transatlantic deal on supervising a derivatives market that largely trades out of London and New York.

China tightens trading rules on forex, stock markets
China has announced tougher rules on trading stock index futures and foreign exchange derivatives as it seeks to steady jittery markets whose weakness has raised concern over the health of the world’s second-largest economy. Facing slowing economic growth and sharp currency and share losses, Beijing has prioritised near-term stability over longer term market liberalisation.

Self-Regulatory Organization (SRO) Rulemaking and National Market System (NMS) Plans

    • BOX: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the Fee Schedule on the BOX Market LLC Options Facility (Release No. 34-75828; File No. SR-BOX-2015-30); see also Exhibit 5


    • BOX: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the Fee Schedule on the BOX Market LLC Options Facility (Release No. 34-75826; File No. SR-BOX-2015-29); see also Exhibit 5

ASIC consults on remaking employee redundancy funds class order
ASIC today released a consultation paper proposing to remake a class order on employee redundancy funds that is due to expire (‘sunset’) in October 2016.

Exchanges & Trading Facilities

CME Group Expands Base Metals Offering with New Aluminium European Premium Futures
PR Newswire
CME Group, the world’s leading and most diverse derivatives marketplace, today announced it will expand its base metals offering with the introduction of a new Aluminium European Premium Duty-Unpaid (Metal Bulletin) futures contract to begin trading on 21 September, 2015. Pending relevant regulatory review periods, the new contract will be available for trading on CME Globex and for submission for clearing through CME ClearPort, and will be listed with and subject to the rules and regulations of COMEX.

LME sets sights on India with metals roadshow
The London Metal Exchange (LME) is broadening its market outreach efforts in India amid growing interest in commodities trading in the region, and is hosting a series of seminars and meetings in New Delhi and Mumbai from 7 – 11 September.

Euronext announces monthly trading volumes for August 2015
Euronext, the leading exchange in the Eurozone, today announced trading volumes for August 2015.

MarketAxess Announces Monthly Volume Statistics for August 2015
MarketAxess Holdings Inc. (Nasdaq:MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced total monthly trading volume for August 2015 of $75.5 billion, consisting of $43.7 billion in U.S. high-grade volume, $26.7 billion in other credit volume, and $5.1 billion in liquid products volume.

Face to face with Peter Fricke
Peter Fricke, Head of Unit, Eurex Singapore Branch Office
Mr. Fricke, how long have you been with Eurex Exchange and what did you do before you joined our company?
I have been with Eurex for more than seven eventful years. My career started with an internship and a subsequent position as a student assistant. After receiving my diploma in Economics from the University of Mannheim in 2009, I started to work as an external consultant first but joined as full time employee after about a year and a half later.

Cross border capital raising in ASEAN made easier
The Monetary Authority of Singapore and Singapore Exchange, together with the Securities Commission Malaysia (SC) and the Securities and Exchange Commission, Thailand, have issued a handbook to implement the Streamlined Review Framework for the ASEAN Common Prospectus. Under the Framework, ASEAN issuers planning a multi-jurisdictional offering of equity or plain debt securities can expect a shorter time-to-market, and faster access to capital across the region.

Insider trading
Companies involved in material discussions obliged to monitor their share trading activity
The Listing Rules do allow companies some latitude when it comes to the timing of announcements of material information; in exceptional cases, the company can withhold the material announcement till later. In so doing, the company is obliged to maintain the strictest confidentiality.

Hedge Funds & Managed Futures

Students ask Education Department to discharge college debt
More than 3,000 former Corinthian College students will have their college loans erased, the first wave of debt relief tied to the collapse of the for-profit higher education chain. The potential cost to taxpayers if all Corinthian students seek relief: $3.2 billion.

A Lot of Money Moved to the Sidelines Last Week
So how befuddled did investors get as August was coming to a close and global stock markets swooned?

U.S.-based taxable bond mutual funds post sixth week of withdrawals
By Tariro Mzezewa
Investors in U.S.-based funds pulled $4.36 billion out of taxable bond funds in the week ended Wednesday, marking their sixth consecutive week of withdrawals, data from Thomson Reuters’ Lipper service showed on Thursday. Riskier U.S.-based high-yield “junk” bond mutual funds posted $714 million of outflows over the same period, resulting in a four-week moving average of negative $508 million, the highest average since mid-July, Lipper data show.

This Adviser Thinks Chinese Stocks Are Nowhere Near Bottoming Out
Kana Nishizawa, Bloomberg
Shanghai Composite seen declining to long-term average levels
Improving profits, reforms needed to revive share market
Chinese stocks are nowhere near bottoming out, said George Magnus, a senior independent economic adviser to UBS Group AG, who correctly predicted in July the rout would deepen.

Pimco Sees Bernanke-Style Saver Glut Capping 10-Year Yield at 3%
Wes Goodman, Bloomberg
Ten-year yields will struggle to push past 3%, Pimco says
Bernanke’s theory says savers funnel money into Treasuries
Pacific Investment Management Co., home to the world’s biggest actively run bond fund, says the savings glut that dictated the direction of the bond market a decade ago is keeping borrowing costs down again in 2015.

Banks & Brokers

Big banks may see nearly 20 percent fall in revenue
By Kevin Dugan, NY Post
The world’s markets are about to get calmer — and Wall Street could end up worse off for it.

JP Morgan loses ‘laggard’ label in electronic charge
By Tim Cave, Financial News
Electronic stockbroking is not an easy sector to break into. A handful of entrenched providers hold sway, gaining the trust of clients can take time and investment, while recent regulatory investigations have shown that reputations in the sector, which are often built over years, can crumble in minutes.

Top Mortgage Analyst Quits JPMorgan to Follow The Beat
Jody Shenn, Bloomberg
Abhishek Mistry went out on top.
He and his colleagues were recognized for the third year in a row by an Institutional Investor survey as one of Wall Street’s premier teams of mortgage-bond analysts. About the same time, he quit his job at JPMorgan Chase & Co. to focus on his startup, Mixcity Inc., which creates software for DJs.

UBS Cuts Hong Kong Stock Target 25% as Black Sky New Reality
Kana Nishizawa, Bloomberg
Slowing economic growth, falling tourism to weigh on earnings
Valuations are still too high given outlook for profits
UBS Group AG lowered its target for Hong Kong’s benchmark stock gauge by 25 percent, saying its worst-case scenario for the city is coming true as the economy weakens and tourism arrivals decline.

Clearing & Settlement

CME Group Successfully Completes First Multilateral Compression Cycle Using TriOptima’s triReduce Service
Nine CME Group IRS clearing members participated in the cycle, which compressed $2.2 trillion in gross notional, resulting in a reduction of 44,933 line items and an additional 6,900 line items partially terminated. Multilateral compression further enhances CME Group’s compression offering, including Compression via Coupon Blending, which has already reduced total notional by more than $11 trillion and total line items by more than 180,000.

LCH.Clearnet plans FRA compression next month
Futures & Options World
LCH.Clearnet is set to expand its swaps compression service to include Forward Rate Agreements in October, marking the latest expansion for a service that is proving popular among large swaps firms. LCH’s Swapclear unit said it plans to extend a particular type of compression known as blended compression to include FRAs from next month, offering another opportunity for firms to reduce the value of over-the-counter derivatives on their balance sheets.

Russia Mimics Euroclear With China Market Link as Ties Grow
Vladimir Kuznetsov Anna Andrianova, Bloomberg
Plan would link countries’ central depositaries, Moiseev says
Yuan-ruble trading jumped fourfold in August on Russia bourse
Russia and China are working on an eastern equivalent to Euroclear Bank SA’s bond, stock and currency settlement services as they seek to boost two-way investment in their markets.

UBS (UBS), Barclays (BCS), Citi (C) and Others Race to Capitalize on Bitcoin’s Blockchain Technology
What can you do with the blockchain, a public account of every Bitcoin transaction ever? No one knows for sure, but big banks like UBS (UBS) , Barclays (BCS) , and, Citi (C) are betting that it may reshape the future of finance

Indexes & Products

Traders Ride the ETF Roller Coaster; Commodity-linked funds have experienced some of the roughest volatility over the past several weeks
Some of the roughest volatility over the past several weeks has been reserved for individual investors who piled into risky bets on commodities prices.

“Interval Alts” Combine Benefits Of Alternative Mutual Funds And Traditional Hedge Funds
Interval Alts strike a useful balance, successfully marrying the interests of managers, clients and brokers. We thus expect the current filing wave to continue.

The Straits Times Index is Changing: What Investors Should Know
The Motley Fool Singapore
As Foolish investors may know, the Straits Times Index (SGX: ^STI), the most prominent market benchmark in Singapore, is made up of 30 different stocks. What may not be that well-known is that the list of 30 is reviewed on a quarterly basis to determine whether any changes should be made.

SIX Financial Information now providing index-linked products data to S&P Dow Jones Indices
SIX Financial Information’s Valordata Feed announced this week that S&P DJI, one of the world’s leading index providers has decided to rely on the Zurich based multinational financial data vendor for index usage data to support its index sales and licensing operations. The Valordata Feed captures a broad range of reference data and valuation prices including current ownership hierarchies, funds composition information and corporate actions. Its data is structured so clients can achieve high levels of automation.


Why tech booms are good but do not last
Richard Waters, FT
Technology: is it in a bubble? That question has been reverberating around Silicon Valley for at least two years. But it is the wrong question. It also distracts from a more serious consideration, and one that has assumed new urgency with the China slowdown and global stock market wobble.


US indicts British ‘Flash Crash’ trader Navinder Singh Sarao
A grand jury in Chicago has indicted a British securities trader for manipulating markets and playing a key role in the 2010 “Flash Crash” in US stocks.

Environmental & Energy

The Oil-Sands Glut Is About to Get a Lot Bigger
Jeremy Van Loon, Bloomberg
The last place oil producers want to be when prices plummet to profit-demolishing lows is midstream on a billion-dollar project in one of the costliest parts of the planet to extract crude.

George Osborne accused of ‘disastrous’ assault on green agenda
By Terry Macalister – The Guardian
Ed Davey, the former energy and climate change secretary, has accused George Osborne of putting tens of billions of pounds’ worth of private sector investment at risk with an assault on the green agenda he pioneered.

Bill to divest state’s public pensions from coal heads to Gov. Jerry Brown
By Melanie Mason – Los Angeles Times
Lawmakers in the Assembly gave final approval Wednesday to a measure that would require the state’s public pension funds to divest from their holdings in thermal coal.


China Seeks to Calm Global Markets by Forecasting Yuan Stability
Olga Tanas, Ryan Chilcote, Bloomberg
China sought to ease concerns that its slowing economy could drag down global growth and signaled it won’t get dragged into tit-for-tat currency valuations.

Alibaba’s Jack Ma, Joe Tsai to Borrow $2 Billion Against Shares; E-commerce giant’s stock price has taken hit recently
Chinese e-commerce giant Alibaba Group Holding Ltd.’s chairman and vice chairman, Jack Ma and Joe Tsai, are planning to borrow more than $2 billion in loans by using their shares in the company as collateral, a person familiar with the matter said.

China’s Stock Market, Economy Have ‘No Correlation’
As growth in the world’s second-largest economy slows and China’s stock market sits nearly 39% below its June high, people are asking how closely correlated the two are. In a video posted to Charles Schwab Corp.’s website, Jeffrey Kleintop, the firm’s chief global investment strategist, told viewers there is no correlation between the two.

China-focused hedge funds lose top spot to Japan peers in August; China hedge funds lost 17.9 pct in June-Aug; Ariose, Tairen China funds among few winners; Inflows fade, fears mount on capital outflows
By Nishant Kumar, Reuters
China-focused hedge funds suffered record losses in the past three months and were overtaken by their Japan-themed peers as this year’s best performers, leaving them at risk of a surge in redemptions.

Frontier Markets

As Sebi-FMC merger looms, bourse-listing system amiss; After combined entity is formed, MCX to be first listed exchange, but without an enabling framework
Business Standard
The Securities and Exchange Board of India (Sebi) will soon have to put in place a framework for listing of stock exchanges, an idea that has been awaiting final approval of the market regulator for the past three years.


McDonald’s all-day breakfast could drive up egg prices
Chicago Tribune
All those nighttime Egg McMuffins could mean higher egg prices at the grocery store, some market researchers say.

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