First Read

A Smart Idea
Doug Ashburn – JLN
We admit it – over the years we have leveled our share of criticism toward the CFTC, its commissioners, some of the things they say and certain rules they have published.

Lately, though, we have had mostly good things to say. The new chairman, Tim Massad, has struck a more conciliatory note with market participants in the U.S. and, perhaps more importantly, abroad. In recent days, new commissioners Chris Giancarlo and Sharon Bowen have each stressed the need to balance the mandates of Dodd-Frank with the realities of the marketplace and the fear of unintended consequences. Without going so far as to call it a “kinder, gentler commission,” especially if one is an institution on the receiving end of a recent fine, we can at least agree that the CFTC has become more pragmatic and responsive in 2014.

Since we are giving credit where credit is due, let us bring your attention to the CFTC’s SmartCheck, a new site that gives investors and would-be market participants a one-stop portal for background checks, the latest news and enforcement actions, and other helpful information.

Read the rest of the commentary! It’s over on the JLN Blog at


CFTC Launches National Campaign to Protect Consumers from Financial Fraud
The U.S. Commodity Futures Trading Commission (CFTC) today launched CFTC SmartCheck, a new national campaign to help investors identify and protect themselves against financial fraud.


Senate Report Criticizes Goldman and JPMorgan Over Their Influence in Commodities Market
Nathaniel Popper and Peter Eavis – Dealbook – NY Times
A two-year Senate-led investigation is throwing back the curtain on the outsize and sometimes hidden sway that Wall Street banks have gained over the markets for essential commodities like oil, aluminum and coal.

***** The good news for the banks is that Carl Levin is retiring. The bad news is he is going out with a bang.


NYSE Acquires True Office, Developer of Interactive Game-Style Training
Tom Groenfeldt – Forbes
Compliance has been called a lot of things, but fun has rarely been one of them. Then True Office came along and turned compliance training into games, with scoring and record-keeping. The company enables global organizations to educate their workforces more effectively by delivering interactive experiences that make complex policies understandable.

***** Compliance has always been a game. It is just the real game has big fines attached to it and it is harder to start the game over.


Top Traders Share Ideas at Sohn London Conference
Laurence Fletcher – MoneyBeat – WSJ
Short-sellers took aim at a forestry company and the booming contemporary art market at this year’s Sohn London Investment Conference. The charity event, produced by Bloomberg Link, where top traders share investment ideas, was headlined by legendary investors Jim Chanos, founder of Kynikos Associates, and Carson Block, founding partner of Muddy Waters Research.

***** I like the name Muddy Waters Research. My research company is going to be called Broken Clock.


Steve Grob, Director, Group Strategy, Fidessa – The Finance Industry: The Case for the Defense

“The truth is that you can’t actually uncouple finance from the real economy…[finance] is the heart of the real economy.”
Steve Grob, director of group strategy of Fidessa, does a bit of role-playing as a “defense attorney” for the financial industry. Grob discusses the importance of the financial industry and its relationship with the global economy, as well as how regulatory matters will affect the future of finance. He brings up the concept of “belief systems” that society has learned to accept as true without thinking about the entire process. For example, when we flick a light switch on, we immediately expect a light to turn on, and we’re not always thinking about the process of how the light is created. The same thought process applies in the financial industry, in the sense that if regulators condone a topic such as HFT, then the general public agrees and sees it in a negative light.

Watch the video »


Does Knowing You Are a Banker Make You More Dishonest?
Julie Steinberg – MoneyBeat – WSJ
Does banking culture lead people to be more dishonest? A new study released today in Nature magazine attempted to answer that question and the results will likely be troubling to those who think the industry’s ethical troubles are overblown.

***** This was a trick quiz, right?


Deutsche Börse And KfW Hold 2014 German Equity Forum
This year’s German Equity Forum (Deutsches Eigenkapitalforum) will take place in Frankfurt from 24 to 26 November 2014. The capital market conference is Europe’s largest information and networking platform and is hosted by Deutsche Börse, KfW acts as a co-organiser.

***** I need to spend more time in Frankfurt.


ConvergEx Unveils ADR Depositary Program
Convergex has unveiled a new ADR Depositary program, the first to hit the marketplace in almost 20 years. In addition to trading and converting ADRs with Convergex, clients now can direct Convergex to create ADR programs for them to invest in, allowing these U.S. investors new access to foreign companies.

***DA: Add ADRs to the list of things going “open source.”


Sponsored Content
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Lead Stories

U.S. SEC enacts rules to protect exchanges, dark pools from glitches
Sarah N. Lynch – Reuters
U.S. regulators adopted a new rule Wednesday that requires stock exchanges and some larger trading platforms to take steps to protect against market disruptions such as technology glitches or natural disasters.

***DA: I’m sure we are completely safe now.

BATS Global Markets to Lay Off 56 Employees
Bradley Hope And Scott Patterson – WSJ
BATS Global Markets Inc., one of the country’s largest stock exchange operators, is planning to lay off 56 employees early next year, according to a filing with the state of New Jersey.

Goldman Sachs’ metal storage unit paid customers to boost queues -report
Goldman Sachs Group Inc’s metals storage unit paid Deutsche Bank, Glencore and British hedge fund Red Kite millions of dollars in incentives that helped extend wait times in the firm’s Detroit storage hub, a Senate report showed on Wednesday.

Goldman prepares to rebut Senate probe in Levin’s committee showdown
Goldman Sachs Group Inc will rebut on Thursday allegations made by a powerful Senate committee report that condemned Wall Street banks for exploiting physical commodity markets to manipulate prices and gain unfair trading advantages.

New Scrutiny of Goldman’s Ties to the New York Fed After a Leak
Jessica Silver-Greenberg, Ben Protess and Peter Eavis – Dealbook – NY Times
From his desk in Lower Manhattan, a banker at Goldman Sachs thumbed through confidential documents — courtesy of a source inside the United States government.

Market Manipulation Probe Entangles Chicago Trading Firm
Matthew Leising – Bloomberg
Chicago proprietary trading firm 3Red Trading LLC and co-founders Igor Oystacher and Edwin Johnson were subpoenaed in a market manipulation probe by the Commodity Futures Trading Commission, as U.S. regulators intensify investigations of the practice of “spoofing.”

***JM: This is from yesterday’s First Read section, and now we have a link to the whole article.

BGC Partners Extends Tender Offer To Acquire GFI Group
BGC Partners, Inc. a leading global brokerage company primarily servicing the financial and real estate markets, today announced that it has extended the expiration date of its tender offer to acquire all of the outstanding shares of GFI Group Inc. it does not currently own for $5.25 per share in cash.

Baltic Exchange faces EEX challenge as ship futures market heats up
Jonathan Saul – Reuters
Britain’s Baltic Exchange faces competition from EEX, part of Deutsche Borse, as it tries to revive its loss-making Baltex dry bulk freight derivatives platform.

Top bankers talk risk and reputation
Financial News
The biggest names in European banking gathered at the Financial News Investment Banking Awards in London this week, with senior figures from Deutsche Bank, Citigroup and Nomura taking time out to discuss what 2015 has in store.


SEC Announces Next Meeting of the Advisory Committee on Small and Emerging Companies
The Securities and Exchange Commission today announced that its Advisory Committee on Small and Emerging Companies will hold its next meeting on Wednesday, Dec. 17, beginning at 9:30 a.m. ET.

SEC Adopts Rules to Improve Systems Compliance and Integrity
The Securities and Exchange Commission today voted to adopt new rules designed to strengthen the technology infrastructure of the U.S. securities markets.

CFTC Chief Massad: Futures Industry Is Healthy and I’m Keeping It That Way
Bret Kenwell –
Tim Massad, chairman of the Commodities Futures Trading Commission, told TheStreet TV the futures industry is “healthy” right now and he aims to keep it that way.

CFTC Commissioner Sharon Bowen Seeks Public Comment on Scope and Composition of New Advisory Committee
Today, Commissioner Sharon Y. Bowen, Sponsor of the Commodity Futures Trading Commission’s newly-formed Market Risk Advisory Committee (MRAC), is seeking public input on MRAC’s priorities and its composition through a Federal Register release. The comment period ends on December 3, 2014.

NFA Notice to Members: FINRA announces increase in examination fees for 2015

NFA Notice to Members I-14-30: FinCEN issues an advisory on the FATF-identified jurisdictions with AML/CFT deficiencies

Remarks At 31st International Conference On The Foreign Corrupt Practices Act, Andrew Ceresney, Director, SEC Division Of Enforcement, National Harbor, Maryland, Nov. 19, 2014

Steven Maijoor, Chair Of ESMA, Speaks At CFA Conference – Regulatory Measures To Prevent Another Crisis

Statement At Open Meeting On Regulation SCI, SEC Chair Mary Jo White

Statement At Open Meeting On Regulation SCI, SEC Commissioner Daniel M. Gallagher

Regulation Systems Compliance & Integrity (SCI), SEC Commissioner Kara M. Stein

The Vital Relationship Between The Regulator And The Advisory Industry – Speech By John Griffith-Jones, Chairman Of The FCA, At The Association Of Professional Financial Advisers (APFA) Annual Gala Dinner Delivered At Banking Hall, London

Exchanges & Trading Facilities

London Stock Exchange Derivatives Market To Offer Stock, Depositary Receipt And Index Options To Us Investors
Following an application to the SEC, London Stock Exchange Derivatives Market today announces that it has received class no-action relief status for its UK and IOB stock, depositary receipt and index options. This new status enables London Stock Exchange Derivatives Market, and its eligible members, to offer certain US registered broker-dealers and large financial institutions these products, further enhancing the market’s global offering.

LME has not given up on gold
Perrine Faye –
The London Metal Exchange (LME) still has ambitions to get into the gold market despite recently losing out in the race to administer the new London gold fix, chief executive Garry Jones said.

Canada Classifies KRX As A Designated Stock Exchange
The Canadian Ministry of Finance notified the Korea Exchange (KRX) that it classified the KRX’s KOSPI and KOSDAQ markets as a Designated Stock Exchange* (effective on October 31, 2014)

FIF Capacity Statistics For October 2014: Four New Record 1 Second Peaks: SIAC OPRA, BATS BZX TOP, UTP UTDF, BATS Options MCASTPITCH AGG

HKEx: Market Highlights Of Shanghai-Hong Kong Stock Connect

CBOE, C2 and CFE Trading Schedule for the Thanksgiving Holiday

NYSE Member Firms Report Third-Quarter Results

Hedge Funds & Managed Futures

Warburg Pincus Defends Lack of Hurdle
Alec Macfarlane – MoneyBeat – WSJ
A managing director at Warburg Pincus has defended the private equity firm’s decision to take its share of profits from funds it manages before reaching a minimum rate of return.

October Shorts Undo Gains for Crispin Odey’s Hedge Fund
Joe McGrath – MoneyBeat – WSJ
Crispin Odey, one of the best-known hedge fund managers in Europe, has seen returns at his flagship EUR1.8 billion ($2.3 billion) hedge fund fall by more than 10% this year, after fresh losses in October undid the gains of late summer.

Ex-Schroders CIO Brown steps down from IMA board
Anna Fedorova – Investment Week
Former Schroders chief investment officer Alan Brown has stepped down from the board of the Investment Management Association (IMA).

You are not experienced
Dan McCrum – Financial Times
Statistically speaking. Pieria has some stats from Citywire on the tenure of fund managers in its database of 17,000 funds, judged to be one of the important factors that financial advisors say they consider when choosing funds for their clients.

It’s Investor Behavior, Not Investment Behavior That Matters
Michael Batnick – The Irrelevant Investor
Much of the investment community have become enamored with alternative ways to slice and dice the indices. According to Morningstar, “Strategic Beta” accounted for 18% of total industry (ETP) assets at the end of 2013. However, while much of the attention is on the nomenclature- “smart” vs. “factor” vs “strategic,” perhaps the most important aspect is being overlooked; like all things investing, the product won’t to be the number one driver of returns, your behavior will.

Banks & Brokers

Credit Suisse and Nomura lose Korea equity derivative heads
Low volatility on the Korea market and greater competition from local securities houses are hitting global banks’ profits in Seoul

Berenberg names new head of London office
Nick Kostov – Financial News
Berenberg, Germany’s oldest bank, has named its global head of equities David Mortlock as the new chief of its London-based operation, a role that puts him in charge of 200 staff across the region.

Goldman sacks staff for leaking confidential NY Fed information
Goldman Sachs Group Inc said it fired two staff after a junior employee passed confidential information from the Federal Reserve Bank of New York, his former employer, to a senior colleague in the investment bank.

Jefferies hires former Marex DMA head
Luke Jeffs – Futures & Options World
Jefferies International has hired Julien Leadbeater, the former head of direct market access at Marex, marking the latest senior hire by the US broker in London.

Wells Fargo Appoints Elizabeth Duke to Board
Duke Is a Former Member of the Fed’s Board of Governors

BGC Announces It Has Resolved Matters With The FCA
BGC Partners, L.P., a subsidiary of BGC Partners, Inc., a leading global brokerage company primarily servicing the financial and real estate markets, today announced that following detailed discussions with the FCA, BGC has resolved matters with the FCA regarding exceeding a 10% stake in GFI Group Inc. without first informing and seeking the approval of the FCA pursuant to the UK’s controller requirements.

European Court of Justice adviser rejects UK banker bonus appeal
Alex Barker in Brussels – Financial Times
Britain has suffered a blow in its legal bid to overturn the EU’s banker bonus cap after an adviser to Europe’s highest court rejected London’s case for annulling the pay curbs.

Clearing & Settlement

Human Rights Campaign Names DTCC a “Best Place to Work” For Third Consecutive Year
The Human Rights Campaign (HRC) has named The Depository Trust & Clearing Corporation (DTCC) a 2015 “Best Place to Work” for lesbian, gay, bisexual and transgender (LGBT) employees, marking the third consecutive year that DTCC has been honored with the designation.

UOB Bullion and Futures helps Strengthen Its Trading and Clearing Capabilities with SunGard’s Post-Trade Cross-Asset Processing and Managed Services
UOB Bullion and Futures (UOBBF), the brokerage arm of United Overseas Bank (UOB), has deployed SunGard’s post-trade cross-asset processing solution and managed services to support its trading and clearing services on major global exchanges.


Fidelity Debuts Oculus Rift-Based Virtual Investment App
Greg MacSweeney – Wall Street & Technology
Fidelity Labs, Fidelity Investments’ 75-person R&D think-tank, has launched StockCity, a virtual-reality view of an investor’s portfolio. StockCity uses Oculus Rift to simulate the investment cityscape.

Evercore ISI Selects REDI’s Multi-Broker Network
Ivy Schmerken – Wall Street & Technology
REDI’s independent trade management platform will provide access to Evercore ISI’s electronic execution platform for US equities.

Citibank Brazil Deploys Award-Winning BPM Solution: Now What?
Becca Lipman – Wall Street & Technology
Citibank Brazil automated commercial customer onboarding and reduced cycle time by 70%. But how can a global organization harness the successes of its islands of solutions?

SGX selects Market Quality Dashboard To Evaluate Singapore Market: CMCRC
Press Release
Singapore Exchange (SGX) has become the first exchange to take advantage of the Market Quality Dashboard from the Capital Markets Cooperative Research Centre (CMCRC) to evaluate the quality of its market.

McObject, Lucera Offer eXtremeDB Database in Cloud
Federal Way, Wash.-based in-memory database provider McObject will make its high-performance eXtremeDB Financial Edition database available on an as-a-service basis in the cloud to clients of New York-based high-performance infrastructure provider Lucera Financial Infrastructures, under a partnership between the two vendors.

Otas adds customization, text generation to analytics platform
London-based analytics provider OTAS Technologies is planning to shortly roll out a new feature as part of its OTAS Core market intelligence platform that will allow users to customize their analytics screens and will incorporate natural-language generation tools to create text commentary based on the analytics.


Another Swiss Banker Wants His Day in U.S. Court
John Letzing – MoneyBeat – WSJ
When Swiss lawyer Edgar Paltzer wanted to secure bond last year in a New York court, he did so with a 19th-century painting worth about a half a million dollars. Now Stefan Buck, the Swiss bank employee charged alongside Mr. Paltzer in April 2013 with allegedly aiding American tax evasion, has offered up his own bond proposal: $100,000 cash.

Ex-Chief of Iceland Bank Sentenced to Jail for Role in 2008 Crisis
Chad Bray – Dealbook – NY Times
The former chief executive of Landsbanki of Iceland was sentenced to prison on Wednesday, the third of the top executives of the country’s three largest banks that the government has successfully prosecuted and jailed for misconduct during the financial crisis.

Royal Bank of Scotland Fined $88 Million Over Technology Failure
Chad Bray – Dealbook – NY Times
British regulators fined the Royal Bank of Scotland 56 million pounds, or about $88 million, on Thursday over a technology failure that left millions of customers unable to access their accounts in 2012.

Regulators fine three banks GBP56m for IT failures
Laura Miller – Investment Weeks
Regulators have fined the Royal Bank of Scotland (RBS), NatWest and Ulster Bank GBP56m for IT failures which meant customers could not access ban

[AMF Canada] Administrative penalties against Simon Vodovos and Vilaron

Environmental & Energy

Senate Rejection of Keystone XL Measure Sets Up 2015 Showdown
Keystone XL pipeline backers came up one vote short in the Senate and vowed to try again in January, when they expect to have enough support to send a bill to President Barack Obama.

Senate effort to approve Keystone XL falls one vote short
The US Senate voted by 59 votes to 41 to approve the controversial Keystone XL tar sands pipeline yesterday, falling just short of the 60 vote majority needed to pass the bill.

Could Obama cut deal on Keystone pipeline? Don’t rule it out
Steve Holland and Roberter Rampton – Reuters
President Barack Obama might be open to using the Keystone pipeline as leverage with Republicans if they cooperate on other aspects of his long-stalled domestic agenda, such as investing in infrastructure, closing tax loopholes or reducing carbon emissions.


Japan’s Financial Services Agency: Memorandum Of Cooperation With The Financial Services Commission And The Financial Supervisory Service Of South Korea
On November 20th, 2014, the Financial Services Agency (FSA) signed a Memorandum of Cooperation regarding assistance and mutual cooperation in the area of financial supervision with the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) of South Korea.

Northbound trade trumps southbound on Stock Connect debut
Simon Osborne – The Trade
As expected, northbound orders on the first day of the Shanghai-Hong Kong Stock Connect outpaced southbound orders, as PRC traders looked south for mainland firms previously inaccessible in their home markets.

China and Singapore begin direct currency trading
Simon Osborne – The Trade
China Foreign Exchange Trade System has announced that China has begun direct trading between its currency and the Singaporean dollar.

Shenzhen and Shanghai exchanges pledge improved ties
Simon Osborne – The Trade
The Shenzhen and Shanghai Stock Exchanges have said that they will try to deepen communication links and improve cooperation.

ASX and Bank of China to expand cooperation
Simon Osborne – The Trade
The Australian Securities Exchange (ASX) and the Bank of China have signed an agreement to co-operate on the development of the renminbi as a currency in Australia’s financial markets.

Japan’s plan for further stimulus is not courageous but foolhardy
William White – Financial Times
In a world of unprecedented expansionary actions by central banks, the Bank of Japan is set to outdo them all. Its plans to expand significantly the scale of its asset purchases imply that the size of its balance sheet relative to gross domestic product will far outstrip that of others.

KRX: Adjustment Of Trading Unit & After-hour Block Trading At KONEX

Thai Alternative Bourse’s Companies Post 8.7 Pct Sales Growth In 9 Months Of 2014

HKFE Announces Revised Margins For HKEx Futures

Frontier Markets

The Saudi Stock Exchange (Tadawul) Voted “The Best Managed Stock Exchange In The Middle East 2014” For The 3rd Consecutive Year

Angola sets sights on capital-markets reform
Kanika Saigal – Euromoney Magazine
The development of Angola’s capital markets has been long promised but recent indications from the country’s capital-markets commission suggests secondary public-debt trading could begin as early as next month. Nevertheless, it’s unclear when the stock exchange will open its doors.

Buyout firms explore Africa’s frontier markets
Alec Macfarlane – Financial News
When Kohlberg Kravis Roberts invested roughly $200 million in a rose farm in Ethiopia this summer, many in the market were surprised.

DGCX Volumes Rise 28% In October
Trading volumes on the Dubai Gold and Commodities Exchange (DGCX) grew 28% from the same period in 2013, a month in which the Exchange significantly expanded its Emerging Markets portfolio with four new products.

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