First Read

Matthew Rees, R.J. O’Brien – Three Old Words For New Generations of Futures Trading
Matthew Rees, chief relationship officer of R.J. O’Brien & Associates, discusses a different perspective of technology, and the importance of keeping the human element when building and maintaining relationships with customers. Rees mentions how there is a “sweet spot” when utilizing new communication tools and staying connected to the “traditional world”. He also gives a warning about how new technology could inadvertently isolate customers.

Watch the video »

***** RJO’s Matt Rees did a great job, capturing the spirit of a TED Talk.


Alan Greenspan Takes Part in ALS Ice Bucket Challenge
Steven Russolillo – MoneyBeat – WSJ
Even Alan Greenspan is participating in the ALS Ice Bucket Challenge. The former head of the Federal Reserve had the privilege of dumping ice water on his wife and MSNBC reporter Andrea Mitchell, who accepted the challenge from Debbie Wasserman Schultz, a Congresswoman in Florida.

***** Talk about your irrational exuberance.


How Does High-Frequency Trading Affect Individual Investors?
The recent buzz over the Michael Lewis book “Flash Boys,” among other things, has raised the issue of the role—and consequences—of high-frequency trading in today’s markets. With this issue in mind, we asked The Experts: How does high-frequency trading affect individual investors?

***** It scares the bejesus out of them.


A new AIM for Icap’s Michael Spencer?
Nick Goodway – London Evening Standard
It is now well over two years since Michael Spencer’s broking giant Icap took over the very junior stock market Plus Markets, which it renamed ISDX. Since then, not too much has happened.

***** Did he get an AIM from heaven?


CFTC keeps up stream of no-action letters
Luke Jeffs – Futures & Options World
The US Commodity Futures Trading Commission has issued two no-action letters to US swap traders and an Indian clearing house, marking the latest letters from the US futures regulator criticised for overusing this form of regulation.

***** The CFTC takes so much no action, you would think they were Congress.


Sound and Fury in Bank Settlements, Still Signifying Nothing
WILLIAM D. COHAN – Dealbook – NY Times
Once again last month, we were treated to the sorry spectacle of Attorney General Eric H. Holder Jr. holding a news conference to proclaim that a “too big to fail” bank had been brought to justice for its reprehensible behavior in the years leading up to the 2008 financial crisis. All things considered, it was fine theater with the obvious caveat that nothing even remotely close to justice had been served.

***** Can you send a bank to jail? If you send a banker to jail, what happens back at the bank? If you fine the bank, are you really hurting the stockholders? If you hurt the stockholders, will they make changes in the bank management? If you change the bank management, will you change the behavior of the bank. If the banks behavior changes, how long will it change for. If there are good banks and bad banks, how can I tell the difference? Do bad banks have tats?


Will redemption gates cause runs? Redux
David Keohane – Financial Times
And by redemption gates we mean rules that give a financial intermediary the right to impose redemption restrictions (keep your money) when things get tense and liquidity is scarce. Rules like the SEC approved in July allowing money market funds sold to both retail and institutional investors “to impose temporary suspensions on redemptions, or gates, if a fund’s level of weekly liquid assets fell below 30 per cent of its total assets. The fund could also impose a liquidity fee of up to 2 per cent on all redemptions in those circumstances.”

***** Back to under the mattress we go.



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Lead Stories

U.S. SEC launches broad compliance review into wrap fee accounts
Sarah N. Lynch – Reuters
U.S. regulators have asked investment advisory firms to hand over records in connection with “wrap fee” accounts they offer clients, as part of a review to determine if they are complying with federal securities laws.

SEFs receive a 12-month documentation reprieve
Rob Daly – The Trade
Swap execution facility (SEF) operators are breathing a little easier as the Commodity Futures Trading Commission (CFTC) has given SEFs conditional relief from certain recordkeeping requirements relating to confirmations of uncleared swaps.

Standard Chartered Settles Money Laundering Case
BEN PROTESS – Dealbook – NY Times
In a deal that strikes at the heart of corporate recidivism, the British bank Standard Chartered has agreed to pay a $300 million fine and suspend an important business activity to settle an investigation over its failure to weed out transactions prone to money laundering.

FESE warns on shift from exchanges to OTC venues
Joe Parsons – Futures & Options World
The Federation of European Securities Exchanges (FESE) has warned the European plan to exempt off-exchange equity derivatives from clearing will see liquidity shifting from exchanges to unregulated platforms.

Aston Martin ‘Myth’ Tested as Hedge-Fund Pay Slumps
Lindsay Fortado – Bloomberg
Bonuses for hedge-fund employees in London have dropped by 94 percent since 2012 as returns in the industry declined, according to a salary-data provider. The average bonus for directors, or mid-level employees, plummeted to 8,000 pounds ($13,300) this year from 135,000 pounds in 2012, said in a statement.


SEC Announces Municipal Advisor Exam Initiative
The Securities and Exchange Commission today announced that its Office of Compliance Inspections and Examinations (OCIE) is launching an examination initiative directed at newly regulated municipal advisors.

IBOR Before It Was “IBOR”
Bob Leaper – Wall Street & Technology
While its catchy new nomenclature and explosion in popularity has given the outside world an impression that it is novel, the same conversations about it were happening twenty years ago. So why then is IBOR the latest buzz word for firms today?

Fund Manager Pay Curbs Seen Unlikely With FCA Lauding Incentives
Lindsay Fortado and Sarah Jones – Bloomberg
Fund managers are entitled to be paid millions of pounds if they’re delivering high returns for investors, the U.K. markets regulator said, the first sign it won’t seek to impose wage caps on the industry.

CFTC Staff Issues Time-Limited, Conditional No-Action Relief Regarding Documentation of Confirmations of Uncleared Swap Transactions
The U.S. Commodity Futures Trading Commission’s (Commission) Division of Market Oversight (DMO) recently issued a no-action letter providing swap execution facilities (SEFs) time-limited, conditional relief from certain data reporting and recordkeeping requirements in relation to confirmations required for uncleared swap transactions executed on or pursuant to the rules of a SEF under Commission regulation 37.6(b).

CFTC Staff Issues No-Action Letter for Clearing Corporation of India Ltd.
The U.S. Commodity Futures Trading Commission’s (Commission) Division of Clearing and Risk (DCR) recently issued a time-limited no-action letter stating that DCR will not recommend that the Commission take enforcement action against Clearing Corporation of India Ltd. (CCIL) for failing to register as a derivatives clearing organization (DCO) pursuant to Section 5b(a) of the Commodity Exchange Act (CEA).

ESMA Announces Two Vacancies In The CRA Supervision Team

ISDA/FIA Europe Submission On The ESMA Clearing Obligation For Interest Rate Derivatives CP

Exchanges & Trading Facilities

David Wright joins MarketAxess from RBS
Electronic trading platform operator MarketAxess Holdings Inc said it hired David Wright from Royal Bank of Scotland Group Plc as head of investor and dealer client sales in Europe and a member of its management team in London.

Euronext expands options service to its own stock
Luke Jeffs – Futures & Options World
Euronext, the European exchange that span-off the IntercontinentalExchange two months ago, has included its own stock in a new options trading service, marking its latest push into European equity derivatives.

Euronext Launches Equitie Options On Euronext N.V.
Press Release

NYSE Member Firms Report Second-Quarter Results

Hedge Funds & Managed Futures

Passport Cuts Risky Short Bets Seeing No Shame in Losses
Kelly Bit – Bloomberg
For John Burbank’s Passport Capital LLC, shorting individual stocks has just become too hard. The $3.9 billion hedge-fund firm, which rose 220 percent in 2007 by wagering on a bust in subprime mortgages, reached the conclusion after losing money in June on some of its bets, it said in a second-quarter letter to clients, a copy of which was obtained by Bloomberg News.

Pimco Makes New Hires to Its Global Equities Team
Andy Pearce – WSJ
At the world’s biggest bond firm, equities specialists are in demand. Pacific Investment Management Co., or Pimco, made a clutch of new hires Tuesday to its global equities team, the first senior recruits by the firm’s global head of equities Virginie Maisonneuve who joined from Schroders in January.

Pimco’s Maisonneuve embarks on equities expansion
Andrew Pearce – Financial News
Pimco has ramped up efforts to diversify its strategy beyond its traditional fixed income offering with a clutch of senior hires for its global equities team under Virginie Maisonneuve.

Wells Fargo Seeks to Boost Asset-Management Business
Kirsten Grind and Emily Glazer – WSJ
Wells Fargo & Co. aims to double the size of its asset-management unit to $1 trillion over the next decade through acquisitions and more aggressive sales to big investors, according to executives carrying out the plan.

Norway’s Wealth Fund Gains $31 Billion on Global Stock Surge
Saleha Mohsin – Bloomberg
Norway’s sovereign wealth fund, the world’s largest, returned 192 billion kroner ($31 billion) in the second quarter as energy stocks and emerging markets led a rally amid turmoil in Iraq and Ukraine.

Norway oil fund sets out expansion plans
Richard Milne – Financial Times
Norway’s $885bn oil fund is shaking up its top executives after criticism about its investment in Formula 1 and worries about how it will deal with its growing size.

eVestment Hedge Fund Asset Flows Report: Hedge Fund Assets Drop 0.49% – Flows Still Positive, But Slowing; Macro, Credit Fund See Outflows

Threadneedle to close former LVAM multi-manager fund
Dan Jones – Investment Week
Threadneedle is to close its Worldwide Select multi-manager fund, one of the range that it acquired from LV= in 2011.

Swaps Panel Delays Payout Auction on Argentine Bonds
PETER EAVIS – Dealbook – NY Times
Some investors were expecting to collect their winnings soon on a bet they made against Argentina’s bonds using financial instruments called credit default swaps. But a rare challenge to the swaps’ payout process could delay the collection of those profits – and possibly shrink them.

The “vulture funds” are tired of being portrayed as the bad guys in Argentina’s debt crisis
Tim Fernholz – Quartz
The video above has the look and feel of a political ad for the US elections this fall, but it’s just another tactic in the war over Argentina’s debt. The country defaulted at the beginning of August after facing a choice between paying all of its creditors, including hold-out funds who refused previous attempts to restructure Argentina’s debt, or none of them—and choosing the latter option.

Banks & Brokers

ICAP Singapore CEO Warner Said to Quit After 25 Years With Firm
Ambereen Choudhury and Cathy Chan – Bloomberg
Anthony Warner, chief executive officer of ICAP Plc’s (IAP) Singapore unit, resigned after 25 years with the broker and will leave at the end of this month, two people with knowledge of the matter said. Danny Cheung, a managing director in Singapore, will succeed Warner, the people said, declining to be identified as the details haven’t been made public yet.

HSBC Chairman Says Compliance Spending May Moderate
Richard Partington – Bloomberg
HSBC Holdings Plc (HSBA) Chairman Douglas Flint said the cost of policing potential wrongdoing will probably decrease after Europe’s largest bank by market value spent billions of dollars to toughen its internal controls in the wake of a series of scandals.

Goldman Withdraws Request for Summary Judgment in Libya Lawsuit
Justin Baer – WSJ
Goldman Sachs Group Inc. withdrew its request for a summary judgment on the lawsuit it faces in London’s High Court for its dealings with a Libyan investment fund, setting the stage for a trial.

Aegon distances itself from executive’s direct plans
Product provider Aegon has distanced itself from a view attributed to its head of marketing that advisers have been “disintermediated” and that its future lies in direct relationships with consumers. The insurer said advisers are “central” to its business and that professional advice is “valuable” for those with access to it.

Clearing & Settlement

Calls mount for quicker start to EU swap clearing
Anish Puaar – Financial News
The start date for buyside clearing of swaps in Europe should be brought forward to prevent “serious operational and financial issues”, according to market practitioners.

ESMA Publishes Responses Received To First Consultation Paper On Clearing Obligation

Indexes & Products

Exchange-traded fund accentuates merger arbitrage highs, and lows
Ashley Lau – Reuters
For merger arbitrage funds playing this year’s hot deal-making market, one exchange-traded fund has pulled ahead – on the upside and the downside.

FTSE Group Launches Ex Russia Indices

NASDAQ OMX Lists First Trust Strategic Income ETF – Provides Financial Advisors With An Innovative Approach To Generating Income

[TSE] New ETFs Included in Real-Time Dissemination of “TSE Indicative NAV”


The New Partner in OTC Regulatory Compliance
Stephanie Hammer – InterConnections – The Equinix Blog
Already an indispensable member of the financial markets ecosystem, the data center is emerging as a strategic partner in firms’ regulatory and compliance strategies. While the data center is essential to financial markets because it offers security, scalability and proximity, among other benefits, its value is growing for the OTC derivatives markets for another reason altogether: it’s the “right” neighborhood.

OTAS Technologies opens TradeShaper
Rob Daly – The Trade
Trading decision-support platform provider OTAS Technologies is putting the final touches to its OTAS Base software development kit, which will enable users to integrate OTAS content in to their existing trading platforms.

Environmental & Energy

Solar Boom Driving First Global Panel Shortage Since 2006
Ehren Goossens, Bloomberg
The solar industry is facing a looming shortage of photovoltaic panels, reversing a two-year slump triggered by a global glut.

***LB: Also in this story “Scarcity will benefit the biggest manufacturers, including China’s Yingli Green Energy Holdings Co. (YGE) and Trina Solar Ltd. (TSL).”

Why the world’s biggest companies are investing in recycling
Joel Makower,
Interest in recycling is looping back around. That’s evident from the launch of the Closed Loop Fund, a budding $100 million effort by a group of large companies to invest in recycling infrastructure and, in the process, put more recycled materials into manufacturing supply chains.

***LB: Also in this story “Over the past few months, nine companies have invested between $5 million and $10 million each into the fund: Colgate Palmolive, Coca-Cola, Goldman Sachs, Johnson & Johnson, Keurig Green Mountain. PepsiCo and the PepsiCo Foundation, Procter & Gamble, Unilever and Walmart and the Walmart Foundation. More investors are expected to be announced in the next two months.”

Greenpeace launches fresh push for a cleaner cloud
Jessica Shankleman, BusinessGreen
Comedian and musician Reggie Watts has been enlisted to star in a new Greenpeace campaign, urging the world’s tech giants to commit to using renewable energy to power their operations.


Asia’s Best-Performing Macro Hedge Fund Hits $1 Billion Mark
Klaus Wille – Bloomberg
Quantedge Global Fund, Asia’s best-performing macro hedge fund, said it has increased its assets to more than $1 billion, joining the ranks of the region’s biggest funds.

HK Monetary Authority Loses Sleep Over NY Regulator – MoneyBeat
Ned Levin – MoneyBeat – WSJ
The midnight oil was burning Wednesday at the Hong Kong Monetary Authority – courtesy of its colleagues at the New York State Department of Financial Services, which announced a $300 million fine and new anti-money-laundering controls on UK bank Standard Chartered PLC.

SFC hints on dark pools consultation outcome
Simon Osborne – The Trade
The Securities and Futures Commission (SFC) is still not revealing final conclusions on the next steps for dark pools in Hong Kong, but has supplied more clarity on the likely outcome. The Hong Kong regulator has just published its quarterly report that summarises its news from the second quarter of 2014.

Shanghai-HK stock link to accelerate China’s reforms
A stock trading program linking the Shanghai and Hong Kong exchanges will speed up reforms of China’s stock markets and make them more attractive to investors at home and abroad, according to analysts.

Monetary Authority Of Singapore And Accounting And Corporate Regulatory Authority: Guidebook For Audit Committees Revised To Ensure Continued Relevance

Shenzhen Stock Exchange Market Bulletin 18 August, 2014, Issue 28

Hong Kong’s Securities And Futures Commission Issues First-Quarter Report

Dalian Commodity Exchange Holds 2nd Forum On Futures Legal Theories And Practices

Frontier Markets

Jeffrey Singer resigns as CEO of Dubai financial zone authority
Jeffrey Singer said on Wednesday that he had resigned as chief executive of the DIFC Authority, which oversees Dubai’s financial free zone, the Dubai International Financial Centre.

Dubai creates new fund class to lure asset managers
Andrew Torchia – Reuters
Dubai is changing its financial rules in an effort to attract more asset managers – particularly those serving the richest and most risk-tolerant investors, such as hedge funds and private equity funds – to base themselves in the emirate.

Tanzania Readies Rules to Open Stock Market to Foreigners
Alawi Masare and Eric Ombok – Bloomberg
Tanzania is studying proposals by the country’s stock market regulator to scrap limits on foreign share ownership, providing a further spur to Africa’s best-performing equities gauge.


Predictions Come True as Regulators Swoop
Dr. John Bates – Wall Street & Technology
When I made five capital markets predictions back in July, I had no idea that two of them would hurtle toward their conclusions within the space of a couple of weeks. But I had broken with the traditional end-of-year capital markets predictions because some things were looking quite imminent — which, it seems, they were.

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