First Read

Bits and Pieces
By John J. Lothian

For the 11th consecutive year, the CME Group held its annual Trading Challenge for college and graduate students. This year there were more than 1500 students from 31 countries trade CME Group products across various asset classes on a real-time professional platform.

Meet the Winners:

The top performing students are eligible to win cash and “exclusive CME Group experiences.” I am not sure what the latter means, but understand it does NOT mean having to wash and wax anyone’s Bentley.

According to the CME Group, “this competition is an annual event and the number of schools that participate has grown each year – with 207 schools from 31 countries and over 385 teams competing in 2014. The Trading Challenge is a unique chance for students to learn hands on techniques for trading futures. Teams must consist of 3-5 members and can register with a student leader or faculty advisor.”

What I liked was that the CME Group brought these students from all over the world to Chicago for a “Day of Market Education.” What a great opportunity.

For more details, check out .

Speaking of the CME Group, they had some volume records which should be noted:

On March 20 trading date Eurodollar MidCurve Options trade 2,965,781 contracts (The midcurve prior is 6/24/13: 2,617,294). The OTC IRS Notional Value Traded was $263,962,952,035 (Prior IRS record is November 7, 2013: $245B).

Excerpt from a paper by Richard Sandor about the Plywood Futures at the CBOT:

“Between 1960 and 1970,56 new contracts have been introduced by the various exchanges. If a successful contract is defined as one with an annual volume of 1,000 or more contracts, then eighteen would be termed successful. It is important to emphasize that 1,000 contracts is an arbitrary number and a volume which is exceedingly low. It has been used because an exchange would probably not delist a commodity with that volume.”

“The Chicago Board of Trade introduced six new contracts in the decade of the 1960’s and three were successful. The New York Mercantile Exchange introduced nine commodities during a similar period and only one of these has enjoyed some period of success. However, the most successful innovator during the period was the Chicago Mercantile Exchange which introduced 16 commodities of which four were successful.”

What a blast from the past?


Bright Future for Japan’s Unified Futures?
Kosaku Narioka – MoneyBeat – WSJ
Japan’s main stock exchange enjoyed a trouble-free integration of its Tokyo and Osaka derivatives operations on Monday as it looks to improve its competitiveness and become Asia’s “chosen” bourse.

***** Ah, the chosen one emerges.


Exchange CEO Series – Asian Opportunity: CME Group’s Phupinder Gill says Asia is the place to be
Exchanges have never faced more challenges and opportunities than they do today.

John Lothian News sat down with six exchange CEOs at the 2014 FIA Boca Conference to talk about their views on four main topics: competition, regulation, growth and technology. Phupinder Gill, CEO of CME Group, said that regulation will continue to define the competition and industry framework for the foreseeable future and rising global demand for existing and new products, particularly from Asia will drive growth.

“The competitive landscape, as it stands now, is going to be largely dictated by where the regulatory landscape takes us,” Gill said. “As exchanges with a global footprint start to think about how the world might evolve, you have to take into account a few things – what the impact of Dodd-Frank is, the finalization of the SEF rules, how MIFID and EMIR work themselves out and implications for infrastructure providers such as ourselves. The trick for us is to make the experience for our client base as seamless as we possibly can.”

Watch the video »


US CFTC may have broken law by suspending outside research-watchdog
The U.S. Commodity Futures Trading Commission may have broken the law when it suspended its outside academic research program in response to a 2012 complaint filed by the CME Group futures exchange, the agency’s internal watchdog determined.

***** Response number 1: It was Gary’s fault!


Bitcoin Swaps Near Reality as Tera Creates Legal Framework
Matthew Leising and Silla Brush – Bloomberg
Tera Group Inc. created a framework for buying and selling swaps linked to Bitcoin that would let investors hedge risk from trading the digital currency. The firm announced today that it drafted a bilateral agreement that provides a legal template for trading Bitcoin swaps.

***** This is one instance where I would trade the swap over the cash market in a heartbeat. However, I would still not trade Bitcoin.


JLN/MarketsWiki 2014 Annual Survey – Please Give us 30 Seconds of Your Time
John Lothian News
You still have time to fill out our quick demographic survey and get in the running for your choice of an iPad Mini or a pair of Bose Quiet Comfort Noise-Canceling Headphones. The cost is a mere 30 seconds of your time. Answers will be kept confidential.

***** I still need the 1000 responses. Please take our quick survey.


The March Issue of Futures Industry Magazine is Now Available Online
The latest issue of Futures Industry magazine features the 2013 FIA Annual Volume Survey. Also inside: Coverage of MiFID II: reform framework finalized, but further detail to follow; An analysis of position limits in Europe; Comparison shopping in the new world of swaps trading; Statistics on futures and cleared swaps in Trading Volume; Washington Watch

***** This is the Sports Illustrated Swimsuit edition of Futures Industry Magazine with all the incredible statistics instead of bathing suits.


Ivy League Sailors Go From Scratch to Race Billionaires
Before Charlie Enright and Mark Towill could sail through the Southern Ocean’s gales in the round-the-world Volvo Ocean Race, they needed help from a Disney movie, a Turkish medical devices company and a business plan.

***** Not markets related, but I love a good sailing story.



MarketsWiki Page of the Day
Nasdaq OMX NLX

MarketsWiki Recent Updates


Leslie Rosenthal; Janet L. Yellen; Caleb H. Canby; Olivier Hartemann; Jignesh Shah; Ian Dudden; Albert Helmig

Companies, Organizations and Groups

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47,838,487 pages viewed, 7,859 articles, 180,899 edits
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Lead Stories

SEC Is Probing Dealings by Banks and Companies in Loan Securities
Jean Eaglesham And Katy Burne –
The Securities and Exchange Commission is investigating whether a Wall Street boom in complicated bond deals is creating new avenues for fraud, according to people close to the probes. SEC investigators are looking at whether banks and companies are using the bond deals to hide certain risks illegally, said the people close to the probes.

NASDAQ OMX Announces Formation of Global Market Services Business
The NASDAQ OMX Group, Inc. today announced the formation of Global Market Services, a new entity comprising NASDAQ OMX transactions, clearing and settlement services in the U.S. and Europe. Hans-Ole Jochumsen, Executive Vice President, has been appointed to lead the newly combined global business, reporting directly to Chief Executive Officer Bob Greifeld.

Thomson Reuters tightens forex trading platform rules
Daniel Schäfer and Philip Stafford –
Thomson Reuters is set to tighten the rules of engagement for its foreign exchange trading platform in a bid to discourage attempts at market manipulation.

FX fixing controversy is so 2006: what they said back then
Sid Verma – Euromoney magazine
Dismayed by the media coverage of the FX fixing controversy as the new Li[e]bor, which suggests the fixing practice of FX dealers, exposed to principal risk for large orders, constitutes an open-and-shut case of outright manipulation and is a new controversy? Well, continue reading.

FX industry body ACI to appoint first full-time president
The ACI, the global foreign exchange market’s main industry umbrella group, will officially appoint former State Street executive Marshall Bailey as its first full-time president later this week.

Commodity trading houses have banks on the ropes: so what?
Mark Pengelly –
Commodity trading houses may well be the new market heavyweights. But contrary to arguments made by bankers, that isn’t necessarily a problem


CFTC Seeks Public Comment on ICE Swap Trade, LLC’s Self-Certification of Package Trade Rule
The Commodity Futures Trading Commission (Commission) is accepting public comment, pursuant to § 40.6(c)(2) of the Commission’s regulations, on certain rule amendments self-certified by ICE Swap Trade, LLC (ICE Swap Trade) concerning the treatment of “package transactions.”

Staff Analysis of Data and Academic Literature Related to Money Market Fund Reform
The staff of the Securities and Exchange Commission today made available certain analyses of data and academic literature related to money market fund reform.

SEC Announces Agenda, Panelists for Cybersecurity Roundtable
The Securities and Exchange Commission today announced the agenda and panelists for its March 26 roundtable on the issues and challenges cybersecurity presents for market participants and public companies.

City watchdogs train sights on biggest hedge funds
Sam Fleming and Miles Johnson –
City watchdogs are stepping up their oversight of the biggest hedge funds as the industry becomes bigger in the UK and more concentrated.

Perspectives On Strengthening Enforcement, SEC Chair Mary Jo White, Via Videoconference To The Annual Forum Of The Australian Securities And Investments Commission (ASIC), March 24, 2014

Global Systemically Important Insurers: Issues, Policies And Challenges After Designation – Speech By Julian Adams, Deputy Head Of The UK Prudential Regulation Authority And Executive Director Of Insurance – The Geneva Association, 24 March 2014

“People Handling Other Peoples’ Money”, Andrew Bowden, Director, SEC Office Of Compliance Inspections And Examinations, Arlington, VA, March 6, 2014

Exchanges & Trading Facilities

MGEX Climbs To Top Five Daily Open Interest Records
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reached the top five daily Exchange open interest records after Friday’s trade date. Total open interest for Hard Red Spring Wheat (HRSW) and Apple Juice Concentrate (AJC) futures and options was reported at 79,030 open contracts, number five on the daily open interest records.

Nasdaq OMX hands Jochumsen wider role
Tim Cave – Financial News
Nasdaq OMX has handed its most senior European executive an expanded role covering all of the group’s US and European transaction, clearing and settlement businesses following the departure of a long-standing executive last year.

OneChicago Market Makers – OCC Clearing Fee
Currently OneChicago absorbs the OCC clearing fee for all OneChicago Market Markers. This process will be discontinued. Beginning April 1, 2014 the OCC clearing fee will be passed along to all OneChicago Market Makers.

SIX Achieves Strong Result And Broad-Based Growth
Operating income up 8.9% in the 2013 financial year to CHF 1,582.7 SIX million. All business areas contributed to this growth, particularly international transactions in the Payment Services business area.

Fese names former Rising Star Rosa Armesto to regulatory role
Anish Puaar – Financial News
The Federation of European Securities Exchanges has promoted Rosa Armesto, a former Financial News Rising Star, as its new head of public and regulatory affairs.

EnterNext congratulates McPhy Energy on successful listing

Hedge Funds & Managed Futures

David Einhorn Identifies Seeking Alpha Blogger
Juliet Chung – MoneyBeat – WSJ
David Einhorn’s Greenlight Capital Inc. has identified the blogger who revealed its Micron Technology stake last year, before Greenlight did, and dropped its effort in court to unmask the writer.

New Carlyle Asia Fund Targets China
Cynthia Koons – MoneyBeat – WSJ
Carlyle GroupCG -3.50% co-founder David Rubenstein expects China to be the biggest destination for dollars from its newest Asia fund, with a focus on deals in the health-care, consumer and food industries.

Hurt in Crisis, TPG Pursues Smaller Deals
When the financial crisis erupted in 2008, TPG suffered more than most private equity firms, having invested in three of that era’s most troubled deals. Now, with stock markets performing well and mergers back in vogue, TPG is coming back, largely with much smaller deals and a recalibrated approach to private equity.

Zombie hordes thrive, await further hedge fund corpses
Dan McCrum | FT Alphaville
Close to a tenth of all hedge funds tracked by HFR succumbed to the inevitable last year as 904 hedge funds liquidated. Their historic performance will live on in the databases of hedge fund returns, but like more than two-thirds of all hedge funds that have ever existed, they are dead, defunct and arguing with their investors over valuations for those lingering illiquid assets.

Financial advisers explore exotic options
Tom Stabile –
Plain vanilla is simply not on the menu any more, as advisers scan the markets in search of ways to generate yield in their clients’ portfolios. Advisers have set aside the standard Treasury bond in favour of a wider range of fixed income and equity options that can produce income, often swirling several flavours together.

Vanguard chief not keen on FoFA meddling
JOHN DURIE | The Australian
BILL McNabb, the chief of the world’s biggest mutual fund, Vanguard, opposes the federal government’s move to open the door to commissions, saying “the less potential for conflicted interest and the more transparency, the better”.

Russian Capital Flight Surges in First Quarter, Fueled by Ukraine Crisis
Russia will see the largest capital outflow since the 2008 financial crisis in the first quarter of this year, the country’s deputy economy minister said Monday, as relations with the West have sharply deteriorated since Moscow annexed Crimea this month.

American hedge funds dominate AUM
eVestment –
Hedge funds operating out of North America control 73 cents of every dollar in assets under management

Banks & Brokers

Newedge adds to Energy Desk
Newedge, a global leader in multi-asset brokerage and clearing, today announced the appointment of Edward Kevelson as Head of US OTC Energy. Based in New York, he will report to Robert Vujtech, Global Head of Energy.

Citi shakes up FX, creates position of global head of spot trading
Citi, the world’s second-largest foreign exchange trader, is restructuring its FX trading desk, appointing a global head of trading and bringing its electronic and voice trading businesses closer together, according to an internal memo seen by Reuters.

UBS’s head of EMEA equities Phil Allison to leave -memo
UBS’s head of equities for the Europe, Middle East and Africa region, is leaving the Swiss bank after almost 18 years, according to an internal memo seen by Reuters on Monday.

Julius Baer raises stake in Brazilian wealth manager GPS
Swiss bank Julius Baer has raised its bet on Latin America’s largest wealth management market, buying a majority stake in Brazil’s GPS for an estimated 100 million Swiss francs ($113 million), as part of a drive to expand abroad.

Even George Osborne Misunderstands His Own Bank Levy
Tim Worstall – Forbes
It’s intensely frustrating to see a politician bring in a measure that is absolutely correct, just the spot on right thing to do, and then watch him mess it all up with subsequent little changes. This is the case, I fear, with George Osborne and the bank levy over in the UK.

BNP Paribas Aims for Double-Digit Earnings Growth
BNP Paribas SA said Monday it is targeting double digit annual earnings growth over the next three years, driven mostly by businesses outside Europe, as the French bank seeks to draw a line under the region’s debt crisis.

Clearing & Settlement

Majority of Emir derivatives reports cannot be matched, say repositories
Fiona Maxwell –
Missing trade and entity identifiers mean up to 60% of derivatives trades reported under the Emir regime cannot be paired with their corresponding halves, say trade repositories

Indexes & Products

US investors offered enhanced returns on Euro Stoxx 50
Gurdeep Ubhi –
Credit Suisse has released a five-year leveraged return note in the US based on the Euro Stoxx 50. It offers a potential return of 90% and would suit investors expecting a gradual rise in equities who can forgo downside protection

ETF roundup: low rates lead to fixed-income ETP record
Vita Millers –
ETFs and ETPs reach global high in February; Euronext trades ETFs on the Nav Trading Facility; Amundi taps FTSE Epra/Nareit index

Warsaw Stock Exchange: Launch Of WIG50 And WIG250 Indices

Deutsche Boerse: SPDR EURO STOXX Low Volatility ETF Launched On Xetra – ETFs Based On Euro-Zone Stock Corporations With Low Volatility

Euro STOXX Low Risk Weighted 100 Index Licensed To State Street Global Advisors

Thai Bourse Lists KTAM SET50 ETF Tracker On March 26

Semi-Annual Changes To The NASDAQ OMX Clean Edge Smart Grid Infrastructure Index


Markit’s PMI Economic Indicators Released On Bloomberg
Each month, the eyes of traders, portfolio managers, economists and strategists are transfixed on their screens for the release of Markit’s Purchasing Managers’ Index (PMI) data, which covers some of the world’s most important economies including China, the Eurozone and U.S. Today, for the first time, this data is available on the Bloomberg Professional service.

SunGard Launches WealthStation PlanAdvisor To Help Advisors Achieve Growth In Managing 401(k) Plans

Perseus Launches Hybrid Transatlantic NJ-Frankfurt Route
Faye Kilburn – WatersTechnology
New York-based fiber and microwave network provider Perseus Telecom has established a new hybrid transatlantic route between Secaucus, NJ and Frankfurt

KVH Optimizes Network to Launch Industry’s Fastest Routes to CME From Tokyo and Singapore
KVH Co. Ltd., Asia’s leading information delivery platform headquartered in Tokyo, Japan, today announced the launch of newly optimized ultra-low latency routes to the Chicago Mercantile Exchange (CME) in Aurora, Illinois from Tokyo and Singapore

Solace Signs Clarke… Again
Max Bowie – WatersTechnology
Crispin Clarke has rejoined hardware messaging platform provider Solace Systems in Toronto as senior vice president of its global accounts team

Trade of the month: the Iosco structured products toolkit
Tim Mortimer –
International Organization of Securities Commissions wants to improve the regulation of retail structured products globally and is placing more emphasis on product design


Madoff Aides Convicted in $17.5 Billion Ponzi Trial After Decades Working for Firm
Erik Larson – Bloomberg
Five former aides to Bernard Madoff who spent decades working for his firm were found guilty of helping run the biggest Ponzi scheme in U.S. history, a $17.5 billion fraud exposed by the 2008 financial crisis.

CFTC Orders Morgan Stanley Capital Group Inc. to Pay $200,000 Penalty for Violating Soybean Meal Futures Speculative Position Limits
The U.S. Commodity Futures Trading Commission (CFTC) today announced that Morgan Stanley Capital Group Inc. (MSCGI) agreed to pay a $200,000 civil monetary penalty to settle CFTC charges that it exceeded speculative position limits in soybean meal futures contracts trading on the Chicago Board of Trade (CBOT).

Federal Court in North Carolina Orders Mitchell Brian Huffman to Pay $2.1 Million Penalty for Defrauding Customers of More than $3.2 Million in Commodity Pool Scheme
The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court supplemental Consent Order requiring CFTC Defendant Mitchell Brian Huffman, of Charlotte, North Carolina, to pay a $2.1 million civil monetary penalty for operating a fraudulent commodity pool scheme that defrauded customers of more than $3.2 million in connection with exchange-traded commodity futures contracts

FINRA Fines LPL Financial LLC $950,000 for Supervisory Failures Related to Sales of Alternative Investments
The Financial Industry Regulatory Authority (FINRA) announced today that it has fined LPL Financial LLC $950,000 for supervisory deficiencies related to the sales of alternative investment products, including non-traded real estate investment trusts (REITs), oil and gas partnerships, business development companies (BDCs), hedge funds, managed futures and other illiquid pass-through investments.

Environmental & Energy

George Osborne is preparing to kill off Britain’s renewable energy revolution
Ashley Seager – The Guardian
George Osborne quietly moved to kill off Britain’s renewable revolution in Wednesday’s budget as he stealthily enacted David Cameron’s rumoured call to his cabinet to kill off the “green crap”.

The U.S. Energy Chief on Gas Exports, Russia, and the Keystone Pipeline
Matthew Philips – BloombergBusinessweek
In a wide-ranging discussion with U.S. Secretary of Energy Ernest Moniz at Bloomberg’s Washington office on March 21, Moniz acknowledged what many observers have already deduced: U.S.-Russia relations are “under strain,” and yes, “everything in terms of the relationship is going to be reevaluated.”

Obama administration grants approval for more US natural gas exports
Jennifer A. Dlouhy – Fuel Fix
As pressure builds on the Obama administration to speed up approvals of plans to sell U.S. natural gas overseas, the Energy Department on Monday authorized exports from a proposed Oregon terminal.


Hong Kong’s soaring bank exposure to China sparks credit concerns
In just a few years, Hong Kong banks have ramped up lending to China from near zero to $430 billion, fuelling concerns about their credit exposure to the mainland at a time when sliding economic growth and defaults are making investors nervous.

SGX Welcomes Haitong International To Securities And Derivatives Markets As Trading Member

HKEx Arrangements For Adjustment Of Sun Hung Kai Properties Futures And Options

HKFE Announces Revised Margins For Futures Contracts

Thai Bourse Enhances Corporate Governance Expertise For Firms Towards Sustainability

HKEx: Arrangements For Adjustment Of Tencent Options

Frontier Markets

JSE To List MSCI Index Futures
The Johannesburg Stock Exchange (JSE) has announced that MSCI Index-linked futures will be traded on the exchange. MSCI is a provider of investment decision support tools worldwide.

Euronext Paris and the Algiers Stock Exchange sign memorandum of understanding
Euronext Paris and Société de la Gestion de la Bourse des Valeurs are pleased to announce the signature of a Memorandum of Understanding with a view to enhancing cooperation between their markets.

Stabilizing risk trends for Morocco and Tunisia suggest MENA is poised for a comeback
Jeremy Weltman – Euromoney magazine
Rising risk scores since 2013 are providing investors with encouragement that the worst is over for the troubled region. Yet sovereign risk remains heightened in familiar territories, with the Syrian turmoil persisting, leaving Gulf states and Israel as relative oases of safety.

Venezuela forex system sells dollars at 8 times official price
Venezuela launched a new free-floating foreign exchange system on Monday that offered dollars for eight times the official price in a move the government says will tame the black market but which critics see as a massive devaluation.

Miners Brave Congo’s Warlord History as Demand for Tin Soars
Michael J. Kavanagh – Bloomberg
As his chartered Cessna flies above the Democratic Republic of Congo’s Katanga province, Mussadiq Hamid Merican flips through the pages of his Malaysian passport, counting Congolese visas.

Mr. Rashid Bin Ali Al-Mansoori, CEO Of Qatar Stock Exchange At The 9th World Exchange Congress 2014

Under The Auspices Of HE Sheikh Abdullah Bin Nasser Bin Khalifa Al Thani, Prime Minister And Interior Minister – Minister Of Finance Opens World Exchange Congress In Doha

Thomson Reuters Releases The Islamic Social Finance Report In Partnership With The Islamic Research & Training Institute

ALTX Africa Group To Launch First Exchange In Partnership With GMEX
ALTX Africa Group (ALTX) Gains First License Approval In Uganda – GMEX Provides Technology And Business Expertise


Why Trade Bonds When You Can Trade Ads?
For many on Wall Street, landing an executive-level job at an established hedge fund would be a crowning career move. Until, that is, they get a chance to go into advertising.

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