First Read

Think Positive: Gail Osten Leaves Fond Memories
Jim Kharouf – JLN

There are some people who just get it.

Gail Osten was one of those people who just got it. Got what? You name it, work, personal issues, a joke – life. As a professional, her career spanned more than four decades starting in marketing at the MidAmerica Commodity Exchange and ending as director of corporate communications at the Chicago Board Options Exchange. She was also a mother of two boys, Dan and Jon, and wife to Joe Osten, all of whom she spoke about regularly.

Gail Osten

Osten, who died Thursday morning at the age of 65 after a second bout of cancer (she defeated an earlier case a couple of years ago), was known fondly by many in the industry for being truly good at what she did, a “consummate professional,” as CBOE Chairman Bill Brodsky put it.

“And one of the things I liked most about Gail was she was always upbeat,” he said.
Her career was a fluid mix of marketing, education, public relations and journalism. She worked for four different exchanges over her career, starting in public relations in 1973 at the Chicago Board of Trade and its Mid-Am subsidiary. Osten spent the bulk of her career – nearly 17 years – at the Chicago Mercantile Exchange, in marketing and advertising, and then later at CME Group as director of market education. She also consulted for the single stock futures exchange NQLX. Osten crossed over into the options space with the CBOE in 2008.

Read the rest of the obituary at

***** JJL: I am very saddened by the death of my dear friend, former colleague and Elmhurst neighbor Gail Osten. She was one of the most loved people I know. She was a light in this world. She had brass, and I love brass. We were blessed to work with her when we started MarketsWiki, and it was her work on the options exchanges that helped her get her job at the CBOE. Her belief in my idea and what we were trying to do with MarketsWiki was a great reassurance we were on the right track. I will be ever grateful for her contributions to MarketsWiki and in awe of the mark she left on the industry and on the hearts of the so many of us who loved her.


SEC Chair Wants Activist Fights to Be Nicer
By Matt Levine, Bloomberg
Among the more interesting ways that law gets made is that sometimes an important person will give a speech, and the speech contains law, and the job for lawyers is to figure out what the speech says. So today Securities and Exchange Commission Chair Mary Jo White gave a speech at the Tulane Corporate Law Institute, the big annual M&A law party, with the grab-bag title “A Few Observations on Shareholders in 2015.” There are, in fact, some observations here, for instance about the benefits of shareholder activism, though they tend to be studiously neutral. (“Activism leads to either increased or decreased long-term economic well-being,” cool cool.) But my guess is that all the M&A lawyers and bankers didn’t fly to New Orleans for observations; they want to know what the SEC is going to do about various activist fights. And White’s speech offers a few clues.

****** May I please nominate a candidate for the board of directors, PLEAAASSEEEE???


Investing’s Old Guard Gets Its Algorithm On; Vanguard and Charles Schwab follow startups into the robo-adviser race
by Margaret Collins, Bloomberg
Throughout 2012, John Petrosky kept hearing about a potential financial crisis in Europe. The Houston father of three remembered the losses he’d suffered in 2008, when the U.S. system was on the brink of collapse, and got scared. He pulled money out of the markets—only to miss big gains in 2013.

***** I always just ask Siri what I should invest in. You should try it.


How Google Skewed Search Results; FTC staff report details how Google favored its own shopping, travel services over rivals
By Rolfe Winkler And Brody Mullins, WSJ
A previously undisclosed report by staffers at the Federal Trade Commission reveals new details about how Google Inc. manipulated search results to favor its own services over rivals’, even when they weren’t most relevant for users.

****** Google search is like everyone else, a little bit narcissistic.


Amazon gets FAA approval to test drones
By Jennifer Booton, MarketWatch Inc. AMZN, +0.07% has been awarded an experimental airworthiness certificate to use drones, according to the U.S. Federal Aviation Administration. Under the contract, Amazon’s logistics unit will be allowed to use drones for research, development and crew training. All flight operations of unmanned aircraft must be conducted at 400 feet or below during daylight hours.

****** The CME is looking at drone deliveries for the grains. The problem is you can only deliver a half a bushel at a time.


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The Life of SCI: John Rapa Looks at the SEC’s Reg SCI

After several high-profile market disturbances, from the 2010 “flash crash” to the Knight Capital algorithmic meltdown in 2012, the SEC considered a new set of rules to tighten up system compliance and integrity. The rules, known collectively as “Reg SCI” became effective in February 2015. John Rapa, president and CEO of Tellefsen & Company and a 30-year veteran consultant to exchange market structure, walks us through the new rules and what they mean for exchanges, dark pools and market participants.

Watch the video »

Lead Stories

Six Banks Will Take Part in New Electronic Gold Fix; ICE says Barclays, HSBC, Bank of Nova Scotia, Société Générale and UBS will participate
By Matthew Cowley
Six banks will participate in the auction to set the new electronic gold price that will launch on Friday, according to Intercontinental Exchange Inc., which manages the new platform.

Ex-Trader Sentenced to 19 Months for Insider Trading in London
Julian Rifat, a former trader arrested nearly five years ago in what was then described as the largest crackdown on insider trading here, was sentenced to more than a year in prison on Thursday after he pleaded guilty in November to insider trading.

**JK – Will 19 months or 19 years deter insider trading?

How an Ex-Moore Trader Got Caught in the Most Complicated Insider Trading Investigation in British History
by Suzi Ring, Bloomberg
British authorities swept through the darkened streets of Oxford that Tuesday toward their appointment with a most wanted man.

ETFs crowd into top US oil contract
Gregory Meyer in New York, FT
Almost a third of the most active US oil futures contract is now controlled by exchange traded funds, turning smaller investors into a muscular force on global commodities markets.

Bank of New York Mellon’s Best FX Execution Was Pretty Bad
By Matt Levine, Bloomberg
Bank of New York Mellon provides custody services to a lot of big investor clients, pensions, endowments, etc. When those custody clients have foreign exchange needs — to buy or sell foreign securities, for instance — they come to BoNY Mellon. This creates a nice opportunity for efficiency: BoNY Mellon has a lot of clients who want to exchange dollars for foreign currency, and a lot of clients who want to exchange foreign currency for dollars, so it can pair them off against each other, operating its own little internal foreign-exchange trading venue.

China Starts 10-Year Bond Futures Trading as Rate Controls Ease
Bloomberg Business
China will allow trading of 10-year government bond futures, the latest step in a plan to build a market-based yield curve and liberalize interest rates. The China Financial Futures Exchange will officially list the 10-year contracts on Friday, after allowing trading of five-year sovereign debt futures in September 2013. That followed an 18-year hiatus after an investigation into alleged market manipulation in the late 1990s.

European exchange lobby group names Riess as its head
Philip Stafford, FT
Rainer Riess, the former Deutsche Börse executive, has been named as the permanent head of the Federation for European Securities (Fese) as part of an overhaul of top executives at Europe’s main exchanges lobby group.

The Power of Markets
by Joshua M Brown, The Reformed Broker
One of the hallmarks of our investment approach is to respect the fact that markets are extremely powerful (though not infallible) as forecasting tools. On average, they do a pretty damn good job at incorporating all of the expectations for the future into current prices, adjusting on the fly with every headline and every trade.

Swap Gauge Expands in Latest Effort to Revive Derivatives Market
by John Glover, Bloomberg
Gauges investors use to hedge against losses or speculate on the credit quality of Europe’s financial companies have been expanded in the latest effort to revive the $14.8 trillion credit derivatives market.


Fed says worth considering dropping banks’ exemption on commodities
A top Federal Reserve official on Thursday said the U.S. central bank would consider overturning a decades-old rule that allows two U.S. banks to trade physical commodities, as part of its review of Wall Street’s involvement in oil and metals markets.

Peter Wallison and Daniel Gallagher: How Foreigners Became America’s Financial Regulators
At a hearing before the House Financial Services Committee on Tuesday, Treasury Secretary Jack Lew denied that the decisions of the Financial Stability Board—an international body of financial regulators—were binding on its member nations, which include the United States. Chairman Jeb Hensarling asked him why, then, did the FSB need to give three Chinese banks “exemptions” from its “nonbinding” rules. Mr. Lew was unable to explain.

Amid Cries of Home Field Advantage, SEC Loses Case in In-House Court
By Aruna Viswanatha, WSJ
The Securities and Exchange Commission lost part of its case against senior executives of a former Dallas-based broker-dealer – but that may be good news for an agency facing criticism it routes cases to in-house judges to tilt the odds in its favor.

SEC Shift on ‘Conflicting’ Shareholder Proposals Sparked by Abuse Concerns; Staff are reviewing when a shareholder proposal truly conflicts with a management proposal, SEC Chairman White said
By Andrew Ackerman, WSJ
A controversial Securities and Exchange Commission decision to stop allowing companies to exclude certain shareholder proposals stemmed from concern firms could abuse the SEC’s process, the top U.S. securities regulator said Thursday.

Comment: Regulators should raise public trade data standards
Donald MacKenzie and Stéphane Tyc, FT
Are financial markets rigged? There have been accusations that they are, but there is not enough hard data. We think that regulators must enforce the free, public dissemination of high-quality, downloadable trade data to help institutional investors and other interested parties assess the workings of the market.

CFTC Issues an Exemption to the Hong Kong Securities and Futures Commission Permitting U.S. Customers to Deal Directly with Hong Kong Brokers
The U.S. Commodity Futures Trading Commission (CFTC or Commission) today issued an order to Hong Kong Securities and Futures Commission (HKSFC) permitting HKSFC licensed corporations authorized to solicit and accept orders and funds directly from U.S. customers for trading on any exchange subject to the HKSFC’s oversight without having to register with the CFTC as futures commission merchants (FCMs). This exemption follows similar exemptions granted to other foreign exchanges or foreign regulators pursuant to Commission Regulation 30.10.

European Union: EMIR:”Too Big To Fail”, Again?
“…just to give you an idea of the actual impact of Lehman Brothers, we can consider the figures published by one of the Lehman’s counterparties: Merrill Lynch, which in the third quarter of 2008 disclosed a US$2 billion pre-tax trading loss, which was mainly due to the unwinding of trades for which Lehman Brothers was a counterparty. Merrill Lynch was only one of the hundreds of counterparties of Lehman, so the aggregate impact on counterparties’ losses of Lehman’s default was much bigger than the one generally used.1 “

Exchanges & Trading Facilities

Eurex eyeing alternative clearing models
Futures & Options World
Eurex, Europe’s largest derivatives exchange, is working to offer a new clearing model to help investors, such as larger funds and corporates, struggling to find traditional clearers. Tough new leverage ratio rules are increasing the capital costs on banks clearing buy side firms, meaning these firms are increasingly struggling to find banks to act as clearing member for their trades.

SGX partners NIE to equip teachers with investment knowledge
Singapore Exchange (SGX) and the National Institute of Education (NIE), Singapore today launched an initiative to increase financial literacy and investment knowledge among teachers.

ICE Futures Europe Achieves Daily Volume and Open Interest Records in UK NBP Natural Gas Futures
Business Wire
Intercontinental Exchange, the leading global network of exchanges and clearing houses, today announced that the ICE Futures Europe NBP Natural Gas futures contract achieved a daily volume record of 146,780 contracts (equivalent to 4.47 billion therms) on March 18, 2015. The previous record of 137,495 contracts was set on February 10, 2015.

London Metal Exchange urged to act swiftly over ‘broken’ aluminium market
The Guardian
The LME has been under pressure since last year’s investigation by a US Senate committee into the aluminium market that issued a damning report in November. Big industrial users of aluminium, such as Coca-Cola, MillerCoors and Rexam, the packaging giant, claim that a cadre of Wall Street banks, traders and producers of the metal have sucked as much as $6bn a year from them by artificially inflating the price.

Hedge Funds & Managed Futures

The Dark Side of Strong Bond Returns
By Richard Barley, WSJ
Coupon clipping – the staple activity of the traditional, cautious bond investor – is rapidly becoming passé in Europe.

Oil trader Vitol’s profits rebound to $1.35bn
Neil Hume, Commodities Editor, FT
Vitol, the world’s biggest independent oil trader, saw a sharp recovery in profits in 2014, aided by more favourable market conditions towards the end of the year.

‘Lincoln and the Jews’ Explores Bonds With a Nation’s Growing Minority
ON Sept. 20, 1862, Abraham Lincoln had a lot on his mind. The Civil War was raging, and just days later he would issue the preliminary draft of the Emancipation Proclamation.

Big banks braced for rate rise boon
Tom Braithwaite and Ben McLannahan in New York and Martin Arnold in London, FT
Do not look to Goldman Sachs for a clear forecast on US interest rates: its top executives have different views. Lloyd Blankfein, chief executive, has warned for years that rates could rise faster than investors expect and recently sounded more optimistic about the benefits of an impending Federal Reserve increase.

Banks & Brokers

Goldman Sachs, UBS named as participants in new LBMA gold price-ICE
Goldman Sachs and UBS will join the four existing members of the gold “fix”, which ended on Thursday, in setting the new London Bullion Market Association (LBMA) Gold Price benchmark, Intercontinental Exchange said on Friday.

HSBC to Shuffle Board Roles of Several Directors
The British bank HSBC said on Friday that it planned to shuffle the roles of several members of its board of directors.

Credit Suisse Faces Italy Suit, Probe as Litigation Persists
by Jeffrey Voegeli, Bloomberg
Credit Suisse Group AG is facing a 3 billion-euro ($3.2 billion) suit in Italy as prosecutors probe the lender in a separate case, a sign litigation risks haven’t abated since a multi-billion settlement last year.

Credit Suisse Cuts CEO Brady Dougan’s Pay; Swiss bank struggled to maintain profit last year amid legal issues
By John Letzing, WSJ
Credit Suisse Group AG on Friday said departing Chief Executive Brady Dougan received a pay cut for 2014, a year when the Swiss bank struggled to maintain its profit as it was dogged by legal issues.

BofA under pressure to defend structure
Ben McLannahan in New York, FT
Bank of America will have to defend its current structure at its annual meeting in May and Citigroup and JPMorgan may have to do the same next year, after the Securities and Exchange Commission allowed a small shareholder the right to challenge the board on a break-up.

BNY Mellon to pay $700m over fraud claims
Tom Braithwaite in New York and Gina Chon in Washington, FT
Bank of New York Mellon on Thursday agreed to pay $714m to settle allegations that it committed fraud by giving customers the worst rates on foreign exchange transactions while promising “best execution”.

Clearing & Settlement

Skin in the game at CCPs
The announcement by Intercontinental Exchange (ICE) that it is to infuse a chunk of its own capital into some of its default funds across the world is welcome news as a growing percentage of the notional $700 trillion over-the-counter (OTC) derivatives market is pushed onto centralised clearing houses (CCPs) as mandated under the Dodd-Frank Act in the US and the European Market Infrastructure Regulation (EMIR).

‘Unstoppable evolution’ in payments poses threat to irrelevant banks
Banking Technology
Banks have been warned that new entrants will come and ‘eat their lunch’ if they fail to remain relevant to the modern consumer in the face of an ‘unstoppable revolution’. The point was made repeatedly during sessions at the Payments International conference in London this week.

Indexes & Products

Gold Bugs Finding Solace in ETF Using Euro to Fund Purchases
by Rachel Evans, Bloomberg
The euro is adding some much needed glitter to gold, at least in one exchange-traded fund.

The Way Gold Prices Are Set is Changing Forever
by Eddie Van Der Walt, Bloomberg
Almost a century of tradition will disappear from the gold market as technology takes over.
Thursday will be the last day that traders at four banks agree by phone twice-daily prices used by miners to central banks to deal and value bullion. Gold will be the last precious metal to drop the London fixings after silver, platinum and palladium made way for electronic auctions last year.

Commodities explained: The new gold fix
By Henry Sanderson, FT
London is the centre of the gold world, accounting for about three quarters of the world’s bullion trading.

How Apple’s stock influences the Dow
Apple Inc.’s inclusion in the Dow Jones Industrial Average means every other component will have a little less influence on the Dow’s price. The Dow is a price-weighted index, which means the price is determined by the price changes of its components, rather than percentage changes. Because Apple’s stock AAPL is nearly four times the price of AT&T’s stock T which it replaced, the divisor used to calculate the index has declined slightly, in an effort to make the change seamless to the outside observer.

Apple’s first trading day in the Dow is a snore
For all the attention Apple’s entry into the Dow Jones Industrial Average received when it was announced, it’s barely budged the shares of the iPhone maker on their first day im the equity index.

Goldman Sachs set to cement its grip on Dow Jones
The Economic Times
One of the most recognizable companies in the world is about to cement its grip on the Dow Jones Industrial Average, and it’s not who you think. While Apple entered the average on Thursday, it is Goldman Sachs Group that will see its influence on the 118-year-old gauge solidified, garnering the biggest weighting after a stock split this week by Visa. New York based Goldman Sachs, with a 7.1% share, will be the first bank to hold the top spot since JPMorgan Chase & Co. in 2000.

ETFs based on MSCI Index set to hit the market soon
The Economic Times
Two mutual fund houses will soon launch exchange-traded funds (ETFs) based on the MSCI India Domestic Index with an eye on tapping inflows from FIIs. Foreign fund managers use MSCI’s indices globally and are comfortable with them. Reliance Mutual Fund and Edelweiss Mutual Fund have filed offer documents with Sebi for launching this product.

Nasdaq is a different beast in 2015
Fifteen years ago “Who Let the dogs Out” by the Baha Men rippled across the airwaves, The Sopranos was cultivating a new type of television audience, Gladiator triumphed at the box office and investors were buying the Nasdaq Composite at 5,000.

99 Years of AT&T’s Ins and Outs from the Dow
By Stephen Grocer, WSJ
AT&T Inc.T -1.17% is out of the Dow – again. History suggests it could return.


On the potential of closed-system blockchains
FT Alphaville
Followers of FT Alphaville’s Bitcoinmania series will be familiar with our generally sceptical position on all things bitcoin. Indeed, over the course of more than 64 posts, we’ve presented a mostly negative case for bitcoin “the currency”, and remain confident that the open-source “people-cleared” cryptocurrency (which replaces one accountable and identifiable third party with 10,000 anonymous parties of dubious intent) is ill-suited for the job of currency in any stable economic system.

Here Comes Ethereum, an Information Technology Dreamed Up By a Wunderkind 19-Year-Old That Could One Day Transform Law, Finance, and Civil Society – Hit & Run
Ethereum, the brainchild of wunderkind software developer Vitalik Buterin, who was just 19 when he came up with the idea, is the most buzzed-about project right now in the cryptocurrency community. It has attracted an all-star team of computer scientists and raised $18.4 million in a crowdfunding campaign—the third most successful of all time. And now, according to the official Ethereum blog, it’s on the verge of being rolled out to the public.

Six undertakes hackathon talent challenge for new fintech incubator
Swiss financial infrastructure provider SIX Group is running a weekend hackathon with a view to acquiring new talent ahead of the launch of a fintech incubator in May.

Intel Joins the Blockchain Technology Race, Forms Special Research Group
Bitcoin Magazine
Last week Bitcoin Magazine reported that IBM is considering adopting the blockchain technology behind Bitcoin to create a digital cash and payment system for government and central banks. Now another technology giant is joining the digital fintech technology race: Intel is planning to investigate the potential of blockchain technology.


Insider Traders and Cement Mergers
By Matt Levine, Bloomberg
Some insider trading. Here is the story of “the biggest, most complex insider-trading investigation in British history,” which … wasn’t that big? Or complex? It led to illicit profits of 285,000 pounds, which is less than the combined profits of the two alleged sets of Oakley Country Club insider traders, and those guys were not exactly criminal masterminds. The main guy here, Julian Rifat, was sentenced to 19 months in jail yesterday; he worked at Moore Capital, a hedge fund, but traded in his (accomplice’s) personal account on inside information that he got from his job at Moore. (Why was a hedge fund getting inside information? Bloomberg News says he “carried on with trades that, in City parlance, left him ‘wall crossed,'” so I guess his fund had agreed not to trade on the information he got.)

Dorchester broker is banned from securities industry
Boston Business Journal
A former Ameriprise Financial Services employee in Boston has been banned from the securities industry after she allegedly had customers write out checks to her instead of Ameriprise and used the money herself.

Former senior trader sentenced for insider dealing
In a case brought by the Financial Conduct Authority (FCA), Julian Rifat – a former senior execution trader and portfolio strategist at Moore Europe Capital Management LLC – has today been sentenced at Southwark Crown Court to 19 months imprisonment; Mr Rifat has also been fined £100,000 for the same offences and ordered to pay costs of £159,402.

Environmental & Energy

Feds to clean up their act
By Timothy Cama – The Hill
Leading by example: President Obama ordered a 40 percent reduction in the federal government’s greenhouse gas emissions, part of an effort to lead by example and spur private-sector emissions cuts.

McConnell Urges States to Help Thwart Obama’s ‘War on Coal’
By Coral Davenport – The New York Times
Senator Mitch McConnell of Kentucky has begun an aggressive campaign to block President Obama’s climate change agenda in statehouses and courtrooms across the country, arenas far beyond Mr. McConnell’s official reach and authority.

Ecosystem Marketplace – Corporate Carbon Offset Buyers Go The Extra Mile In Fighting Climate Change
Ecosystem Marketplace
Companies that include offset purchases as part of a carbon management strategy are also taking concrete action to address climate change through energy efficiency, green product design, and other means, according to a new Ecosystem Marketplace report. American automaker General Motors, British bank Barclays, and Brazilian cosmetics company Natura Cosméticos are among the top voluntary carbon offset buyers.

RGGI Auction Extends US Carbon Market Winning Streak
North America’s longest-running carbon market just set a new mark for carbon pricing across the Northeast US, passing a significant revenue milestone years ahead of schedule, and continuing an impressive winning streak for American and Canadian carbon auctions.


New Stock Connect account model confirmed for 30 March
The Trade
A launch date of the 30th of March for the new stock connect account model has been set. Confirmation of the rules and regulations were published on Thursday 20 March.

Arrangements for Adjustment of Hong Kong & China Gas Structured Products, Futures and Options
Hong Kong Exchanges and Clearing Limited (HKEx) announced the arrangements for the adjustment to The Hong Kong and China Gas Company Limited (Hong Kong & China Gas) structured products, futures and option contracts to account for Hong Kong & China Gas’s proposed issue of bonus shares.

HKEx Welcomes Government Appointments to its Board
Hong Kong Exchanges and Clearing Limited (HKEx) welcomes the Government’s appointment of Anita Fung Yuen-mei and Rafael Gil-Tienda and the reappointment of John Barrie Harrison and Margaret Leung Ko May-yee to its Board of Directors.

Frontier Markets

A titanic struggle
Business Standard
Online supporters of the Financial Technologies (India) Ltd (FTIL) group are running an innovative social media campaign against its proposed merger with the scam-hit National Spot Exchange Ltd (NSEL).

Pakistan’s Most Amazing Money Manager Gets No Respect
by Naween A Mangi, Bloomberg
In Pakistan, it’s difficult to find a more successful money manager than Maheen Rahman.


Cargill recognized as one of the Achievers Most Engaged Workplaces™ in North America
Global HR software provider recognizes companies leading innovation in employee engagement and productivity
Cargill was recognized by Achievers as one of its Achievers 50 Most Engaged Workplaces™ in North America for 2015. The global employee recognition software provider’s annual award recognizes top employers that display leadership and innovation in engaging their workplaces.

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