John Lothian Newsletter: Struggling Infinium Capital negotiates to sell assets to FXCM; Wall Street Predicts USD50 Billion Bill to Settle Mortgage Suits; Traders struggle to meet European reporting deadline

Jan 10, 2014

First Read

We Cry for Thee, Argentina
by Doug Ashburn – JLN
The economic policy decision-making process exists, for the most part, in a theoretical world. Today’s decisions are taken from yesterday’s problems and (hopefully) adjusted for the conditions that make each situation unique. For example, central bank policy over the past few years has drawn heavily from “lessons learned” during the Great Depression and, to a lesser extent, from the two decades-old Japanese malaise.
jlne.ws/KalBl4

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Infinium ex-employees sue over $4.1m loss
Arash Massoudi and Gregory Meyer in New York – FT.com
Former employees of Infinium Capital Management have accused six of its leaders of tricking them into sinking their personal money into the Chicago automated trading company while hiding its struggles to stay afloat.
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***** We learn every day about risk and where it may exist, don’t we? And some risks are not even on the sheets. What amazes me about the story is that some traders would make an investment mistake that they would never make in trading. Don’t put all your money on one trade.

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Euronext reshuffles management ahead of IPO
Philip Stafford – FT.com
Euronext, the European exchanges operator, has reorganised its business and management team in preparation for a demerger from parent IntercontinentalExchange later this year. The Paris-headquartered, Amsterdam-listed group promoted Amaury Dauge, its head of corporate planning, to the role of chief finance officer.
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***** The word of the day is “demerger.”

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Financial firms seek startup solutions to trade better, faster
Sonali Basak – Blue Sky Innovation
Technology has already transformed financial trading, and emerging companies are still at work making options trading faster and more accessible than ever. With rising regulatory burdens, new technologies might make it safer to trade, too.
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***** I like the photo/graphic of TT’s Rick Lane.

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Bitcoin-Mining Chips, Gear, Computing Groups: Competition Heats Up
Ashlee Vance and Brad Stone – Bloomberg
Joel Flickinger’s two-bedroom home in the hills above Oakland, Calif., hums with custom-built computing gear. Just inside the front door, in a room anyone else might use as a den, he’s placed a desk next to a fireplace that supports a massive monitor, with cables snaking right and left toward two computers, each about the size of a case of beer.
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***** Here is all you need to know from the last couple of lines from the story:

***** He estimates his two fastest computers will earn him $150,000 each this year. “It takes up a lot of time, but I have no kids. I have no life. I have a cat.”

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China brings fresh blood to LME Ring
Xan Rice, Commodities Correspondent – FT.com
In 2012, the boisterous, circle-shaped trading floor of the London Metal Exchange lost Barclays and Natixis as members. Last year Jefferies Group exited, lowering the number of ring-dealers on one of the world’s last open-outcry trading floors to ten. In 1996 there were 17 traders in the Ring, and nearly twice that in the 80s. Step forward GF Financial, a unit of China’s GF Securities, which is listed on the Shenzhen stock exchange and has a market capitalisation of more than $10bn.
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***** The ring always loves new blood, and new money.

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OIC Introduces the Industry’s Premiere Options Education Program
Today OIC rolled out its new options education initiative, the Options Education Program. The Options Education Program brings together OIC’s full range of educational offerings and network of leading industry professionals to offer investors, whether novice or advanced, the best educational platform possible to learn about options for free.
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***** Look for the OIC Premier Options Education Program Parade coming soon.

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Sell-Side Analysis Most Useful When Most Wrong
Simon Kennedy – Bloomberg
Equity analysts work harder when economies and financial markets are slumping. They also have more influence over stocks — even though their earnings forecasts are less accurate.
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***** There is no such thing is most wrong. It is just wrongest.

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JPMorgan Lost Madoff in a Blizzard of Paper
FLOYD NORRIS – NYTimes.com
Did JPMorgan Chase deliberately cover up Bernard L. Madoff’s fraud? The documents released this week by federal prosecutors do not show it did, and I suspect it did not. What the documents do show, however, is a huge bureaucracy where employees stuck to their own silos and did not communicate well with others.
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***** Someone must have been paying attention, no? I know they hire some pretty smart people there.

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MarketsWiki

MarketsWiki Page of the Day
BlackRock Inc.
jlne.ws/KEYlwf

MarketsWiki Recent Updates

People

Adrienne Muir; Robert Urtheil; Jessica Titlebaum; Craig S. Donohue; Michael McClain; Patrick Troy

Companies, Organizations and Groups

BlackRock Inc.; Women In Listed Derivatives; Infinium Capital Management, LLC; Chicago Board Options Exchange; London Stock Exchange Group plc; OCC; Shanghai Futures Exchange

Miscellaneous

Value at Risk; Swap Execution Facility

Statistics

46,427,887 pages viewed, 7,730 articles, 176,320 edits
MarketsWiki Statistics

Lead Stories

Struggling Infinium Capital negotiates to sell assets to FXCM
Reuters
Foreign-exchange brokerage FXCM Inc (FXCM.N) said on Thursday it was in talks to acquire assets of high-speed trader Infinium Capital Management in a deal that could allow the broker to expand into commodities and other markets.”
jlne.ws/1ak9oFc

Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits
JESSICA SILVER-GREENBERG and PETER EAVIS – NYTimes.com
Wall Street could pay nearly $50 billion to buy peace from federal authorities who are taking aim at the banks over their role in the mortgage crisis, according to interviews and a confidential analysis of the industry’s potential legal exposure.
jlne.ws/1eikUSs

Traders struggle to meet European reporting deadline
Philip Stafford – FT.com
Fund managers, banks, investors and corporations trading in Europe are struggling to meet a deadline in five weeks’ time for mandatory reporting of all their trades to regulators.
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CFTC Expected to Usher In New Swaps Trading Rules
Katy Burne – WSJ.com
A top derivatives regulator is expected next week to accept one electronic platform operator’s request to list several swaps for trading, said people familiar with the matter, bringing closer to reality a key plank of the 2010 Dodd-Frank financial overhaul law.
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ISDA to Kill Euro Libor Rate as Citigroup Pulls Submissions
Matthew Leising – Bloomberg
The International Swaps & Derivatives Association is canceling a European interest rate because Citigroup Inc. decided to stop submitting data that sets the benchmark.
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ICE Said to Hire Evercore to Sell NYSE Technology Divisions
Matthew Leising and Matthew Monks – Bloomberg
IntercontinentalExchange Group Inc. has hired Evercore Partners Inc. to help sell some technology businesses it acquired as part of its takeover of New York Stock Exchange owner NYSE Euronext, according to two people familiar with the matter.
(via email)

Regulatory

CFTC Extends Public Comment Period On Proposed Amendment To Aggregation Policy Under Part 150
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SEC Announces 2014 Examination Priorities
The Securities and Exchange Commission today announced its examination priorities for 2014, which cover a wide range of issues at financial institutions, including investment advisers and investment companies, broker-dealers, clearing agencies, exchanges and other self-regulatory organizations, hedge funds, private equity funds, and transfer agents.
jlne.ws/1eikVpk

Too-big-to-fail problem solved, claim leading industry figures
Matt Cameron, Joe Rennison – Risk.net
US regulators have solved the too-big-to-fail problem, and the country could cope with the failure of a systemically important financial institution (Sifi) now without putting taxpayer money at risk, according to several leading industry figures.
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CSA publishes guidance for know-your-client, know-your-product and suitability obligations
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SIFMA Statement On The MSRB’s Request For Comment On Draft MSRB Rule G-42
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Exchanges & Trading Facilities

Alcoa has no plans for legal action against LME -Kleinfeld
Reuters
Alcoa Inc. has no plans to file a lawsuit against the London Metal Exchange aimed at overturning sweeping reforms to its warehousing policy, Chairman and Chief Executive Klaus Kleinfeld said on Thursday.
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MGEX Reaches Top 15 Volume Day Yesterday
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports 16,917 futures and options contracts traded during yesterday’s trading session, hitting the top 15 daily Exchange volume records.
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NASDAQ OMX December 2013 Volumes, 4Q13 Est. Revenue Capture
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Warsaw Stock Exchange Ranks Second In Europe By Number And Third By Value Of IPOs In Q4 2013
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December 2013 FIF Market Share And Market Dynamics Reports – Executive Summary
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Euronext strengthens senior management team
Press Release
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Program Trading Averaged 27.0 Percent Of NYSE Volume During Dec. 30-Jan. 3
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Hedge Funds & Managed Futures

Apollo Hits Mark for Flagship Fund, Raises $17.5 Billion
Michael Wursthorn – MoneyBeat – WSJ
Apollo Global Management, the megafirm led by Leon Black, closed its latest flagship fund at $17.5 billion, raising the large private equity pool since the economic downturn.
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K.K.R. Raises $2 Billion Credit Fund
WILLIAM ALDEN – NYTimes.com
Kohlberg Kravis Roberts & Company is expanding its business of investing in distressed debt, with a new $2 billion fund.
jlne.ws/1eikXhb

Hedge fund manager Hugh Sloane sues tax advisers over soured film bet
Nick Kostov – Financial News
The founder of UK hedge fund Sloane Robinson is suing his former tax advisers of over 20 years for millions of pounds in damages after an investment in a film company went sour.
jlne.ws/1eikXxu

Terry Smith’s funds boutique Fundsmith swings into profit
Mark Cobley – Financial News
Fundsmith, the asset-management boutique founded by Tullet Prebon chief executive Terry Smith in 2010, has posted its first annual profit on the back of continuing good performance.
jlne.ws/1eikWtD

Asset manager Takumi Shibata promoted to head Nikko
Ben McLannahan in Tokyo – FT.com
Takumi Shibata has taken the helm of Nikko Asset Management, one of the biggest fund groups in Japan, capping a swift return from an insider trading scandal that cost him a senior role at Nomura Holdings less than two years ago.
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The zombies have representation, and would like to respond
Dan McCrum | FT Alphaville
When we pointed out that the hedge fund industry has been trounced over the last five years by the simplest combination of stock and bond index funds, we asked institutional investors a question: why are you invested in hedge funds? AIMA thought it had better provide an answer and so a letter from the hedgie trade body appeared in the FT on Friday.
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MarketAxess Research’s Alex Sedgwick: The December Effect
The “January Effect” is a well known, heavily covered phenomenon in the equity markets. Far less known is the “December Effect” in the bond market. MarketAxess Research head Alex Sedgwick of MarketAxess details this seasonal slump in bond market volumes and the challenges it poses for investors in December. In his latest blog post, he notes how investors have come to rely on e-trading to help them implement significant quarter-end adjustments to their portfolios even as trading volumes wind down in the final weeks of the year.
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Cargill reports second-quarter fiscal 2014 earnings
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Banks & Brokers

Some banks easing lending ahead of stress tests: ECB’s Honohan
Reuters
Some euro zone banks are restricting lending to boost their performance in financial stress tests this year, a member of the European Central Bank’s (ECB) governing council said on Friday.
jlne.ws/1eikZFB

JPMorgan Chase plans to exit prepaid card business
Reuters
JPMorgan Chase & Co plans to sell or exit over time its business of issuing prepaid cards for corporate payrolls and government tax refunds and benefits, the company said on Thursday.
jlne.ws/1eikY4D

Blackstone Hires UBS Banker to Lead Energy Advisory Group
WILLIAM ALDEN – NYTimes.com
The investment banking arm of the Blackstone Group has hired a UBS executive to lead its energy and power advisory practice.
jlne.ws/1eikZFK

Big global corporates stick with cash managers for now
Carol Dean – Euromoney magazine
While large companies continue to consolidate their cash management providers, fewer companies looked to change their banking relationships over the past year, according to Euromoney survey data.
jlne.ws/1eikYl7

Raymond James brokerage chief Chet Helck to retire
Reuters
Chet Helck, the chief executive of Raymond James Financial’s global private client group, will retire from the firm and its board in February, the St. Petersburg, Florida-based company said Thursday.
jlne.ws/1eikYle

Nomura names Todd Sanoz global head of equity trading
Matt Turner – Financial News
Nomura, the Japanese bank that has fundamentally reshaped its equities business over the past 18 months, has appointed a former Credit Suisse veteran to run its trading business for the asset class globally.
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Indexes & Products

iSTOXX Efficient Capital Managed Futures 20 Index December 2013 – Monthly Report & Commentary
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Technology

Financial Services Datacenter Strategy 180-Degree Shift
Greg MacSweeney – Wall Street & Technology
Data centers have quickly shifted from the crown jewel of financial services IT to a costly technology albatross.
jlne.ws/1eikYBJ

Bloomberg Announces Immersive Brand Experience At London City Airport
First Bloomberg Hub Will Deliver Enhanced Connectivity To Business Travellers In A Dynamic, Living Environment
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Enforcement

Jury of 7 Women and 5 Men Chosen for Martoma Trial
ALEXANDRA STEVENSON – NYTimes.com
A jury of seven women and five men was selected on Thursday to determine whether Mathew Martoma, a former SAC Capital Advisors hedge fund manager, is guilty of engaging in what the government has called the biggest insider trading scheme in history.
jlne.ws/1eikYS5

Ex-SAC Trader Was Expelled From Harvard Law School
MATTHEW GOLDSTEIN and ALEXANDRA STEVENSON – NYTimes.com
A federal jury will decide whether Mathew Martoma, the former hedge fund manager, cheated when he worked at SAC Capital Advisors, but there’s no denying he cheated when he falsified his grades at Harvard Law School some 15 years ago.
jlne.ws/1eil0t7

SEC Charges Diamond Foods and Two Former Executives in Accounting Scheme to Boost Earnings Growth
The Securities and Exchange Commission today charged San Francisco-based snack foods company Diamond Foods and two former executives for their roles in an accounting scheme to falsify walnut costs in order to boost earnings and meet estimates by stock analysts.
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Aluminium firm Alcoa to pay $384m after guilty plea in US over Bahrain bribes
Simon Bowers | The Guardian
A subsidiary of Alcoa, the multinational aluminium group, has pleaded guilty in the US to a bribery offence relating to the payment of kickbacks to Bahraini officials through an unnamed London-based middleman with close ties to Bahrain’s royal family.
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SEC Charges Alcoa With FCPA Violations
Press Release
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FINRA Orders Stifel, Nicolaus and Century Securities to Pay Fines and Restitution Totaling More Than $1 Million for Unsuitable Sales of Leveraged and Inverse ETFs, and Related Supervisory Deficiencies
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Investissements Kinked Ltée – AMF withdraws charges
jlne.ws/1eikZ8G

BCSC panel finds that B.C. man committed fraud
jlne.ws/1eil0JK

Pierre Dastous fined $5,000
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Environmental & Energy

EU Should Adjust Carbon Handout at Year End, BusinessEurope Says
Bloomberg
The amount of free carbon permits the European Union hands out to factories should be adjusted at the end of each year to match industrial output, according to BusinessEurope, the Brussels-based employers’ federation.
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**RKB — Granting emission rights based on historical activity would be one way to prevent a build-up of unused permits and help maintain Europe’s competitiveness, said Alexandre Affre, who oversees industrial policy at the lobby group, in the article.

EU beefs up carbon trading system to make pollution more expensive
The Canadian Press
It will become more expensive for businesses in the European Union to burn fossil fuels this year after the 28-country bloc decided Wednesday to beef up its carbon trading system.
jlne.ws/1bWQr7z

China mulls national pollution permit trading system
Reuters
China will look into establishing a nation-wide trading system for pollution permits as part of efforts to use market mechanisms to help clean up its environment, the country’s top environment official said.
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**RKB — Five cities and regions set up new pilot carbon trading platforms last year to encourage local enterprises to address soaring greenhouse gas emissions and two more will be launched in 2014. China aims to have a nationwide carbon emissions trading system later in the decade.

Asia-Pacific

China IPO Reopening Keeps Private-Equity Firms Awake
Sonja Cheung and Cynthia Koons – MoneyBeat – WSJ
The closure of China’s initial-public-offering market used to be what kept mainland-focused private-equity investors up at night. Now, it’s the reopening of that exit path that’s cause for concern.
jlne.ws/1eil10b

SGX Iron Ore Derivatives – A Stellar Performance In 2013 Sets The Stage For Continual Growth
Singapore Exchange (SGX) ends a record year in 2013 for SGX Iron Ore Derivatives with resounding appreciation and a standing ovation for the strong support of all market participants. We step into the new year with market development initiatives that will drive continual market growth.
jlne.ws/1eil24l

SGX partners e2i to draw more to stockbroking
Singapore Exchange (SGX) is partnering NTUC’s e2i to draw more Singaporeans to the stockbroking profession and equip new joiners with the necessary skills.
jlne.ws/1eil24s

SGX welcomes Frasers Centrepoint to Mainboard
jlne.ws/1eil2kJ

Tokyo Commodity Exchange: Good Delivery Material Price Differential For January 2014 Rubber Contract
jlne.ws/1eil10o

Frontier Markets

Securities Commission Malaysia Charges Former MPAC CEO For Insider Trading
jlne.ws/1eil1gL

Bursa Malaysia Securities Berhad Invites Comments On Proposed Enhancements To The Listing Requirements
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MCX Weekly Market Report – January 03, 2014 – January 09, 2014
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John Lothian Newsletter

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