On the road again
As mentioned last week, Mr. Lothian is on his way to Mexico today for the annual meeting of the World Federation of Exchanges, which to me sounds kind of like a “Justice League” for financial types. In his absence, we’ll faithfully continue the process of gathering and commenting on news. Tomorrow’s newsletter will be a bit later than usual (as with today’s issue as well), so don’t panic!
8 must-read finance blogs
Christina Le Beau – Crain’s Chicago Business
When finance blogs are a dime a dozen, it can be hard to know which ones are worth the bandwidth. So we’ve curated eight of the best, covering everything from personal finance to commodities trading to free-market rhapsodizing. Better yet, these blogs are all written in Chicago. Sign on and read along.
***JM: Wait… the guy in the middle of that picture… oh hey! Look who made the list!
Salaries surge for scarce compliance staff
David Oakley, Vanessa Kortekaas and Daniel Schäfer – FT.com
A shortage of qualified compliance staff in the banking and asset management industry has sparked a surge in salaries as groups struggle to cope with the flood of new regulations coming into force after the financial crisis.
***DA: Any guesses as to who ultimately pays for these upgrades?
Goldman Sachs, Buying Redemption
SUSANNE CRAIG – NYTimes.com
Goldman Sachs is a master at making money. Lately it has become a master at giving it away. Goldman — for many a symbol of Wall Street greed and excess — wants the world to know it has a charitable side. With the same calculation that earned it a reputation as the savviest trading house on Wall Street, it has staked out a position as one of the nation’s leading corporate philanthropists, giving away more than $1.6 billion since 2008.
***JM: So help me out here. Would it be better that Goldman… NOT give money to help others?
***DA: Or that they spend more on lobbying and less on philanthropy?
Does CCP recovery fall unfairly on asset managers?
Dan Barnes – FOW
The European Parliament’s Recovery and Resolution paper protected buy-side assets to some extent in the event that a CCP failed. A new paper from the International Organization of Securities Commissions (IOSCO), the collective of securities regulators, is not as clear. It seems to suggest that buy-side firms’ assets could be used to support a central counterparty while it is still functioning as a profit-making organisation.
***DA: The salient question is whether this new financial infrastructure under construction is truly making us safer, or whether it just one big game of Hot Potato.
NYSE Technologies faces uncertain future
Anish Puaar – Financial News
NYSE Euronext’s $200 million acquisition of privately held software company Wombat in 2008 was a sign of just how important technology services would become for the world’s largest exchange groups.
***DA: $200 million for a wombat? Meanwhile I have been trying to unload all these chinchillas I have been raising.
Cinnober open to new investors
Tim Cave – Financial News
Cinnober, the Swedish technology firm behind major upgrades at the London Metal Exchange and Brazil’s national bourse, has said it is open to partnerships with new investors to fuel growth.
How the “Navy SEALs” of trading are taking on Wall Street’s predatory robots
A plague of predators are eating away at Americans’ retirement funds. But the “Navy SEALs” of trading are here to help.
***JM: “Get down, Jenkins, and hand me that CDO bomb. We’ll show those man-eating algorithms a thing or two!” Drama so thick, not even a flash crash can penetrate.
U.S. SEC’s Aguilar: hold exchange execs accountable for failures
A proposal that would require stock exchanges to be better equipped to handle market disruptions does not go far enough to hold senior officials accountable for failures, Securities and Exchange Commission member Luis Aguilar said on Friday.
***JM: I’m not sure “hang by the feet until deeply remorseful” will really clean things up, but I guess we could try…
Pros and Conflicts: Whose Side Is Your Broker On?
Jason Zweig – MoneyBeat – WSJ
Finding out whether your broker has a conflict of interest can make the difference between a successful investment and a disastrous one. A new report by securities regulators suggests how brokerage firms can mitigate their many conflicts. At the same time, the report’s findings could make one of the most important and difficult tasks for investors—knowing your broker—a little easier.
Gary DeWaal’s Bridging the Week: October 21 to 25 and 28, 2013 (AlphaMetrix, Foreign Bribes, SEFs)
No single theme dominated financial industry regulatory news this past week; news came from many corners of the industry. That being said, this upcoming week promises to have an important development, as the US Commodity Futures Trading Commission will have an open meeting on October 30 to discuss, among other things, its proposed rules related to the protection of customer funds at future commission merchants and designated clearing organizations.
Visit DGCX at FIA Expo
Options’ Glass is Half Full: Gary Katz Says Industry is Doing Well
Gary Katz, president and CEO of the International Securities Exchange (ISE), has seen the options markets change dramatically since he co-founded the all-electronic options exchange in 2000. His exchange launched ISE Gemini in August, representing the 12th US options exchange. Katz sat down with JLN editor-in-chief Jim Kharouf to talk about where the US equity options business is today, why almost flat volumes isn’t a bad thing, and how this industry can keep growing, even in a low volatility, low interest rate environment.
Watch the video »
MarketsWiki Recent Updates
Companies, Organizations and Groups
44,663,959 pages viewed, 7,690 articles, 166,705 edits
Top pair set to quit NYSE Euronext tech unit
Philip Stafford in London and Arash Massoudi and Ed Hammond in New York – FT.com
The top two executives at NYSE Euronext’s underperforming technology business are set to leave when the $10bn takeover by IntercontinentalExchange is completed in coming weeks, according to four people familiar with the situation.
France central bank chief says Robin Hood tax is ‘enormous risk’
Hugh Carnegy and Michael Stothard in Paris – FT.com
Europe’s planned financial transaction tax poses “an enormous risk” to the countries involved and could threaten financial stability, the governor of France’s central bank has said.
Singapore’s penny stock mystery increases pressure on exchange
Singapore Exchange Ltd’s role as the city-state’s equity market regulator is coming under increasing scrutiny in the fall-out from a penny stock crash earlier this month.
SGX powers up Asia’s first electricity futures market
Singapore Exchange (SGX) is developing Asia’s first electricity futures market with a targeted launch by end-2014, subject to regulatory approval.
Euronext exchanges set to map out their future
Tim Cave – Financial News
IntercontinentalExchange is just a few regulatory nods away from completing a groundbreaking acquisition of NYSE Euronext – and this is likely to trigger upheaval for Europe’s stock exchange landscape.
ICE plans warehousing review after acquiring Liffe softs
Warehousing practices and trading hours are the top items to be tackled by InterContinentalExchange once it has acquired NYSE Liffe soft commodity contracts, Ben Jackson, president and chief operating officer of ICE Futures US, said on Thursday.
ICE: No Plans to Merge Cocoa Contracts With Liffe Acquisition
IntercontinentalExchange Inc. (ICE) said Thursday it has ruled out combining the world’s two largest cocoa-futures contracts, which would both come under its control with its planned acquisition of NYSE Euronext (NYX). The contracts, used by traders of the key chocolate ingredient and food companies to hedge against price fluctuations, would come under one roof in the acquisition, which NYSE expects will close Nov. 4.
Exclusive: Aiming to avoid Facebook chaos, NYSE runs Twitter IPO test
The New York Stock Exchange on Saturday did a test run of Twitter’s highly anticipated market debut, as it seeks to avoid the types of problems that plagued Facebook’s initial public offering on rival Nasdaq.
JPMorgan Reaches Deal With Agency Over Loans
BEN PROTESS and PETER EAVIS – NYTimes.com
JPMorgan Chase has secured important concessions in a $13 billion settlement over its mortgage practices, allowances that could ultimately reduce the bank’s financial burden and leave the government itself on the hook for a small portion of the cost.
Singapore Exchange Seeks High-Frequency Traders
Jonathan Burgos – Bloomberg
Singapore Exchange Ltd. (SGX), Southeast Asia’s biggest bourse operator, wants to lure more high-speed traders on to its stock market as it grapples with lower volume. Computerized trading firms, which execute transactions in fractions of a second, account for a negligible share of volume on Singapore Exchange’s cash equities market, according to bourse spokeswoman Loh Wei Ling, while they contribute 30 percent of revenue from derivatives.
Malaysia to build Asia’s Canary Wharf
Jeremy Grant in Singapore – FT.com
Malaysia is pushing ahead with its bid to join the ranks of the world’s financial centres, inviting bids from developers and investors to build a vast business district in the capital that it hopes will become Asia’s version of Canary Wharf in London.
A $13 Billion Reminder of What’s Wrong
GRETCHEN MORGENSON – NYTimes.com
It was the deal of the week — a possible $13 billion settlement between JPMorgan Chase and the Justice Department to resolve an array of crisis-related mortgage cases. Was it fair or flawed?
JPMorgan Probe Prosecutor Put Away Tomato Racketeer
Karen Gullo – Bloomberg
Benjamin Wagner, the top U.S. prosecutor for mostly rural eastern California, has busted the head of a tomato-packing company for racketeering and wrangled a settlement from a lumber company over a wildfire. He’s also prosecuted more than 250 people for mortgage fraud in a district that includes six of the 10 U.S. cities hardest hit by foreclosures since the 2008 financial crisis.
Bank Born Out of Black Death Struggles to Survive
Elisa Martinuzzi & Vernon Silver – Bloomberg
Siena, the medieval city renowned for its Palio horse races, is home to the world’s oldest bank. Within its aging walls lies a distinctly 21st-century tale of devastation wrought by local politicians and global financiers.
CFTC’s Division of Clearing and Risk and Division of Market Oversight Provide Time-Limited No-Action Relief for swap execution facilities (“SEFs”) from compliance with certain requirements of Commission Regulations 37.9(a)(2) and 37.203(a)
Isda – understanding the impact of Emir/Dodd-Frank protocols on Asia
Jacqueline Low – Risk.net
Both Europe and the US have launched a blizzard of protocols as part of the move of OTC derivatives onto central clearing. Isda explains which are most important to players in the Asia market
FESE Letter On US And EU CCP Margins
FESE warns about the consequences of the disparity between US and EU CCP margin standards for exchange-traded derivatives. It is vital that the European authorities take concerted action to close this loophole in global derivative exchange regulation before these companies take the decision to move their trading interest to other jurisdictions.
New EMIR Counterparty Classification Tool launched by ISDA and Markit
The EMIR Counterparty Classification Tool has been added to the ISDA Amend system launched by the International Swaps and Derivatives Association and run by Markit to try to help financial market participants comply more easily with the European Market Infrastructure Regulation (EMIR).
“Understood And Understanding” – Remarks Of CFTC Commissioner Bart Chilton Before The International Regulators Conference
Exchanges & Trading Facilities
Decoding the LME’s silence on warehousing
Jack Farchy – FT.com
Oh London Metal Exchange, you tease! The entire metals industry is bursting to know what the LME will do about warehousing. The exchange’s response to a storm of criticism over long queues at its warehouse network is likely to define the trading and pricing of aluminium, the metal most affected by the queues, for years to come. Last week, the LME finally made a decision. But it isn’t telling anyone about it just yet.
Cleartrade resumes INTL FCStone talks
Anna Irrera – Financial News
Cleartrade Exchange, a Singapore-based commodity trading platform that has been searching for a buyer this year, has resumed talks with US futures broker INTL FCStone over a potential investment.
Freeport switches to LME for cobalt pricing amid benchmark furor
Freeport-McMoRan Copper & Gold Inc. said on Friday it will use London Metal Exchange pricing data for some $200 million worth of annual cobalt sales, shifting from a published benchmark that has been an industry standard for decades.
Shining a light on dark pools: interview with Seth Merrin
Graham Hand – Cuffelinks
It may come as a surprise to many retail investors, but not all trades in listed securities take place on the so-called ‘lit’ public exchanges, such as the ASX. Increasingly, they are moving to the ‘unlit’ markets, or dark pools, and if you hold managed funds with a large portfolio manager, this could be good or bad, depending on who you listen to. Supporters argue that execution is improved and costs are reduced, to everyone’s benefit and the efficiency of the market. Opponents point to the lack of transparency.
BME will bring its CCP activities under one umbrella BME Clearing
Montreal Exchange Introduces Implied Pricing on OBX & OGB
Montreal Exchange (MX) today introduces implied pricing on Options on Three-Month Canadian Bankers’ Acceptance Futures (OBX) and on Options on Ten-Year Government of Canada Bond Futures (OGB) contracts.
TOM MTF Statistics Week 43
Hedge Funds & Managed Futures
Correlation suggests ‘return to normal’ for commodities
Gillian Carr – Risk.net
Commodities have resoundingly de-correlated from equity markets since early 2013, and are now being much more firmly driven by market fundamentals, according to market participants and analysts.
KKR to invest $100 mln to build wireless infrastructure – WSJ
U.S. private equity firm KKR & Co will invest $100 million alongside investment firm Associated Partners LP to build wireless communications infrastructure, the Wall Street Journal reported, citing people familiar with the matter.
Asset managers face tax hike
Joe McGrath – Financial News
International tax loopholes through which asset managers boost profits and investor returns would be closed under proposals being put to consultation by the Organisation for Economic Co-operation and Development.
Blackstone’s James Cuts Stake in Company With Third Sale
Devin Banerjee & David Carey – Bloomberg
Blackstone Group LP (BX) President Tony James is reducing his stake in the private-equity firm he helped build into the world’s largest manager of alternative assets over the past 11 years.
CFTC Commitments Of Traders Reports Update
Banks & Brokers
BofA to Citi: Take Our Employees
Shayndi Raice – MoneyBeat – WSJ
Banks are practically begging each other to take their employees. Bank of America was so desperate to find jobs for its employees that it invited rival Citigroup to a job fair to interview employees, according to an executive.
Barclays Taps J.P. Morgan’s David Fernandez for Research Role
Isabella Steger – MoneyBeat – WSJ
Barclays PLC has appointed David Fernandez to the newly created role of head of research for fixed income, currencies and commodities for Asia Pacific, the bank said Monday.
J.P. Morgan’s Subprime Troubles Ran Deep
Al Yoon – WSJ.com
A 1,625-square-foot bungalow at 51 Perthshire Lane in Palm Coast, Fla., is among the thousands of homes at the heart of J.P. Morgan Chase JPM +0.55% & Co.’s $5.1 billion settlement with a federal housing regulator on Friday.
Trouble from the top down at JP Morgan
William Wright – Financial News
Something worrying is happening at the top of JP Morgan Chase. The debate over the barrage of multibillion-dollar legal issues it faces has been hijacked by the bank’s capacity to make very large amounts of money.
Clearing & Settlement
Stuck with collateral
Vladimir Piterbarg – Risk.net
Values of derivatives contracts for which there is a choice of asset to post as collateral have been shown to depend on the instantaneous interest rates these assets return. However, the models developed so far assumed perfect substitution. In reality, such agreements are hard to enforce.
Oslo Børs VPS Will Introduce Shorter Settlement Cycle In October 2014
Indexes & Products
Emerging Global Advisors Chooses “FTSE Beyond BRICs” Index For ETF
CQG Readies QTrader Entry-Level Data-Trading Workstation
Max Bowie – WatersTechnology
Denver, Colorado-based data, charting and trading technology provider CQG is preparing to unveil a new, low-cost data and trading terminal, dubbed QTrader, aimed at semi-professional futures traders and the futures commission merchants that serve them.
ITRS Expands Its Global Business Development Team With Angie Walker And Ian Salmon
In the latest development of its global expansion strategy ITRS Group Ltd has appointed Angie Walker as Global Head of Sales and Ian Salmon, as Global Head of Business Development. ITRS is the leading global provider of performance monitoring and management technology to the world’s financial community and these two appointments are seen as core elements in the next phase of the company’s global growth.
Brazil’s CGD Securities Taps Valdi for Market Access
CGD Securities, a Brazilian division of Portugese bank Caixa Geral de Depósitos, has selected SunGard’s hosted Valdi solution for access to the BM&FBovespa financial markets.
Ultra high-performance FPGA trading gateway launched by NanoSpeed
NanoSpeed, the provider of ultra-fast FPGA solutions to the trading community, has today announced the launch of Nano-TG, an ultra-low latency trading gateway. NanoSpeed provides the lowest latency, highly-robust FPGA-based trading, market data and risk management solutions to investment banks, prop traders and hedge funds, as well as exchanges and other financial institutions.
Judge denies Thomson Reuters’ request to dismiss ex-employee lawsuit
A federal judge on Friday rejected Thomson Reuters Corp’s (TRI.TO) (TRI.N) bid to dismiss a lawsuit by a former employee who claims he was fired in retaliation for complaining about how the company distributed some economic data.
BCSC panel issues lifetime ban against B.C. man for fraud
Environmental & Energy
EU Nations Said Due to Decide on CO2-Fix Mandate Nov. 8
European Union nations are due to decide in two weeks whether to allow the start of talks on a draft carbon-market fix with the region’s Parliament, according to an EU presidency official.
EU candidates table list of energy infrastructure needs
Meeting in Belgrade yesterday (24 October), the energy ministers of the Energy Community, an organisation of countries seeking closer EU integration or membership, adopted a list of 35 energy projects of regional importance, mirroring a recent EU effort which identified 248 projects of common importance for the Union. EurActiv Serbia contributed to this article.
Energy secretary sees Capitol Hill thaw on climate change
The Hill’s E2 Wire
Energy Secretary Ernest Moniz said Thursday that the debate on climate change has “turned the corner.” “I believe that we are, including in our Congress, really past the issue of whether we need to respond,” Moniz said at the Center for Strategic and International Studies.
SGX proposes remote membership for clearing of US customers’ swaps
Singapore Exchange is consulting the market on a new remote membership class, which will enable futures commission merchants registered with the US Commodity Futures Trading Commission to clear swaps for existing and new US customers through SGX’s derivatives clearing house, SGX Derivatives Clearing.
Alternative exchange spooks Thai bourse
The entry into Thailand of the alternative trading network Liquidnet has prompted the Stock Exchange of Thailand to make rapid upgrades to its trading system and improve competitiveness to protect its market share.
SGX corrects misconceptions
Singapore Exchange (SGX) would like to correct certain misconceptions which have appeared in the media recently.
Monetary Authority Of Singapore Revokes Two Remittance Licences
The 1st SME Exchangeable Private Placement Bonds Issued On Shenzhen Stock Exchange
Kuwait bourse to launch derivatives trading next year
Kuwait’s stock exchange plans to launch derivatives trading in the first half of 2014 using its new Nasdaq-backed trading system, a senior stock exchange official told Reuters.
Zambia’s Derivatives Market to Start Trading Nov. 5 After Delay
Matthew Hill – Bloomberg
Zambia’s Bond and Derivatives Exchange is set to begin trading in its first product on Nov. 5 after it signed on three clearing members, Chief Executive Officer Allan Thomson said.
Kuwait wealth fund hires ex-BofA banker as infrastructure head – sources
Kuwait Investment Authority (KIA), the Gulf state’s sovereign wealth fund, has appointed a head for its newly-created infrastructure arm, seeking to bolster its investments in the sector, two sources familiar with the matter said.
NSEL Scam: Police grills Jignesh Shah, to question him again
Financial Technologies (FT) promoter Jignesh Shah came face-to-face with long-time colleague Anjani Sinha in a rather unusual setting: At the South Mumbai headquarters of the Mumbai police’s economic offences wing (EOW).
Aftab Gets Record Fifth Term As Lahore Stock Exchange CEO
The incumbent MD of Lahore Stock Exchange, Mr. Aftab Ahmad Ch, has been reappointed as the CEO of the exchange for another three years term.
NILEX Trading Hours Extended To Be 4 Hours Effective 7th, October 2013
Tehran Stock Exchange Weekly Digest – 23 October 2013
Malawi Stock Exchange Weekly Trading Report- 25th October, 2013
Exclusive: Washington lobbying law firm in merger talks – sources
Washington law firm Patton Boggs, well known for its lobbying and public policy work, is in talks to merge with a larger U.S. law firm, according to two former partners and a person with inside knowledge of the deal.