John Lothian Newsletter: U.S. Investigates Currency Trades by Major Banks; ATS Brasil has partners lined up, eyes Nov. 2014 opening; New Terms Set for Insurance Against Debt Defaults

Nov 15, 2013

First Read

David Robin

Fed Carousel: Newedge’s Robin says bond market could move in Q2 2014
Fed tapering, a government shutdown and last minute debt-ceiling deal rocked the bond market in recent weeks. John Lothian News’ editor-in-chief Jim Kharouf sat down with David Robin, managing director of Newedge to talk about what’s next for the bond market and interest rate futures volumes. In Robin’s view, we are not likely to see another Washington fiasco as we did back in October. “The significance of the debate itself and the process the marketplace and the political theater underwent, has sort of got the marketplace in a situation where know that for any extended period of time, the Fed is the only game in town,” Robin says.

Watch the video »


Magnus Böcker and Michael Syn of SGX to Guest Edit JLN Next Week
John Lothian
I have a confession. I am not having major or any surgery and not headed to a Boy Scout camp next week, but we are going to have a guest editor, or editors, anyway. SGX CEO Magnus Böcker and SGX Head of Derivatives Michael Syn will be our guest editors for the week. Magnus will handle Monday and Friday and Michael will take the middle of the week.

Not to make a big deal about this, but this will be the first time JLN will be edited in Asia. We are very pleased to have Magnus and Michael take their turns illuminating and amusing the readers. Thank you to SGX for agreeing to do this. I need a week off. Whew!


If you will be attending SEFCON IV Monday, read this note!
John Lothian News
This Monday, November 18, John Lothian News editor-at-large Doug Ashburn and production editor RJ Roxas will be in New York at SEFCON IV, talking with SEF participants about the status of implementation, market structure and lingering regulatory issues. Afterward, we will be putting together a short video featuring those who participated. If you will be attending the conference and have something to say, send an email to Hope to see you there.


Sponsored Content
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Monday, November 18, 2013, Grand Hyatt Hotel, NY

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content from:


Treasuries Not Good Enough as Swaps Collateral in CFTC Rule
Matthew Leising – Bloomberg
Rules under consideration by federal regulators could require clearinghouses to back up Treasuries pledged as collateral in the $693 trillion over-the-counter derivatives market with credit lines, according to industry executives.

***** I believe this is the default of Congress.


NYSE’s new boss on the future of the trading floor
Sprecher made it clear that—while he did not make any long-term commitments to keep the NYSE floor—the Twitter IPO and the extensive coverage CNBC provided around how the IPO was priced has left him with a renewed appreciation for the value of human participation in the markets.

***** Is my TV acting up, or is Jeff Sprecher just tickled pink about closing the NYSE Euronext deal?


Top 10 Takeaways from Futures Industry Event
Dan Hubscher – Wall Street & Technology
Object Trading’s Dan Hubscher offers a rundown on the key issues discussed at FIA Expo 2013, including regulation for market safety, kill switches, and new competition for futures exchanges.

***** I like the giveaways more than the takeaways. First time I ever saw an iPhone case with a built in bottle opener.


EU-backed social media sentiment project releases market surveillance tool
Project First, the European Union-backed research effort to find a way of extracting and analysing financial services-related sentiment from social media networks, has concluded with the launch of a prototype market surveillance system.

***JM: Let the gaming of the system begin!


German parties urge FTT covering stocks, bonds, FX, derivatives
German parties discussing policies for a coalition government are urging the rapid implementation of a financial transactions tax among EU countries, covering stocks, bonds, currencies and derivative contracts, according to a document seen by Reuters.

***** I have been to German parties and never have they urged an FTT. Maybe I go to the wrong parties.


Wall Street Courting Gay Students to Bolster Bottom Line
Ben Schenkel – Bloomberg
Wall Street is paying special attention to young lesbian, gay, bisexual, and transgender (LGBT) applicants during the hiring process for college seniors. Beyond embracing gay rights, the country’s largest banks, brokerages and consulting firms are vying to retire their conservative image and try to improve profits along with diversity.

***** The young people of today are the bankers of tomorrow and the young people I know are open and accepting of their friends of all stripes. This only makes sense.


TABB Group Reaction To European Commission Continuing To Press Ahead With The Council’s Recommendation Of 4% And 8% Volume Caps For Dark Pool Trading
According to TABB’s senior research analyst Rebecca Healey in London, despite the capital markets industry’s best efforts, the European Commission is continuing to press ahead with the Council’s recommendation of the 4% and 8% volume caps for dark pool trading, as well as price improvement at the mid-point. They cite that their main objective is to increase transparency, but as TABB’s Healey sees it, these proposals have the potential to inadvertently create greater opacity as well as seriously impact institutional investors ability to execute order flow. In fact, as TABB has learned through soon-to-be published research, only 14% of institutional investors do not have concerns regarding the introduction of the volume cap proposals.

***** Is it me, or does the TABB Group react to everything?


Gold Making People Crazy in Search for Sunken Treasure
Vernon Silver – Bloomberg
Captain Robert Mayne stands at the wheel as he guides the steel-hulled Aqua Quest from the docks in the Florida Keys, pointing the vessel toward what he’s been assured is a gold-laden shipwreck that may be worth tens of millions of dollars. Mayne, 60, says experience has taught him such gold hunts can be perilous: inspiring obsession, sending treasure hunters on endless journeys and blinding them to reason.

***** Does gold make people crazy, or do crazy people just like gold?


11.18 Launch Date for New Diversification Tool – Futures on RVX Index
Matt Moran – CBOE Options Hub
Futures on the CBOE Russell 2000 Volatility Index (index ticker is RVX, and futures ticker is VU) are scheduled to launch on CFE on Monday, November 18, and CBOE plans to introduce trading in RVX options on Monday, December 2.

***** They call the RVX the fear of family vacations index.


Green Key Technologies Launches Trader Voice Box: Cloud VoIP Software, Recording and Storage Capabilities for the Financial Markets
Green Key Technologies, a financial markets technology solutions provider, announced today the launch of Trader Voice Box, a suite of Voice Over IP technology applications leveraging cloud telecom and storage capabilities.

***JK: Ehem…La, la, laahh, la, la, laaah!



MarketsWiki Page of the Day
Lawrence (Larry) Leibowitz

MarketsWiki Recent Updates


Charles Vice; Hector Sants; Lawrence Leibowitz; Jill E. Sommers; Jeffrey M. Christian; Joseph Mecane; Jan Arpi; James P. Marzano; Duncan Niederauer; Thomas W. Farley

Companies, Organizations and Groups

Euronext; Spot Trading; IntercontinentalExchange Group Inc.


45,227,148 pages viewed, 7,706 articles, 168,588 edits
MarketsWiki Statistics

Lead Stories

U.S. Investigates Currency Trades by Major Banks
From their desks at some of the world’s biggest banks, traders exchanged a series of instant messages that earned them the nickname “the cartel.” Much like companies that rigged the price of vitamins and animal feed, the traders were competitors that hatched alliances for their own profits, federal investigators suspect.

ATS Brasil has partners lined up, eyes Nov. 2014 opening
Americas Trading System Brasil (ATS Brasil) plans to open as a stock exchange in Brazil next November with partner firms to be announced within weeks, the CEO of the upstart said on Thursday.

New Terms Set for Insurance Against Debt Defaults
Katy Burne –
A financial trade association on Friday will unveil new coverage terms for insurance against debt defaults, the latest step in plans to reboot the market as the industry struggles with dwindling volume and unwanted attention from regulators since the financial crisis.

Metal warehousing tactics embitter coffee and cocoa market
The window is closing on lucrative – and much-resented – practices that some exchange-licensed coffee and cocoa warehouses have copied from the metals market, as exchanges step in to pre-empt scrutiny from regulators. Complaints common in the metals markets such as high warehousing rents along with long delays and steep charges to withdraw material have recently been heard from the coffee and cocoa markets.

Financial Services Still Plagued by DDoS Attacks
Becca Lipman – Wall Street & Technology
Distributed denial-of-service attacks, or DDoS, are a standard tool of choice for publicity gathering attacks, but we rarely see institutions coming out and commenting on them – why DDoS are they being used, what were the results, or anything related to it that could be worse than what DDoS was going for.

Options traders gear up to strangle and straddle Twitter
Traders itching to “strangle” or “straddle” the newly launched shares of Twitter Inc will finally get their chance on Friday when trading in the social media company’s options launches on U.S. exchanges.

European Commission gets tough on dark pools
Anish Puaar – Financial News
The European Commission has weighed in on the “dark pool” trading debate that has engulfed Europe in recent weeks, with the most restrictive proposals for curbing the practice to date, Financial News has learnt.

Insight: Fixing the world’s metals warehousing: why so long?
In the mid-1990s the London Metal Exchange was embroiled in a criminal investigation after the discovery that a trader – nicknamed Mr. 5 Percent for the share of the world’s copper he reputedly controlled – had spent years manipulating its systems to hoard copper and boost the price.

Liechtenstein to end bank secrecy
Liechtenstein, whose banks have been accused by the United States and other countries of facilitating tax evasion, said on Thursday it would end its practice of helping foreigners hide money from their tax authorities.

Regulators Looking to Tame Unruly Bitcoin World
Robin Sidel and Ryan Tracy – MoneyBeat – WSJ
The top banking regulator in New York is accelerating his hunt for bitcoin bad guys, announcing that he will hold hearings that could help determine whether virtual currency companies will need to apply for a special “bitlicense” to operate in the state.

C.I.A. Collecting Data on International Money Transfers, Officials Say
The Central Intelligence Agency is secretly collecting bulk records of international money transfers handled by companies like Western Union — including transactions into and out of the United States — under the same law that the National Security Agency uses for its huge database of Americans’ phone records, according to current and former government officials.


Kevin W. Goodman Named Head Of SEC’s Broker-Dealer Examination Program
The Securities and Exchange Commission today announced that Kevin W. Goodman has been named as the national associate director of the broker-dealer examination program in the Office of Compliance Inspections and Examinations. He will oversee a staff of approximately 300 lawyers, accountants, and examiners responsible for inspections of U.S.-registered broker-dealers.

Volcker rule start date could be delayed
Peter Madigan –
The introduction of the Volcker rule ban on proprietary trading could be delayed, Risk has learned – a result of the long hold-up in the rule-making process – with one source speculating it may not take effect until as late as July 2015.

FINRA Names Mike Rufino Head of Member Regulation – Sales Practice, and Bill Wollman Head of Member Regulation – Risk Oversight and Operational Regulation

CFTC’s Divisions of Clearing and Risk, Market Oversight and Swap Dealer and Intermediary Oversight Issue Guidance on the Application of Certain Commission Regulations to Swap Execution Facilities

CFTC Staff Issues Advisory on the Applicability of Transaction-Level Requirements in Certain Cross-Border Situations

ESMA Begins Preparatory Work For New Market Abuse Regime
The European Securities and Markets Authority (ESMA) has published a Discussion Paper setting out its initial views on the implementing measures it will have to develop for the new Market Abuse Regulation (MAR).

Regulatory skills shortage is a problem for everyone
Monique Melis – Financial News
Financial services regulation invariably starts with the best of intentions.

U.S. And France Agree To Combat Offshore Tax Evasion – 10 Completed Agreements, Marks Significant Momentum In FATCA Implementation

Ensuring the UK remains open for business – requirements for foreign-owned firms
Speech by Clive Adamson, Director of Supervision, at the Association of Foreign Banks, London.

The Importance Of Trials To The Law And Public Accountability, SEC Chair Mary Jo White, 5th Annual Judge Thomas A. Flannery Lecture, Washington D.C.

[AMF Canada] Transition to new service provider for the operation of the CSA National Systems

Exchanges & Trading Facilities

CBOE And C2 To List Options On Twitter On November 15
The Chicago Board Options Exchange and C2 Options Exchange announced that they will list options on the stock of Twitter, Inc. on Friday, November 15.

CBOE Holdings to Present at KBW Securities Brokerage & Market Structure Conference On November 19
CBOE Holdings, Inc. announced today that Edward T. Tilly, Chief Executive Officer, will present at the KBW Securities Brokerage & Market Structure Conference in New York City on Tuesday, November 19, 2013, at 9:15 a.m. Eastern Time.

Lyxor boosts Bats Chi-X Europe’s ETF ambitions
Anish Puaar – Financial News
Bats Chi-X Europe, Europe’s newest stock exchange, is continuing to build its listings business with the addition of exchange-traded funds from Lyxor Asset Management.

Eris Exchange: November News
Wells Fargo Joins Eris; Financial Times Video Interview; Featured Trade: Swap Spreads; New Bloomberg Spreadsheet; CME Group GFLC Sponsor; Eris Careers

Program Trading Averaged 23.3 Percent Of NYSE Volume During Nov. 4-8

London Stock Exchange Welcomes Wisdom Marine Lines To Main Market

Hedge Funds & Managed Futures

Vanguard slashes fees on passive products
Mike Foster – Financial News
Vanguard has thrown down the gauntlet to rival providers by slashing the fees on 23 of its passive products in Europe, including those charged by its popular emerging markets exchange-traded fund.

Berkowitz on Fannie and Freddie Proposal: ‘Our Plan Is a Start’
David Benoit – MoneyBeat – WSJ
Bruce Berkowitz described his proposed plan to buy parts of government mortgage-giants Fannie Mae and Freddie Mac for $52 billion as a “start.”

Whitney Hedge Fund Wins Backing From BlueCrest Principals
Saijel Kishan & Max Abelson – Bloomberg
Meredith Whitney, the Wall Street analyst who forecast a flood of U.S. municipal-bond defaults in 2010 that hasn’t materialized, won backing from billionaire Michael Platt and other partners at BlueCrest Capital Management LLP for her new hedge fund-firm, according to a fund presentation.

When a Deal Goes Bad, Blame the Ratings
Did you make an incredibly bad decision during the great credit bubble? Don’t worry. Join the crowd denying responsibility. Explain that nobody should have expected you to do any homework before investing.

Partners Group raises $800 million for European private debt
Dan Dunkley – Financial News
Alternative asset manager Partners Group has raised over $800 million for private debt investments in Europe, the firm said in a statement today.

Motion Equity Partners in talks to quit ‘zombie’ status
Anne-Sylvaine Chassany, Private Equity Correspondent –
European private equity house Motion Equity Partners, which has been unable to raise new funds since the financial crisis, is in talks with Boston-based investment group HarbourVest over securing capital to finance deals.

Banks & Brokers

Chief’s Vision for Morgan Stanley Is Showing Some Success
Thunderclouds were gathering in April when James P. Gorman, Morgan Stanley’s chief executive, went for a run on the beach on Amelia Island in Florida after attending a closed-door meeting of the bank’s top stockbrokers. After just a few miles, the storm began to pick up speed, prompting Mr. Gorman to turn around and head for safety.

JPMorgan to shut Geneva energy trading operation: sources
JPMorgan is set to close its energy trading operation in Geneva, which employs a team of around 12 traders, within the next four to five months, sources familiar with the matter said on Thursday.

What Goldman Sachs’ MD list means for its rivals
Matt Turner and Richard Partington – Financial News
The once annual – and now biennial – list of new Goldman Sachs managing directors has always been closely watched by rivals. But the focus on the class of 2013 is even greater.

Goldman Market Structure Executive Headed to Bloomberg — Sources
Katy Burne
Philip Cenatiempo, a vice president in the principal strategic investments group at Goldman Sachs Group Inc. (GS), is leaving for a senior market structure role at Bloomberg LP, according to people familiar with the matter.
(via email)

Clearing & Settlement

Four more markets commit to shorter settlement cycles
Sophie Baker and Anish Puaar – Financial News
The four Nordic countries have become the latest markets in Europe to announce plans to shave 24 hours off the time period between the execution of a trade and its settlement, according to an announcement by the region’s securities markets association.

Indexes & Products

CBOE responds on Vix
John Hiatt –
John Hiatt, director of research and product development at the Chicago Board Options Exchange, responds to a recent Structured Products article concerning the Vix volatility index

BlackRock turns to regional and community banks in ETF push
BlackRock Inc, a money manager that has long worked with the largest U.S. financial institutions, is now turning to the country’s smaller banks, where it sees a promising market for exchange-traded corporate bond funds.

IntercontinentalExchange Inc. (USA): Merger With NYSE Euronext (USA) – Changes In FTSE Mondo Visione Exchanges Index

S&P Dow Jones Indices Announces Changes To The S&P/TSX Canadian Indices – A Share Update For The S&P/TSX Composite Index


Per Andersson to Lead Pantor’s Sales and Marketing
Pantor, a provider of high-performance transactional platforms to the financial services industry, has appointed Per Andersson as Head of Sales and Marketing to support Pantor’s continued growth.

MarketPsych Unveils New Predictive Analytic Tools
Faye Kilburn – WatersTechnology
Behavioral finance research and analysis provider MarketPsych has developed a new suite of tools that will enable investment banks, wealth managers, hedge funds and traders to understand market trends and extract value from its sentiment data.

Former SunGard Exec Pedder Joins Wolters Kluwer
Nicholas Hamilton – WatersTechnology
Clive Pedder has joined Wolters Kluwer Financial Services as managing director of the company’s finance, risk and compliance business for Europe, the Middle East and Africa, after working as a senior executive at SunGard for the past four years

Readers Award BAE Systems Detica The Best Financial Crime Product Or Service At The Banking Technology Awards 2013


SEC Charges Hedge Fund Trader With Insider Trading in Carter’s Stock
The Securities and Exchange Commission today announced insider trading charges against a New York-based investment professional who used nonpublic information about youth clothing company Carter’s Inc. to give the hedge fund where he worked a $3.2 million trading edge.

High Stakes for SAC Manager Michael Steinberg—and Steven Cohen—in Trading Trial
Christopher M. Matthews and James Sterngold –
Michael Steinberg, a veteran hedge-fund portfolio manager, has much at stake in a Manhattan court next week. So does his boss, billionaire Steven A. Cohen. Mr. Steinberg, who has pleaded not guilty, is the most senior employee at SAC Capital Advisors LP to be indicted for insider trading.

New Zealand’s Financial Markets Authority: David Ross Sentenced For New Zealand’s Largest Ever Ponzi
David Robert Gilmour Ross (63) has been sentenced in the Wellington District Court to 10 years and 10 months of imprisonment following a joint agency investigation by the Serious Fraud Office (SFO) and the Financial Markets Authority (FMA).

Environmental & Energy

EU can’t afford to step down as climate leader: Think tank
Europe’s abdication from climate leadership would stunt growth in the region and hand a huge economic advantage to China and the United States as they carve out their share of a multi-billion low-carbon market, a German think tank said today (14 November).

U.S., EU, Reject Brazilian Call for Climate Equity Metric
The U.S. and European Union blocked a proposal supported by 130 nations including Brazil and China that would use pollution levels dating back to the industrial revolution to help set limits on emissions in the future.

Japan dials back climate change emissions target
Japan has drastically scaled back its target for reducing greenhouse gas emissions, possibly complicating efforts to forge a global climate change pact.


SGX’s clearing and settlement infrastructure assessed to be sound, efficient and effective
Singapore Exchange’s clearing and settlement infrastructure has been independently assessed under the International Monetary Fund’s Financial Sector Assessment Programme as sound and efficient with an effective risk management framework.

Returning to Japan, hedge funds bet this time is different
Japan, a frustration for the world’s sharpest hedge fund minds for more than a decade, is proving one of the industry’s biggest winners this year. Big names from New York to London have made billions betting that “Abenomics” – the monetary stimulus programme launched under Prime Minister Shinzo Abe – would send the yen sliding and stocks surging.

Veteran Deal Maker Mary Ma Resigns From Hong Kong Listing Committee
Isabella Steger – MoneyBeat – WSJ
Veteran China deal maker and former Lenovo Group Ltd. executive Mary Ma has resigned from the Hong Kong Stock Exchange’s listing committee after taking up a role as the city’s financial regulator.

Traiana opens Singapore office as it expands in Asia-Pacific
Traiana, a provider of pre-trade risk and post-trade processing solutions, has created a hub for its Asia Pacific business by opening a new office in Singapore.

ICBC Dishes Out ‘London’ Dim Sum to Asia Instead
Ben Edwards – MoneyBeat – WSJ
Keen to promote London as a hub for offshore yuan trading, U.K. Chancellor George Osborne last month took to micro-blogging site Twitter to announce that Chinese lender Industrial and Commercial Bank of China Limited would be the first mainland headquartered Chinese bank to sell offshore yuan bonds in London.

PAG Capital’s Real-Estate Arm Raises $1.5 billion For Distressed Real Estate, Debt
Cynthia Koons – MoneyBeat – WSJ
PAG Capital’s real-estate arm has raised $1.5 billion for a fund that focuses on distressed real estate and debt opportunities in Asia, as the hunt for deals in Asia Pacific intensifies.

China Exchanges Services Company: Change Of Regular Review Schedule And Share Adjustment Policy

HKEx: Exchange Reports On Implementation Of Corporate Governance Code And Corporate Governance Report

Frontier Markets

BSE to launch currency, interest rate derivatives in December
The Bombay Stock Exchange (BSE) will launch currency and interest rate derivatives on its platform in the first week of December, its chief executive said on Thursday.

MarketPrizm provides market data and order entry services to DGCX
MarketPrizm, a leading provider of market data and trading infrastructure services, today announced that it will offer data and order entry services to the Dubai Gold & Commodities Exchange.

Bursa Malaysia Securities Reprimands, Fines And Suspends Quah Choon Wah For Engaging In Unlawful Trading Practices

Malawi Stock Exchange Weekly Trading Report – Week Ending 15th November, 2013

MCX Weekly Market Report – November 08, 2013 To November 14, 2013

John Lothian Newsletter

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How Ken Griffin rebuilt Citadel’s ramparts

First Read $33,626/$300,000 (11.2%) Charlie Carey ++++ Trading Technologies Announces Matching Program to Benefit GoFundMe Campaign for MarketsWiki Education Video Series and John Lothian News As a pioneer of electronic trading, we at Trading Technologies value our...

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